The Hindu Business Line : Take a call on telecom

Speaking at the annual session of the Confederation of Indian Industry on April 18, the Prime Minister, Dr Manmohan Singh, spoke about the impressive developments in the information technology (IT) and telecom sectors.

He outlined the need for getting into the `electronics, IT and telecom hardware industry'. The PM said, "To maintain the vibrancy of the telecom sector, we have set up a Group of Ministers to enable early vacation of spectrum by existing government users. We hope to make this capacity available for commercial use in a time bound manner."

It looks like long ago, but the Indian telecommunications industry was in `a placid backwater' till 1992, reminisces Ashok V. Desai in India's Telecommunications Industry, from Sage (www.indiasage.com). From about 15 million telephone connections in 1998, we had close to a hundred million in 2005. That's equal to nine telephones per 100 persons, or `a telephone for every two households,' explains Desai.

He is, however, aghast that official statistics of teledensity (telephones per head of population) do not say anything about the `skewed distribution'. For instance, "there are almost two phones per household in the privileged towns." Policymakers keep watching naïve indicators, rues the author. Also, "a village telephone is not of much use unless it enables villagers to talk to friends and relatives — mostly people in the same or in neighbouring villages."

Pointing out to barriers erected by various operators, Desai cautions, "our telephone system is in danger of disintegrating into a number of isolated systems with less and less traffic moving between them." Urgent, therefore, to take a call on telecom.

A major hurdle to growth was the last-mile cost. But it got eliminated when large-scale wireless transmission became possible. "The only cost of connecting a cellular subscriber was a part of the cost of the transmission tower that would connect him." Desai speaks about the IT industry transmitting data internationally through satellite networks; "the export of IT data and services from India, which by now exceeds $15 billion, is entirely wireless."

The grim scenario that the book paints is of `the incumbent' threatening to become `a millstone round the Government's neck'. For, the public sector enterprise that enjoyed monopoly for long has been "asking continually to be bailed out and refusing to compete on equal terms." Desai fears that it is more likely that the Government will adapt the regulatory regime to the needs of the incumbent.

Topics such as USO (universal service obligation) fund, subsidy, estimation of revenues, penalties levied and so forth should interest accountants. The book is valuable for the many policy suggestions it offers. For instance, Desai says that licensing should aim at having as many operators as possible, not keep them out. "A technical institution would be better equipped to manage spectrum allocation," notes the author. And functions such as revenue collection and cross subsidiaries "do not require a dedicated Government department," he writes.

Unpalatable ideas for the incumbent, but too important to ignore.

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