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H. Kaushal

THE telecom scene has changed dramatically in India. The pace accelerated in the early 1990s with the introduction of value-added services and the privatisation of telecom services. The resolution of the licence fee tangle gave the sector a push, helping it dramatically cut the waiting list for telephone connections and put value-added services on the path to rapid growth.

Airtime charges, rentals and other cellular phone charges have dropped. The limited mobility offered by WLL was an inhibiting factor for cellular operators but brought in its wake reduced tariffs. The opening up of the National long distance (NLD) and, recently, international long distance (ILD) telephony is picking up.

Things really picked up pace when Bharati Telesonic, an NLD private operator, offered a 20 per cent discount on BSNL's STD rates. The cellular phone operator from where the STD call originated would get 40 per cent of the revenue, Bharati Telesonic 40 per cent and the operator who terminated the call 20 per cent. This was a great change for cellular phone operators, because they were not getting any share of the STD revenue from BSNL. All the cellular operators switched over to Bharati Telesonic. BSNL appeared to have been upstaged, with the user at long last getting some benefit. In fact, much more was in store for the users. Quick to react, BSNL, anxious to maintain its monopoly over NLD traffic, which cross-subsidises local calls and rental charges, halved the STD rates. At long last the monopoly operator seemed to have woken up to tapping volumes. For the user, however, there may be more goodies in store as more players — Reliance and MTNL — enter this Rs 7,000-8,000 crore market. With increasing competition between BSNL and NLD operators, a further lowering of call charges cannot be ruled out.

The picture is, however, different in basic services. Bharati Telesonic has not been able to create interest among private basic telecom operators as BSNL offers a higher share of its revenues. But this may change with BSNL slashing STD rates. As this would affect the cross-subsidy of local call charges and rentals, the latter may have to be raised. This may bring BSNL's tariff close to private operators? Competition will hot up. BSNL will have to offer an efficient service if it is to remain a major player in the market-driven environment.

The dramatic changes in the NLD segment are hopefully a sign of things to come in ILD calls. TRAI had recommended easy conditions for the entry of private operators into ILD service. The Government has accepted these terms without demur and cleared the entry of a number of operators. The expenses of these companies will be minimal, enabling international calls to be offered at low prices. Many estimate that competition could reduce call charges in such lucrative sectors as India and the US by 75 per cent.

Public sector operators as VSNL and BSNL had so far operated in very favourable conditions. But now, real competition has come calling at their doors. The entry of other operators will liven up things further. Will the public sector giants rise to the challenge?

(The author is a former Group Captain, Indian Air Force.)

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