Would Touch tel open its local loop for other ISPs in broadband?
FYI, They are ready to.. Them having very few lines is another point, but if BSNL will, they will. That's where regulation comes to play.

As for TRAI,there are several issues that need to be clarified.However,I shall restrict myself only to the recent ruling of TDSAT that usurped the jurisdiction of TRAI over the dispute arbritration.TRAI unfortunately has been reduced to noneity.Infact ocassionaly they mange to awaken themselves from intellectual rigor mortis and say something sensible.The last word on the same was on the broadband policy(which got rejected in toto)This reflects the true extent of TRAIs power anyway in the corridors of decision making.
Agreed. I meant the same thing by suggesting that BSNL and DoT must not protect each other.

At the risk of repition,infrastructure funds would flow only when there is clear regulatory regime.Hence provide the invstors a bang for their buck.
Again at the risk of repetition, I fail to understand... How exactly does regulatory regime from TRAI ensure infrastructure funds?

There was no provision for Reliances fixed operator licence. Not true.. WLL is a fixed license operators service. That is why CDMA operators only have wireless phones (with landline rates). All CDMA operators are free to provide this service, not just Reliance. FYI, BSNL has it too. How Reliance escapes fines though is a matter for discussion. ;-)

TRAI indeed has no role(I believe) in the manner in which the telecom companies raise funds.However,last year most of companies fell short of the quality of infrastructure in most of the circles�you AirTel and Hutch included.Reliance had just started its services then. Which means they must improve.. What do you feel TRAI should do about this? Ban operators who don't come up to these benchmarks?

Predatory pricing is again a fallacy.If acquiring the customers is one issue,then by hook or crook they mange to get it anyway.
How exactly will they acquire these customers?

If Tatas have launched in Punjab,they offered free calls to Tata phones till April.Free Internet access with Free data cable till Feb end.However,thats just the introductory offer.Is that not predatory to existing Reliances customers?Every operator indulges in the same.Perhpas their PTT which is very cheap at Rs.99/- per month.Is that not predatory?
These are temporary offers to penetrate a new market. If these were permanent, giving existing customers a reason to permanently shift; then it would be predatory.
PTT is a non real time point to point messaging service. It basically uses the infra of WAP (also offered at 99/- by most operators). The receiving party must support the same to, it does not (in the present implementation offered by operators) allow messages to landlines and mobiles as a phone call. A VERY important difference. It is essentially a repackaged MMS, to put it very crudely. Does that mean operators should not provide internet messaging, WAP, internet access without an ISP license? Or news videos without a TV license? Texts without a postal license??? Services are converging and that is why the unified license has come about. It must of course keep up with increasing convergence. TRAI has announced the same. Whether it will come through (read BSNL) is another matter.

This is the reason that the prepaid segment is larger than the post paid.Scale up customers,give money upfront and then forget about them.
So simple according to you, isn't it? ;-) If one operator offers these services to the volume segment (prepaid), it would become a monopoly in no time wouldn't it? I wonder why not even one operator (at least the struggling ones!) in India has figured this one out yet. Please tell me why it hasn't happened. And how you think at least one operator can be made to do it. Don't just tell that it should.

Would Touch tel open its local loop for other ISPs in broadband?
FYI, They are ready to.. Them having very few lines is another point, but if BSNL will, they will. That's where regulation comes to play.

As for TRAI,there are several issues that need to be clarified.However,I shall restrict myself only to the recent ruling of TDSAT that usurped the jurisdiction of TRAI over the dispute arbritration.TRAI unfortunately has been reduced to noneity.Infact ocassionaly they mange to awaken themselves from intellectual rigor mortis and say something sensible.The last word on the same was on the broadband policy(which got rejected in toto)This reflects the true extent of TRAIs power anyway in the corridors of decision making.
Agreed. I meant the same thing by suggesting that BSNL and DoT must not protect each other.

At the risk of repition,infrastructure funds would flow only when there is clear regulatory regime.Hence provide the invstors a bang for their buck.
Again at the risk of repetition, I fail to understand... How exactly does regulatory regime from TRAI ensure infrastructure funds?

There was no provision for Reliances fixed operator licence. Not true.. WLL is a fixed license operators service. That is why CDMA operators only have wireless phones (with landline rates). All CDMA operators are free to provide this service, not just Reliance. FYI, BSNL has it too. How Reliance escapes fines though is a matter for discussion. ;-)

TRAI indeed has no role(I believe) in the manner in which the telecom companies raise funds.However,last year most of companies fell short of the quality of infrastructure in most of the circles�you AirTel and Hutch included.Reliance had just started its services then. Which means they must improve.. What do you feel TRAI should do about this? Ban operators who don't come up to these benchmarks?

Predatory pricing is again a fallacy.If acquiring the customers is one issue,then by hook or crook they mange to get it anyway.
How exactly will they acquire these customers?

If Tatas have launched in Punjab,they offered free calls to Tata phones till April.Free Internet access with Free data cable till Feb end.However,thats just the introductory offer.Is that not predatory to existing Reliances customers?Every operator indulges in the same.Perhpas their PTT which is very cheap at Rs.99/- per month.Is that not predatory?
These are temporary offers to penetrate a new market. If these were permanent, giving existing customers a reason to permanently shift; then it would be predatory.
PTT is a non real time point to point messaging service. It basically uses the infra of WAP (also offered at 99/- by most operators). The receiving party must support the same to, it does not (in the present implementation offered by operators) allow messages to landlines and mobiles as a phone call. A VERY important difference. It is essentially a repackaged MMS, to put it very crudely. Does that mean operators should not provide internet messaging, WAP, internet access without an ISP license? Or news videos without a TV license? Texts without a postal license??? Services are converging and that is why the unified license has come about. It must of course keep up with increasing convergence. TRAI has announced the same. Whether it will come through (read BSNL) is another matter.

