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Home > Business > Interviews

The Rediff Interview/Mukund Govind Rajan, President, ABTO

'You need the right combination of tactics and support from USO fund'

December 02, 2005

He has been in the thick of things, formulating strategy for the Tata Group's telecom forays as executive assistant to Ratan Tata.

Part of the hallowed fraternity of Tata Administrative Services, the 37-year-old, soft spoken, Oxford-educated Mukund Govind Rajan has played a crucial role in turning aroundVidesh Sanchar Nigamand getting Tata Teleservices on to its aggressive expansion path as an all-India player (he is director in both).

Rajan, who took over as president of the Association of Basic Telecom Operators last week, in an interview with Surajeet Das Gupta, talks about the future of CDMA, the spectrum controversy and the bitter battle being waged between GSM and CDMA players. <br>Excerpts:

The Government has got a target of 250 million phone lines by 2007. Is this achievable?

I think we can over-aspire. Essentially it is a matter of network reach, handset prices and service. In the network field, you need to have the right combination of tactics and significant support from the USO fund, which can be used to create incentives for faster rollout.

Also, the government needs to reduce the burden of taxation (30 per cent of revenues). Then the industry can grow much faster.

How do you tackle handset prices?

We have set challenges to our suppliers to come up with rural terminals, which will serve these markets and be even cheaper; we need to have handsets within the $15 range if you want to proliferate ownership. We should have an interesting product in the market in the early part of next year.

What kind of support are telcos giving to the $15 phone?

We are putting pressure on component manufacturers and vendors. As the chipset is a large part of the cost, we are in serious discussions with Qualcomm. There are smaller entities like Via Technologies, which can also produce the chipsets.You can strip the phone down down to the bare essentials: what you need is a voice-only offering. You don't
necessarily need to have a display screen at all.

GSM operators have pooled together to ensure large volumes to handset manufacturers and bring down prices. Why is no such effort seen in the CDMA space?

Typically, we haven't done that in CDMA, but there are efforts to get operators to come together to order large volumes. However, my understanding is that beyond a certain point, scale loses meaning for the vendor.

So, for instance, after 2-3 million handsets, the marginal advantage is lost. We (CDMA operators in India) have not sat together; each company has its own strategy, but we don't rule out a possibility of coming together. Different operators are using different platforms.

Are CDMA operators dependent on subsidised phones to get subscribers?

In CDMA, we did not have legacy carriers, a second hand market of handsets, or even people understanding the technology. So willy nilly operators started supplying handsets to customers. We had to give some incentives that became a pronounced subsidy over time.

The good news is that both operators have been able to drive down handset prices from vendors, and there is much more competition amongst handset manufacturers in the CDMA space than in the GSM space today. And
both operators are moving away from the subsidy game.

CDMA operators are fighting a bitter battle with GSM operators on the issue of spectrum. They say you have claimed on affidavit before courts that you are five times more efficient than GSM, so you should be given much less spectrum.

Technology has moved on. For instance, GSM operators like Cingular claim that they are more spectrally efficient than CDMA. I have never heard of any economy or country which says that if you are efficient you should be penalised.

At the end of the day, it should be the operator's choice what he should choose. Tomorrow there might be another technology better than GSM and CDMA. Instead of flogging a dead horse, what we need to look at is what is appropriate for us today in our country.

The statements they (GSM operators) are relying on are dated statements. In 30 odd countries CDMA and GSM coexist and they get the same spectrum.

The Tatas and Reliance have a different approach towards spectrum allocation,diametrically opposed to each other. What is the stand of your association?

AUSPI has conceded that there are different approaches that our members have on spectrum. One member has said we must have a large fee, another has suggested that the fee should be brought to a minimum in order to make services more affordable.

What we are united on is that spectrum should go only to serious players who want to serve the market. No, we have had no consensus on this issue, and leave it to the Government to make a final call.

Do you think 3G will become a mass-market phenomenon in India and we will see a large shift from 2G to 3G?

We have to feel our way. The limiting factor to full-blown 3G will be the terminal handset cost. Currently they cost $350-400.

Dayanidhi Maran has been talking about "India One" or one tariff across India. How do you see this coming along?

We have formally written to the government requesting details of what it would comprise. We don't have the information. At the moment, when you add all the connectivity and other costs up, we are not clear how you will achieve a one India tariff without addressing these issues. Also, local call rates may have to go up.

Most private operators say the market should decide these things, as there is already enough competition. The other alternative is to have a fixed return, like in power. You can have very low tariffs, but if competition goes away you will again have a monopoly, which is not good for customers.

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