Commentary/Yazad Darasha

Disconnected Priorities

Viva VSNL! MTNL zindabad! DoT aage badho!

Our telecommunications ministry is showing the world how it should be done. And it is leading by example.

The Videsh Sanchar Nigam Limited has decided that it cannot match its supply with demand where Internet connectivity is concerned. Its answer? Simple: reduce demand by increasing prices. After all, VSNL is a public sector undertaking, and the government always knows best, n'est ce pas? After all, too many people with access to the Internet is not good for the country, no? It might put some strangely subversive global ideas into too many heads -- ideas like customer service.

So VSNL is flying in the face of public opinion (at least the minuscule Internet-using public's opinion), thumbing its nose at market forces, giving the finger to business expansion norms, blowing a raspberry at the worlwide trend -- and raising instead of lowering the costs of connectivity.

In the meantime, the Mahanagar Telephone Nigam Limited has decided that too many people are making domestic long distance calls. These thoughtless, anti-national cochons are putting too much load on the existing infrastructure. The answer is to push the discounted rate times further into the wee hours of the night.

That way, the truly perverse can stay awake late to make their long-distance calls. Which in turn will leave the high-cost peak times freer for all right-thinking patriots who believe that filling the MTNL's coffers is a nationalistic thing to do.

And finally, the mother of all telephone scams (move over, Sukh Ram, this is not about filling personal pockets, it is about emptying corporate ones). The Department of Telecommunications -- the parent body that oversees all lack of development in the sector in India -- has burnt some midnight oil and come up with a gem of a plan.

The DoT has decided that it is not getting enough of the mobile telephony pie from all those grasping, greedy multinationals who dare to provide a viable alternative to the collapsing telecom structure in India. So it has proposed that every call made from a fixed telephone to a cellular telephone will be charged at a rate almost ten times that of a call made from a fixed to another fixed telephone. The result? Again, a falling off in the rate of calls made to a cellular phone, putting pressure on the cellular operators' bottom lines while padding MTNL's.

This is really a classic scam. Hats off to the DoT for thinking it up. Consider the background. In the United States, each cellular subscriber pays for incoming as well as outgoing calls, while calls from fixed to cellular phones are charged as local calls. This is the way it has been so far in India as well. In Europe, the cellular subscriber's incoming calls are free, while calls from fixed to cellular phones are at a premium.

The DoT now wants the cellular subscriber to pay for incoming as well as outgoing calls, and it wants the fixed line subscriber to pay a premium for calls to a cellular phone! Clever, isn't it? Skim the icing from each system and integrate it into your own. This is true liberalisation! It is liberalisation from the earthly bonds of logic as well as from all quaint and antediluvian notions of fair play.

There are three major players in the Indian telecommunications firmament. All three do India proud by consistently upholding the Indian tradition of shafting the consumer. VSNL and MTNL both feel that the best way to ease the load on existing infrastructure is not to upgrade it, but to decrease the number of its customers. And if, in the process, there is a bit of swelling of the corporation's bottom line, well, all the better!

This is the same VSNL that wants to push through a Global Depository Receipt offering -- for the fourth (or is it the fifth? I'm afraid one has lost count) time. Three (or four) times the GDR has been cancelled because VSNL has not been able to get the price it wanted for its shares. And again -- for the fourth or fifth time -- VSNL has announced that it will do the GDR in March 1997. And again, the pricing is a problem.

Perhaps it is hard for VSNL to swallow the notion that not every investor on this planet is an Indian -- willing to believe everything that the government and its corporations put about. Perhaps it is hard for VSNL to swallow the idea that not all telecom corporations worldwide are monopolies like itself and that a monopoly today is not necessarily the best investment for tomorrow in this age of lightning change.

Will VSNL actually do a GDR? I doubt VSNL itself cares. After all, there is going to be increased income from its activity as the sole Internet Service Provider in India, if it manages to push the increased tariffs down the browser's throat!

Talking about globalisation and monopolies, in the same breath as it were, brings up the telecom pact recently signed by 68 countries, including India. The pact is effective January 1, 1998 and stipulates that monopolies in the sector will be opened up to global competition, according to the commitments made to the World Trade Organisation.

India has not only refused to give up its public sector monopoly on long-distance calls, but has also given itself room to roll back the maximum foreign equity stake in telecom companies from 49 to 25 per cent! Perhaps the Indian telecom sector -- dominated as it is by the public sector monoliths -- is determined to prove that it can buck world trends by actually moving back into the prehistoric ages.

India has said that it will review its domestic long distance monopoly only in 1999 and the international one in 2004. This means that the inflow of higher and higher technology will remain a dream. This means that no foreign investor in the sector -- up to 25 per cent or otherwise -- can be sure of any modicum of continuity in policy, and may decide he is better off watching the circus from afar without getting his fingers burnt. This means that the unwritten promise made to global investors when VSNL first tried to do its GDR -- that VSNL's monopoly will continue for ten years at least, till 2004 -- seems set to become the official policy on the subject.

Finally, this means that India will remain in the dark ages where telecommunications are concerned. Every step taken forward will be rolled back two. Did someone mention a desperate, desperate need for infrastructure upgradation? Strange, I'm sure I heard something like that. Must have been a crossed connection.

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