Financial Daily from THE HINDU group of publications
Friday, Sep 13, 2002
Tata Teleservices to enter TN market on CDMA platform
Mr R Balachandran
COIMBATORE, Sept. 12
THE telecommunications sector in Tamil Nadu is witnessing a mind-boggling transformation aided by the opening up of the field to the private sector.
What was earlier a monopoly of the State-owned Bharat Sanchar Nigam Ltd (BSNL) has become an open field now with the entry of three private players. Already, Bharti Telenet Ltd, belonging to the Bharti group, has launched its basic telephone services in parts of Tamil Nadu.
Now Tata Teleservices Ltd (TTL), belonging to the Tata group, is expected to launch its basic telephone service in the State in about eight weeks.
What is of significance is that Tata Teleservices would be adopting the Code Division Multiple Access (CDMA) technology in providing limited mobility, which to some extent may have an impact on the mobile telephony in view of the low call charges and the convenience it provides. In an interview to Business Line, Mr R. Balachandran, Chief Operating Officer (COO),Tata Teleservices, Chennai, discusses the business plans of his company and the way it seeks to re-define basic telephony in the State.
There is lot of expectation about the launch of your telephone service since you would be bringing in CDMA technology here. Can you outline its basic features?
We are in basic telephone services in Andhra Pradesh for sometime and we have been quite successful there. Through the AP operations, we achieved a number of firsts in the industry in the country. We were the first to introduce the Code Division Multiple Access (CDMA) technology in the country and we were also the first to introduce commercially the limited mobility service in that State. WLL (Wireless in Local Loop) sometimes is a misnomer but is commonly associated with limited mobility.
WLL covers a whole spectrum of technologies. However, WLL has tended to be more associated with limited mobility. Internationally, many technologies are available and CDMA is one of the most well-known and fastest growing technologies. In WLL, the last mile connectivity to the customer is through wireless. Limited mobility is one of the applications. With CDMA one could give both mobility as well as fixed lines. I will amplify how we are doing it.
The limited mobility part is actually a mobile phone. By regulation, not by technology, the limited mobility is restricted to Short Distance Charging Area (SDCA). The Department of Telecommunications (DoT), which is the licensor, has defined 130 SDCAs in Tamil Nadu. As an operator, Tata Teleservices has an obligation to cover all SDCAs in the State over a specified period. Under the limited mobility concept, the mobile phone of the subscriber would be operational within the limits of the concerned SDCA. By regulatory conditions, the same mobile phone could not be used in other SDCAs.
What can be advantage of this facility, which is restrictive?
There is no concept of roaming as in mobile telephony. The benefits of limited mobility are many. Since there is no concept of airtime, it is very affordable. The only charges are the monthly rental and the charge for the outgoing calls, which is Rs 1.20 per three minutes and no incoming call charges. It is literally like carrying your home phone in your pocket.
With the reduction in monthly rental to Rs 200 now, the affordability has even grown further. If one assumed that the working time of a person is within the SDCA area, then with low rental, no airtime, affordable call charges and incoming calls being free, the whole affordability paradigm changes and, therefore, we see that the impact on expanding the market will be very big. It has lowered the affordability barrier. This makes the technology relevant not only in metros but in cities like Coimbatore and medium size towns too. Mobile phone is of great value to those who are on the move constantly. But most of the people spend time within the city. For them, this is a new value proposition.
What are the other services you plan to offer through CDMA?
Through CDMA we will offer fixed wireless. While the customer would have a fixed phone on his premises, he would be connected to the exchange through wireless instead of through cables.
In all other respects, it would be a land line. As of today, it is mainly meant for voice applications. Over a period of time we would be enhancing data capabilities also. Primarily, the Indian mass market is mainly a voice market. Our system would fulfil that need.
However, we intend to provide cable linkages to higher bandwidth, data, corporate customers though there are wireless products for them also. But the initial product that we would be coming out with in the next seven or eight weeks would be limited mobility and fixed wireless.
The critical benefit of fixed wireless is the speed at which it could be installed.
Limited mobility will appeal across all categories of people.
What is the geographical limit up to which this would work?
In different SDCAs, it is different. For instance, the entire Greater Chennai is one SDCA up to Muttukadu, Tambaram, Porur, Manali in different directions. In Coimbatore, it is up to Perianaickenpalayam on Mettupalayam road, Sulur on Tiruchi road, up to Madukkarai on Palakkad road etc. It is roughly 20 km radius in the case of Coimbatore.
While we are building CDMA network in key areas of the State, we are also examining other technologies for coverage of smaller towns. Our belief is that one should first decide what services to provide before zeroing in on the technology to provide that.
What would be the cost of the handsets?
Initially, the cost of the handsets would be around Rs 7,000. But once volume picks up, the price would crash as it happened in the case of cellular phone handsets.
With the low airtime rates for mobile telephony, are you confident of competing with cell phone operators?
In the case of cell phones, there is a fixed cost (monthly rental) of around Rs 500-600, whereas in our case it would be only Rs 200. There is no airtime involved and there is only one cost for a three minute call unlike in cell phones where call to BSNL phones are charged extra, in addition to cell phone airtime. Hence the real cost is high. However, in our case, a call from our phone to a BSNL local phone would cost only Rs 1.20 per three minutes.
What is the total investment you have made so far in Tamil Nadu and how much you intend to invest in your projects in the State?
In a matter of five years, Tata Teleservices would be investing about Rs 1,000 crore. Of this, about 25 per cent-27 per cent would be invested by March 2003 itself. Bulk of the total investment would be incurred in the first three years since telecom investment is front-ended as infrastructure has to be created in the early stage itself.
How many cities would you be covering by March 2003?
By that time, we would cover at least six cities in Tamil Nadu, including Chennai and Coimbatore. By the middle of 2003, we will have our presence in about 25 towns/cities.
There are concerns from mobile phone operators that limited mobility would impact their business. There is also a view that on quality parameters, wired phone facility is better than CDMA technology? Please comment.
I would not comment on the corporate aspect of the first question. The customers in India are capable of making a choice, which is correct for them. Roaming has its own benefits, but those who do not need it would look for other options.
As for CDMA vis-à-vis wired technology, CDMA is only one of the wireless technologies available. It will drive a major part of our requirements. CDMA has mobility as well as fixed parts. The reason for choosing CDMA is that it has `very strong growth potential' in terms of ability to deliver data over a period of time, whether mobile data or data on a fixed line.
Wired line has certain quality level as do wireless. But at the end of the day, quality is always related to price, in any field, not merely in telecom. We are a full service telecom company. We will be in different forms of technology and we will take that technology to the customer, which satisfies the needs of the customer at the price level that is appropriate.
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