The Hindu : Ringing several messages

Online edition of India's National Newspaper
Tuesday, Dec 31, 2002

Opinion

Opinion - Editorials

Ringing several messages

THE HIGH-PROFILE ENTRY of the Reliance group into the telecommunications business sends out several messages simultaneously. In keeping with the group's proven ability to think big, its forays into the telecom sector are on a truly grand scale. For instance, it has been announced that the group aims to provide connectivity to 90 per cent of the population in the foreseeable future, using a 35,000-km newly laid fibre optic cable network to transmit voice, data and pictures. A project like that with a proven financial and managerial commitment to back it will obviously impact on key issues that go well beyond its commercial significance. While the exact implications will take some more time to be understood, it is already evident that last Friday's launch of telecommunication services by the Reliance group seems to be one of those key moments, not just in telecom or in the related information technology but in wooing the mass of Indian consumers in a few novel ways. Pitching for affordability as the key plank in its marketing strategy, the group promises to deliver telecom services at a very low cost to the consumer. It has been claimed that under certain conditions a call through the new network will cost less than a postcard. There will be very significant sociological and economic consequences flowing from the success of such a marketing strategy. However, there have been a few controversies that will have to be ironed out.

Even before its launch, the Reliance initiative had stretched the limits of telecom regulation in India. In the days to come, the regulators will have to decide quickly on several contentious issues. Reliance's competitors — both the private sector cellular operators and the state-owned BSNL and MTNL — will have to respond to the new challenge. Finally, there are aspects of the technology — the newer CDMA technology that Reliance is using and the GSM technology used by most of the cellular operators — that will have to be adjudicated upon by the market place and in a sense by the regulators as well.

In fact, on the last point, the controversy has been so intense and the issues involved so complicated that even the Supreme Court recently asked the telecom appellate authority, the Telecom Dispute Settlement and Appellate Tribunal (TDSAT), to re-examine the entire matter. The crux of the controversy has to do with the onset in India of what is called Wireless in Local Loop (WLL) service, through which basic telephone operators provide limited mobility to their consumers. Reliance and the Tatas are the most prominent of those basic telephone operators using the CDMA platform, but the public sector companies, BSNL and MTNL, have already rolled out their version of WLL. The cellular operators who have all opted for the rival GSM technology fear that the new players, especially Reliance, in the guise of launching WLL, will make a backdoor entry into their business and reap an unfair advantage by not having to pay the hefty licence fees and meet other entry norms stipulated. A related controversy has to do with the inability to settle commercial issues such as providing interconnect services with one another. It is expected that the regulatory ruling will capture the rapid technological changes and provide an amicable solution to all types of telephone service providers as well as the Government and the telephone users. What is certain, however, is the advent of fierce competition in the telecom business. Even before Reliance's entry other segments such as international long distance telephony and national long distance telephony have, consequent on their being opened up, seen a drastic drop in the tariff chargeable to their consumers. The cellular telephone lobby, now threatened by Reliance's strategy, has already witnessed a spate of consolidation among the operators. Barring a few, others are reportedly in dire financial straits. They have been looking to the Government to change the policy to suit them. It is highly unlikely that the telephone business in India can be bottled up by any type of unrealistic regulation. It is hoped that the Indian consumers who are about to reap an unprecedented bonanza will continue to enjoy a real choice, which is what competition is all about.

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