NEED FOR A LEVEL PLAYING GROUND IN TELECOM


By
Krishna Chaitanya V.
Assistant Professor & Research Associate (Finance Area)
Dhruva College of Management
Kachiguda,Hydearabad - 500 027
Cell : 9849422731
Phone : 040 - 24655274 24600032
E-mail :
kc_dcm@yahoo.co.in
 


Introduction

It all started in 1855 when the Government of India granted license to the Oriental Telephone Company to establish exchanges at Bombay, Calcutta, Karachi, Madras and Rangoon.  And soon in 1882 undivided India's first telephone exchange was commissioned in Bombay.  It took nearly sixty old years in India to make telephone services available to the common man.  Finally in 1943, the Indian Wireless Act was enacted and telephone services was nationalized.  The telephone services began to spread all over India under the shelter of Government and for the first time in 1986 the basic telephone services in the metros (Delhi & Mumbai) were spun into a new Government owned Corporate Entity called The Mahanagar Telephone Nigam Ltd. (MTNL) and overseas services was given charge to Videsh Sanchar Nigam Ltd. (VSNL).

Soon in 1989 the Telecom Commission was setup to prepare a Telecom Policy and as per the telecom commission's recommendations the Government of India created history by allowing Private Participation in telecom services in 1992.  Two years later licenses were awarded to six basic service operators, eight  cellular operators in the metros.  Today, where India is operating in a liberalized economy, the Information and Communication Technologies (ICT) are the drivers of Globalization.  For a country at this stage of development, India has a surprisingly vibrant Tele Communication industry feels the experts.

Today, every eight out of ten do hold a telephone and business men who have crores of business to a tenth class school kid owns a cell phone.  Isn't it amazing?  Is it the same old India???  Where are we and what lies ahead……
 


A level-playing field in telecom

T.Choudary on a request from the MTNL (and other fixed, that is, wired basic telephone service providers) to introduce limited mobility telephone services through wireless local loop (WLL) equipment, the Department of Telecommunications (DoT) has asked the Telecom Regulatory Authority of India to give its recommendations on matters such as additional licence fees and a level playing field between the full mobility-service providing cellular mobile service providers and limited mobility service providers. It appears that by imposing additional entry and licence fees, basic service providers may be allowed to provide limited mobility service.

This has several aspects:

* In the lifetime of a licence, fixed or mobile telephone services or ISPs, new technologies and services are becoming possible. These could be based on the infrastructure of existing licensed operators. Requests will come from the incumbent providers of several services under different licences, and new entrants who, by deploying new technology and elements in segments of the existing network, can offer new services. The conditions for new services will impact on the business of other service providers. Thus, due to the continuous emergence of new technologies, increased convergence between the fixed and the mobile; computers, communications and broadcasting, the situation becomes extremely fluid.

Licensed service providers which have different terms and conditions -- the most important being the entry and licence fees, revenue sharing and inter-connection charges, all of which determine costs and prices -- may be affected. The new services will either substitute or enhance existing services. There is, therefore, tremendous scope for contention between incumbents providing different services under different licence conditions, on the one hand, and new entrants and some of the incumbents wanting to provide new services that may be full or partial substitutes for existing services.

The TRAI and the DoT are not positioned to anticipate these developments or do justice to the incumbents and new entrants. The issues would be politicised as no supplier would want to be affected by new developments.

* The users may prefer a continuous increase in the number of suppliers of the existing and new services. They would want more competition to ensure greater choice and, most likely, reduced prices and offer better quality, often occasioned by dissatisfied consumers migrating from one supplier to another.

* Every time a new determination is made by the TRAI, it will have some impact on the Government's revenues. The Internet service policy is extremely user-friendly because there are no licence fees, no revenue shares, no limit on the number of service providers or where the service is to be provided, the full freedom to deploy wireless in local loop to connect users to the Internet and to create infrastructure between cities and international interconnection to Internet backbones. This also promotes competition and, as a result, the number of Internet users has risen by leaps and bounds and prices dropped to realistic levels. The consumers interest must be the most important for TRAI and must ensure competition and the continued viability of suppliers through a level-playing field. However, if one player introduces a new service in somebody else's service area at lower rates to consumers because liabilities such as licence fees, revenue shares and interconnections governed by the previous license are lower, then there arises an unequal playing field. In this instance, there is an unequal playing field existing between basic telephone players such as BSNL, MTNL and private companies that wish to provide limited mobility through WLL equipment and the cellular operators (to the disadvantage of the latter). However, the reported prices that basic telephone operators want to charge the limited mobility customers are quite attractive to subscribers.

