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Varadharajan Sridhar

CELLONE, the cellular service of BSNL, was inaugurated recently amidst lot of fanfare. The service was expected to be launched nationwide in about 350 cities and towns, covering first all State capitals, by October 2. However, there has been a delay and now it is slated to be launched on October 19. But until recently not even the General Managers in different circles had a clue as to when the service would be launched. If and when it becomes operational, it is expected that BSNL will aggressively price its services to the discomfiture of incumbent operators.

BSNL has an advantage in that it does have to pay the 8-12 per cent revenue share that other private operators do to the government as licence fees. Being the dominant basic telecom operator, with landline entry in to over 35 million homes and the largest national long distance operator, it does not have to pay the large share of the revenue as interconnect charges for routing the landline calls and STD calls.

The Department of Telecommunication is even considering granting International Long Distance (ILD) licence to BSNL which will allow BSNL to cut down even on the ILD interconnect charges. These provide BSNL major advantages to BSNL over its competitors on the price front. But is it only pricing that matters?

It is true that in a price sensitive market as India, low price is definitely one of the major parameters that customers look for from the service providers. However, experience shows that other factors such as the quality of network service, customer relationship management, flexibility and service packages also matter. When MTNL launched its Dolphin service in Delhi, many who subscribed to the service soon became disgruntled because of the frequent disconnect, and the poor network service quality.

BSNL has an unenviable history of faults in network and service. Number of faults per 100 main lines per year in BSNL's local landline network is more than 150 compared to the world average of 25. It is even greater that the average number of faults of about 140 observed in low- income countries. Such a network service is not acceptable in a competitive market.

Further, BSNL, as an organisation, has to become more customer friendly. More than three lakh BSNL employees at various operating, supporting and management levels have to reorient themselves to improve their relationship with customers.

Gone are the days when users have no alternative but to heed to the erstwhile monopoly. Even in basic telecom operation, private operators have already started rolling out competitive services in many circles and metros. BSNL has to improve customer service and support to avoid churn of their customers.

BSNL also should seek ways to promote and educate the subscribers of its brands and services. The Communications Minister, Mr Pramod Mahajan's idea of tying up with Department of Post, with postmen providing mobile PCO services in villages is a novel idea.

In an oligopoly market, variety of service offerings, especially value-added service can be another way by which the service providers can differentiate themselves from the competitors.

With so many different packages available from incumbent cellular operators for pre- and post-paid services, BSNL has to follow suit. BSNL's recent announcement of flexible pricing scheme for basic services, aimed at encouraging customers to pay promptly so that it can reduce the huge collectibles is a step in the right direction.

With fixed assets valued at over Rs. 600 billion, there is no doubt that BSNL is a force to contend with. Its assets in basic telecom, cellular mobile, national long distance, and Internet infrastructure can be leveraged to provide stiff competition to every operator in each of these segments.

However, the regulator and the government should ensure that the incumbent strength does not give BSNL an unfair advantage. Reimbursing the third operator cellular licence fees by the government has given BSNL a definite advantage on the price front.

Problem faced by Bharti for the mobile to land line inter-connectivity with BSNL in Gujarat is another example where the incumbent can use its power to bully the other service providers.

The DoT allotted mobile numbers starting with 94 giving CellOne a unique identity. This has become a bone of contention for the private cellular operators who point out that this numbering scheme will be a USP for BSNL.

Be that as it may, the management of BSNL should wake up to the harsh reality of a competitive market and react accordingly in all the above mentioned areas. Can the big elephant dance to the tunes of the competitive world?

(The author is Associate Professor, Information Technology and Systems Group, IIM-Lucknow.)

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