Home > Business > Columnists > Guest Column > Saurabh Sharma
A Marie Antoinette telecom policy
January 28, 2003
Queen Marie Antoinette has an unlikely kindred soul in India in the form of the Telecom Regulatory Authority of India chairman M S Verma.
The people are crying for cheap and affordable local telecom; he has said, "Eat cake — go mobile."
The larger role played by his consort, Pramod Mahajan, also deserves to be singled out. His subjects want cheap and affordable telephone services. He goes mobile on 15-day tours abroad to study parliamentary systems as telephone subscribers burn with rage in the country.
Competition is a mantra that reduces prices for consumers and increases the quality of the product for the consumer. With the able guidance of Verma and Mahajan, we are neither witnessing lower prices nor improved product quality.
Ninety-five per cent of the telephone subscribers use regular BSNL (Bharat Sanchar Nigam Ltd) phones. It is only when the costs of these services are reduced by 50 per cent from pre-competition levels, can we say that we have free and fair competition.
In contrast, it appears that the jackal is guarding the coop and leading the chicken to slaughter whenever he opens the gate.
Trai is acting against the best interests of the consumers. Reliance wanted to offer 800 minutes of telephone time free in their monthly rental plan. Verma reduced it to 400 minutes. Can this be legally challenged? If a company is offering lower costs to consumers, can Trai disallow this? Why? Therein lies a tale. A tale of making bread costlier so that a cake appears affordable -- go mobile.
A telecom-starved populace needs cheap and affordable telecom. They would expect Trai to mandate a reduction of monthly rentals from Rs 300 a month to Rs 150 a month within a year. Pulse rates for local calls are a curse. There should be no pulse rates. A genuine local call would have a pulse rate of eight to ten minutes during the day and no pulse rate at night after 9 pm. Why can't Trai mandate this?
The reduction in STD rates was dramatic, from Rs 24 a minute to Rs 9 a minute. Why can local calls not come down in the same proportion? Reliance Infocomm has already demolished the myth that local calls have to be priced higher than STD calls.
Free local calls (unlimited) within a radius of 16 to 30 km for the price of their monthly rental are the norm for consumers in US. Verma and his consort, after many trips to the US, choose to ignore this reality. To add insult to injury, they are raising prices after making these trips on taxpayers' money.
Marie Antoinette, aka M S Verma, insists we choose cake -- by making bread costlier. Go mobile is the mantra and Verma seems to be really going places in the company of private sector telecom providers.
Reliance Infocomm was brave enough to offer affordable telecom in the country. Look at the margins available. At Rs 1.20 for a three-minute STD call in the country Reliance Infocomm has boldly announced that they expect to declare a dividend in the first full year of operation.
Most projects break even and give a dividend in the third or fifth year of operation.
Reliance can reduce charges by a third or fifth, say, 40 paise for three minutes or 24 paise for three minutes. These humungous profit margins are glaringly obvious to all. Reliance also demonstrated that a local call can be priced the same as an STD call. And yet the price of a local call is being raised. Whose margins are you protecting? Do you have any duty to telecom consumers in this country?
Pramod Mahajan as Louis the XVI is even more benign given the wide discretionary powers at his disposal. His decision to ask BSNL to take on the obligation of private players to lay phones in rural areas is a slap in the face of the telecom consumer and taxpayer. Not only are tariffs being raised to help the private telecom companies, their obligations too are being paid for by the taxpayer.
The mobile operators to date have behaved like a cartel. Many would say they are a cartel. Witness the huge tamasha to announce a common rate of Rs 2.99 a minute for mobile-to-mobile STD calls. How can eight companies in the private sector announce a common rate for a commodity and not be charged for behaving like a cartel? The rapacious nature of mobile companies and their collusion to charge the consumer high rates is evident in their pricing in the last five years.
Why can they not introduce a one-second billing pulse? Why is, say, 400 minutes of mobile-to-mobile airtime within the local calling circle not free in the rental plan? Why has Mahajan not investigated this? He was actually chief guest of the TV tamasha that took place. Is the Union minister aiding and abetting a cartel? Should he resign?
Collusion between the private sector players and regulators is not new. Proposition 103 in California was a public initiative to have cheaper and affordable car insurance. It got massive support. The then insurance commissioner in California looked very bad indeed. While we do not have provisions for citizen's initiatives to be voted on we need a process to swiftly allow for a review of the ruling of a regulatory body like Trai.
Verma is looking very bad -- a moribund Congress has not seized the initiative, nor for that matter a BJP going into elections.
Competition in the private sector is our stated economic policy. Raising basic telephone tariffs in the absence of rising costs is scandalous. Pricing has to appear logical and fair. Verma and Mahajan have given us a warning that free and fair competition has not yet reached us. Once again for the consumers it is a case of MTNL (Mahanagar Telephone Nigam Ltd) -- mera telephone nahin laga!