Some progress

The nation’s telecom liberalization program is being implemented in bits

and pieces. Every other day some key announcements are made. On the face of it,

these indicate efforts to loosen the government’s vice-like grip on this vital

infrastructure sector. But if you delve deep into it, the reform program is not

actually transparent and open-ended.

Take the latest announcement. Just before the Prime Minister AB Vajpayee’s

15-day US visit, the government has announced that the monopoly of the Videsh

Sanchar Nigam Limited (VSNL) over overseas telecom services will end in 2002

instead of 2004. VSNL, which has raised enormous amount from the international

financial markets on the strength of its continued monopoly, will be adequately

compensated.

It is an indisputable fact that overseas calls from India are very high. VSNL

has fully exploited its monopoly status to fatten its coffers at the cost of

providing a cost-efficient service to customers. All over the world

government-run telecom monopolies are being privatized. Under the World Trade

Organization guidelines, Indian government reluctantly agreed to end VSNL’s

monopoly by 2004. This timetable has now been advanced to provide a talking

point to the Prime Minister when he meets potential American investors. So far

so good. What ever be the government’s compulsion, it offers a ray of hope to

suffering telecom customers.

But the reluctant government announcement comes with many riders, attached in

fine print. What the government has conceded is that private telecom companies

can start to offer overseas services from April 2001. For this to happen, the

detailed guidelines and conditions should be made public right now so that

potential new entrants can make their plans. However, the telecom bureaucracy is

not going to make the passage easy and smooth for the private investor.

The government has made it clear that its domestic telecom operators, MTNL

(covering Mumbai and Delhi) and Department of Telecom Services (DTS) will route

their overseas calls only through VSNL. This is the big hurdle in the path of an

efficient telecom regime. Afterall, the basic telecom sector has yet to become

truly competitive. DTS is the dominant player and bulk of the overseas calls

originate from their network. The private will be left with just the crumbs.

Moreover, this directive forecloses any plans on the part of the country’s two

big telecom providers–MTNL and DTS or its new avatar BSNL–to enter the

lucrative overseas communication services. Straightaway, the government is

putting roadblocks in the path of an efficient telecom system. To demonstrate

its commitment to telecom reforms, the government should immediately withdraw

such foolish directives and give up its back door mechanisms to stymie

competition in the overseas telecom services.

Just before this announcement, the government has tried to give fillip to the

defunct basic telecom service privatization. There are only a handful of private

operators in this segment. The ambitious program did not take off again due to

the dilatory tactics of the telecom technocracy. The government has now removed

the restriction that there will be only one other basic telecom operator in each

state to compete with DTS. Now any number of players can come in. This is a

welcome step. A mere announcement is not enough. The government needs to take

pro-active steps to attract private companies into this vital area. More

important is the need to articulate the commitment to ensure an efficient,

competitive, customer friendly telecom system at the highest levels of the

government. This is really needed to send a strong message to the telecom power

brokers and vested interests that their dilatory tactics will not succeed.

Such a message is all the more important at this juncture when the

400,000-odd telecom employees are on a strike to derail the telecom reform

process. While the genuine apprehensions of the telecom employees should be

removed, they should be made to understand that the interests of the consumers

come before their own needs. Telecom is vital sector for the continued good

performance of the national economy. Every hurdle that comes in the way of an

efficient telecom network should be removed at all costs.

We have seen the benefits of the entry of private players in the Internet

access segment. The same VSNL which, as a monopoly, used to insist of filling up

a large number of forms before providing a connection, is now going door to door

to sell connections. The VSNL’s access charges have more than halved. The

market has exploded with over 1.4 million Internet connections now. In the

heydays of VSNL monopoly, the number of connections remained at an abysmal

40,000 for at least three years, thanks to its inability to service more

customers. This should not be allowed to be repeated at least in the overseas

telecom sector and the best way is to allow unrestricted competition at the

earliest.