 | « Back to article | Print this article |
The wise men who formulated the National Telecom Policy 999 broke the vertically integrated National Telecom Network into three segments, i.e., Access (Fixed and Mobile), National Long Distance and International Long Distance.
Thanks to this pro-competition policy, competitive pressure is quite intense in the access segment (mobile) of the national network.
This has resulted in a dramatic reduction in tariffs and improvement of Quality of Service. However, no such pressure is being felt by the integrated telecom players, i.e., the incumbents, who have succeeded in retaining a virtual monopoly in the long distance market. This is mainly due to non-availability of a facility called 'Equal Access' to the stand-alone NLD operators in the country.
This concept originated in the US in the 1980s, when the nationwide monopoly of AT&T was broken, and the national network which was vertically integrated, segmented into Access and Long Distance, with separate markets.
The dominant operator, i.e. AT&T was not permitting it's customers access to the long distance networks of its competitors, Sprint & MCI. The FCC, the US telecom regulator, had to intervene and force the incumbent (AT&T) to give 'Equal Ease of Access' to the NLD network of its competitors so that they could offer long distance services directly to the customers.
Such a regulatory intervention is overdue in India, so that customers have a choice of the long distance carrier who can offer them the best rates and service . At present, the Unified Access Providers (Fixed/ Mobile), do not give any choice of carriage of national long distance calls to their subscribers.
They carry their long distance calls on their own networks as they are also NLD operators, being integrated players.
In the US, the FCC does not normally permit the Access Providers to become NLD service providers, as integrated players can easily dominate both the markets, and indulge in anti-competitive practices such as excessive pricing and price discrimination.
Equal Access which is based on the provision of Carrier Access Code (CAC) or Carrier Pre Selection (CPS) facilitates the growth of competition in the supply of telecom services by enabling customers to choose their preferred NLD provider.
The Access Provider's license makes it mandatory for them to provide interconnection to NLD service providers in such a manner that their customers could have a free choice, to make long distance calls through a service provider of their choice.
This implies introduction of 'Equal Access' facility in their networks, as part of interconnection arrangements. This important provision of the license agreement has not been implemented as yet by the government.
Carrier selection was implemented in all developed countries about 10 years back. A number of countries like Australia have introduced pre-selection based on a concept called 'balloting'. Balloting enables customers to pre-select the long distance carrier of their choice. The chosen long distance carrier automatically carries their long distance STD calls.
The ballot process was completed in all major Australian cities by the end of 1996. By this process, Optus, a stand-alone NLD operator in Australia was able to attract between 20-25 per cent of the voters. The process allowed Optus to give effective competition to the incumbent, i.e., Telstra. It was able to offer competitive NLD services in terms of tariffs and quality directly to the customers by advertising its rates on TV, as mobile operators do in India.
It has also been introduced in a number of European countries. European Union directive 98/61/PC, by which the European Community amended the Interconnection Directive had made it mandatory for the operators to introduce carrier pre-selection throughout the European Community with effect from January 1, 2000.
Some of the countries which could not implement the directive from January 1, 2000 were pulled up by the European Community. France was one such defaulter.
In December 2005, the governmnet announced major changes in the licensing regime applicable to long distance telecom services. These changes have dramatically lowered entry barriers for new long distance operators.
For example, the entry fee has been reduced from Rs 100 crore (Rs 1 billion) to Rs 2.5 crore (Rs 25 million), net worth requirements were reduced from Rs 2,500 crore (Rs 25 billion) to Rs 2.5 crore, and tough roll-out conditions of the original licensing regime were dispensed with.
Despite these major concessions, the NLD sector has not seen entry of a large number of new operators along the lines of the mobile sector.
The Trai had carried out a consultation on this issue way back in 2001 and had finalized allotment of access codes. However, the incumbent operators have not implemented these codes.
The government has recently taken a bold decision to introduce number portability despite opposition from incumbents. Such a bold decision is also required in the long distance segment for introduction of Equal Access which will be welcomed by the customers and will be in consonance with objectives of the National Telecom Policy.
