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Home > Business > Columnists > Guest Column > Saurabh Sharma

Consumer pays the price

March 20, 2003

The consumer is being taken for a ride. He has been told by the Telecom Regulatory Authority of India that his local call can last a world record 90 seconds. Funny.

Further bad news is that no review of this scandalous decision is likely to take place.

Telecom Minister Arun Shourie has also commented on predatory pricing by some telecom companies. To complete the ride of the telephone consumer, Arun Shourie has gravely spoken of the consumer's 'learning to pay real charges for services.'

Mr Shourie's views need to be addressed first. It is the taxpayer's money that has gone towards creating BSNL and MTNL.

Further, even at today's rates, both BSNL and MTNL make profits. What on earth is he then talking about, when he is referring to 'real charges?' There is profit in the system, for God's sake.

Assuming for a moment, that a subsidy element is present in the income structure of BSNL and MTNL, surely it is I, the taxpayer, giving this money back to myself.

Why should Shourie raise objections to this? If there is a threat to future profitability, improving operational efficiency should be the first option that Mr Shourie must explore instead of asking for an increase in tariffs?

Paying real charges is something the Indian consumer is happy to do. In many states farmers happily pay a 'reasonable' tariff for power even though they have seen earlier days when power was free.

There is no discontent whatsoever.

The urban consumer routinely pays higher tariffs for electricity and power every two or three years. I can only say that it is ingrained in the Indian psyche to pay for what one gets.

Where has Mr Shourie got the idea, that a fairly priced, high quality service is anathema to the Indian consumer?

Fairly priced and high quality service is the conundrum in the above equation. Both MTNL and BSNL are overstaffed.

No, Mr Shourie, it is not I the taxpayer who must end up paying their salaries. The excess staff should be absorbed in areas where they can be put to productive use. If this is done, costs will come down, tariffs will fall and you will have done your bit.

High quality services in the country are a rare treat. If the quality of service improves, Mr Shourie's demand most certainly becomes weighty, though it is a separate matter altogether whether having acceptable levels of service mandates higher tariffs.

Outgoing Trai chairman, M S Verma had raised the basic telecom tariff by a whopping 100  per cent by way of a reduced pulse rate.

Push in an increase in rentals and a decrease in free calls and the Verma logic needs Vedic mathematics! A fair shot would be to say that he has hiked tariffs by 200 per cent. Inflation in India is tamed, interest rates are falling and onion-pricing-Verma by some strange logic has raised prices without raising the cost of inputs! Are we consumers so gullible?

It is important that the consumer has a say in tariffs that are being fixed. Telephone companies are an organised and aggressive group and so it is not impossible on their part to influence the Trai and rake in huge profits.

But what about the poor consumer? He is not organised and has no say. Even this columnist was not spared.

Arun Shourie needs to introduce a major reform and allow consumers to vote on proposed tariffs.

I have already mentioned that consumers are willing to accept tariff hikes in exchange for quality and services.

Reliance has harnessed economies of scale and is able to pass on the benefit of low pricing to its consumers. This pricing is termed predatory by both Mr Verma and Mr Shourie.

By what yardstick have they come to this conclusion? Under the aegis of which law do they speak? The Competition Law is yet to be notified.

Has Mr Shourie done his homework to find out whether there is room for another company with the same economies of scale?

While Arun Shourie and M S Verma appear unreasonably confident of their claims, is the  consumer not entitled to an opinion?

To the consumer these are heroic prices. He yearns to know why other companies cannot offer this cost structure in basic telecommunications?

He will cheerfully ask the minister to dump the other service providers and allow only Reliance to operate. Is this, therefore, a predatory demand?

Unfortunately, our heroes become zeroes in the high stakes games for humongous profits. Their sole function is to add zeroes to the balance sheets of uncompetitive telecommunication companies.

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