The Hindu Business Line : The India connection

AT&T's brand was once again visible in the Indian media after it got its International Long Distance (ILD) and the National Long Distance (NLD) licences. However, Sanjiv Bhagat, MD & CEO, AT&T Global Network Services India, is at pains to explain that AT&T `never went away from India'.

"It entered the country in 1998 with pure bandwidth services. In 2000, we started managed services with VSNL and have continued until now. Towards the end of last calendar, AT&T was enthused by the Government's policy decision to allow foreign entities to hold up to 74 per cent (up from 49 per cent) in telecom operations. We thought it is time now to get into India directly." Excerpts from the conversation eWorld had with Bhagat:

Historically, AT&T has not been happy with the Indian ILD and NLD policy. What has changed now?

Obviously FDI - that gives us an opportunity to have majority stake in a company and offer services through that. That became very attractive for us.

We have always been here. AT&T Wireless had a joint venture (JV) with Birla now called Idea. Actually, AT&T Wireless was spun off as a separate company. Even then, it was not part of AT&T. AT&T allowed it to use the brand name for some time. Later, it was changed to Cingular.

We are still here offering our services. We basically provide data network services.

When we started, we did so with Frame Relay and then went to ATM (Asynchronous Transfer Mode) services. And now we do it with MPLS. We offer IP/VPN services to offer voice data and video - offer a converged network using MPLS technology. So we never left India. That was only a perception.

However, we are not in a consumer market in India. Outside the US, we never have been.

The thing to keep in mind is whom we are trying to sell to. Our target market is global MNCs. We are not trying to sell to the Indian national customer. We can't be competitive there and that's not what AT&T wants to accomplish.

What we do is serve the biggest customers in the world everywhere they go in the world and more and more where they are going is India.

We have been servicing a large MNC in finance and credit cards for the last 20 years. In the last 6-7 years, they have moved BPO and software to India.

Likewise, all big customers need a single global provider wherever they are going.

It's not a matter of just landing here with one or two locations but building up pretty significantly. Our target customers are growing significantly here in India.

In addition, the Indian MNCs, such as the top five IT software services companies, are building business processes and selling them and competing globally. They too have needs in the US/Europe/Latin America, so they would need the same services as our American customers with Indian operations.

We are uniquely positioned to serve them since our network is global and of world-class quality.

We are not everywhere they want us to be but we are getting there.

But aren't you interested in Indian national companies across India? Isn't the geographic size good enough or is it too much too soon?

We have to take a really long view of that. India is such a big country and there are so many national businesses. It would be naïve to think that we could land in here and compete in the Indian national market. That's not something we could do profitably. To do that successfully we would need a large retail sales organisation - we need switches and networks. We are not selling just a box - we have to have infrastructure. We have that globally.

We can do that successfully when we target global customers and do it where they are. But to go into every village and every town just doesn't make sense.

What about the infrastructure you need to have for the NLD licence now that you have one?

We don't plan to offer domestic services. The main reason for the NLD licence is, when we have international customers requiring a global network, they also need a domestic network.

And, they don't want to speak to multiple service providers. We provide domestic services too to them. We will not be providing standalone domestic services to a client who is not an international customer.

We are in four cities and will be in the fifth in January. Between 85 and 90 per cent of revenues comes from those cities.

We need to get to customers from those places but are not interested in building for every national client's need.

Any big change in the policy, other than FDI changes, that interested you?

The other thing is the market is growing. The ITES/BPO and financial segments have seen phenomenal growth. By taking the licence ourselves, we'd be more flexible and be able to provide the same quality of service we provide anywhere in the world.

Would you be able to dwell on your performance in terms of units of measurement, such as millions of voice minutes... ?

When we talk of enterprise customers, there is no question of voice minutes. But we have four nodes now and a fifth is being built in Hyderabad. We will continue evaluating options. We will invest in real estate, set of equipment, bandwidth or IPLCs connecting various countries in mesh format. If a customer wants MPLS service, I take local access from this node to the customer where I put in equipment.

Nodes are scaleable. They are always changing. If I talk of X capacity now, a month later, it would be different.

There could be other needs in future. We could also see the need to go to smaller centres such as Pondicherry. The question there would be whether we would set up our own node or partner an MPLS provider and have a network-to-network interconnection. Immediately, we would be able to reach 50 or 100. It's on our mind. We would decide on this next year.

You talk about existing customers. Are they from your VSNL relationship or... ?

The services they continue buying from us are data networking services that we provide - with a variety of technologies.

The kinds of requirements customers have would drive us to build services on top of our network. The business model we have been providing in India was through VSNL - customers signed contracts with us and then with VSNL. They looked for us to do global servicing of that network and we work with VSNL to service it here. Although it worked fine and is a good relationship we would much prefer to do it on our own.

It allows us to do it quicker and contract and negotiate directly with customer if they want a feature or function added. We don't need VSNL's permission to do it in India.

When the carrier code regime comes in, would that be a brand building opportunity for AT&T, along with widespread domestic services?

All that depends on AT&T's policy - we don't want to get into a consumer business outside of the US. We have a strong brand in the US. The consumer market is so much about branding and bundling services. In the US, we have traditional markets and wireless services, Net access services, and more and more new tech — IPTV services, television, over broadband access and where we really see those markets going is having those multiple services and bundling them together to be successful. So I wouldn't anticipate in the near term at all, looking and deploying that outside the US.

Despite the numbers of subscribers in India and China? You have nearly a 60 per cent shareholding in Cingular. Yet, you aren't that strong in India or China.

That'll change down the road. Particularly in the wireless area. Customers are looking for wireless access to our global network. So that's something we work with a variety of providers to be able to offer that. There really is no plan on the consumer side - but that could change, as a matter of policy.

bharatk@thehindu.co.in

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