A comparison of the licence conditions and the liabilities that the basic telephone operators have with regard to their payments to the Government under different heads and the conditions of cellular operators will only establish that the cellular operators will be discriminated against.

This will not be good regulation. Imposing additional licence and entry fees and revenue shares on basic telephone service providers that wish to provide limited liability, is anti-customer and works against the telecom sector because these additional amounts are costs to companies and prices to users. These extra amounts collected from the consumers due to a TRAI recommendation or the government's determination to enhance the licence fees and revenue shares would not be utilised for telecom development, but would only go to cover the Government's limitless deficits. This will detract from the increased affordability of all types of services to consumers. Therefore, the introduction of the limited mobility service may be deferred. WLL was never intended to provide such a service. Technological developments are, thus, undermining the initial ideas and associated licence fee regime. It has been suggested that basic telephone operators and cellular operators be allowed to become full service operators -- basic companies may provide full mobile services and the cellular mobile operators may be allowed to provide basic or fixed services through wireless or wires.

For a level playing field to emerge, these companies must be given time, say 12 months, before each can provide other facilities and services. Because the distinction between the basic and cellular mobile operations will disappear with the implementation of the above recommendations, the entrance fees, revenue shares and universal access fund contributions must be readjusted to represent the same proportion of the revenues of each type of company. Finally, due to the rapid technological developments and convergence happening sooner than the Government is able to understand its full implications, especially with regard to incumbents holding licences under different conditions and terms, the situation will be fluid. The only remedy is for every operator to become a full service provider.

Further, the ban on IP telephony will be unsustainable as it is already being undermined and may soon be removed. Another complication that could arise is that all the Internet users could access domestic long distance and international calls at prices a fraction of what they are paying now.

If, due to inadequate understanding or pressure from certain sections, the Government delays the transformation of every type of service provider into a full service provider, conflicts could arise through inadequate understanding and much lobbying by political forces. The TRAI should exercise caution before pushing ahead with the limited mobility service, considering the differential burdens likely to descend on existing operators with differing licence fees and liabilities.

Conclusion

Scene of Indian Telecom in 2010

Call a number and if they are at home, within reach, that will ring; if they are on road, their mobile will beep; it they are at work, the call will automatically be directed to their office extension and if they are in meeting, the call will end up at a voice-mail service.  This is how the Indian Telecom will be by 2010 and it is a fact.

The DOT figures says it all, by 2010, the number of fixed connections in India will swell to 180  million  and the number of cellular connections to five crores.
 


Tariffs, for all kinds of telecommunication services, voice will continue to fall.  Indeed by 2010, the local call that cost Rs. 1.25 per 60 seconds now, could come at a free of cost.  Even the cellular tariffs will be lower.
 


The national and international long-distance tariffs certainly will be coming down in the near future.

Telecommunication is yet another industry that has shown itself to be heavy on Global consideration.  It is very likely that India's largest companies in telecom will be taken by Europe's largest or Perhaps Even America's largest Player.

But one thing is sure, the Indian big Players like Telecom companies like TATA's, BPL – Birla – TATA –AT & T combine, Bharathi Enterprises and Reliance Infocom will strive hard to expand and role this robust competitive market.
 


Krishna Chaitanya V.
Assistant Professor & Research Associate (Finance Area)
Dhruva College of Management
Kachiguda,Hydearabad - 500 027
Cell : 9849422731
Phone : 040 - 24655274 24600032
E-mail :
kc_dcm@yahoo.co.in
 

Source : E-mail February 21, 2004

 

B A C K

 

Important Note :
Site Best Viewed in Internet
Explorer in 1024x768 pixels
Browser text size: Medium