This is the reason that the prepaid segment is larger than the post paid.Scale up customers,give money upfront and then forget about them.
So simple according to you, isn't it? ;-) If one operator offers these services to the volume segment (prepaid), it would become a monopoly in no time wouldn't it? I wonder why not even one operator (at least the struggling ones!) in India has figured this one out yet. Please tell me why it hasn't happened. And how you think at least one operator can be made to do it. Don't just tell that it should.

First,I am customer of Reliance.But NO fan!
I had illustrated the monopolistic tendencies of Reliance despite the fact that it gets awards for "corporate governance" and "most admired company" blah blah.If you have agreed with me so far,its this point that is intended to be highlighted.
A company can make any kind of a profit it intends to make.However,at what cost to the customers?Pan Indian presence,integrated players et al make for fancy reading or maybe over awe lesser mortals.However,the very same reason that these people root for BSNL s infrastructure,they ought to look in their backyards.Would Touch tel open its local loop for other ISPs in broadband?If no,then the same need not be relevant for BSNL.However,its not the question of national interest here.There was none ever.My only grouse against BSNL in not doing so is that they have set up the infrastructure using PUBLIC funds.If national interest is the overriding concern,then Touch tel should be forced to drop the high prices it charges for the broadband access.Whatever "broadband" that they understand.
As for TRAI,there are several issues that need to be clarified.However,I shall restrict myself only to the recent ruling of TDSAT that usurped the jurisdiction of TRAI over the dispute arbritration.TRAI unfortunately has been reduced to noneity.Infact ocassionaly they mange to awaken themselves from intellectual rigor mortis and say something sensible.The last word on the same was on the broadband policy(which got rejected in toto)This reflects the true extent of TRAIs power anyway in the corridors of decision making.
At the risk of repition,infrastructure funds would flow only when there is clear regulatory regime.Hence provide the invstors a bang for their buck.There was no provision for Reliances fixed operator licence.However,they managed to pay paltry licence fees and got in the business of mobile services.How did they manage to do so?Its a question open to interpretation.
TRAI indeed has no role(I believe) in the manner in which the telecom companies raise funds.However,last year most of companies fell short of the quality of infrastructure in most of the circles...you AirTel and Hutch included.Reliance had just started its services then.
Predatory pricing is again a fallacy.If acquiring the customers is one issue,then by hook or crook they mange to get it anyway.If Tatas have launched in Punjab,they offered free calls to Tata phones till April.Free Internet access with Free data cable till Feb end.However,thats just the introductory offer.Is that not predatory to existing Reliances customers?Every operator indulges in the same.Perhpas their PTT which is very cheap at Rs.99/- per month.Is that not predatory?Over the long term,low prices only would be sustainable with large volumes.This is the reason that the prepaid segment is larger than the post paid.Scale up customers,give money upfront and then forget about them.Thats why the customer support for the prepaid is outsourced(I know about Airtel Bangalore that does it).Is that good for the companys image when the complaints donot get resolved or take inordinate time to be done so?WHO cares anyway?Try calling up the people concerned.Youd be surprised when you are shunted from one to another.
However,its a Hobsons choice.There is no real differentiator in the services as of now.Perhaps a bit on the value added services.
Lets leave the fancy price tags salaries of MBAs.I am not concerned with that.However,I suggest you refer to the AirTel broadband post.
Thanks for the info on the SNR.I wasnt aware of that.Another reason to keep contributing to this column.There is still so much to learn.
At the end of the post,I believe that there cannot be the last word on this.There would be divergent views on the same.I believe that with the depth of your knowledge about the Telecom industry you ought to post your own thoughts here.Or what needs to be done.I am trying in my own way.
As for the title of the post,this is very generalised.Yes,the telecom "revolution" has done wonders but at the cost of the immense profitabilty to the operators much of its not justified by ethical standards.I am not opening up a can of worms,but if you have some leverage in the political class of India,then its a win win situation for all.Its the customers having no say in the same have to suffer.I have just tried to highlight the same here.

First,I am customer of Reliance.But NO fan!
I had illustrated the monopolistic tendencies of Reliance despite the fact that it gets awards for "corporate governance" and "most admired company" blah blah.If you have agreed with me so far,its this point that is intended to be highlighted.
A company can make any kind of a profit it intends to make.However,at what cost to the customers?Pan Indian presence,integrated players et al make for fancy reading or maybe over awe lesser mortals.However,the very same reason that these people root for BSNL s infrastructure,they ought to look in their backyards.Would Touch tel open its local loop for other ISPs in broadband?If no,then the same need not be relevant for BSNL.However,its not the question of national interest here.There was none ever.My only grouse against BSNL in not doing so is that they have set up the infrastructure using PUBLIC funds.If national interest is the overriding concern,then Touch tel should be forced to drop the high prices it charges for the broadband access.Whatever "broadband" that they understand.
As for TRAI,there are several issues that need to be clarified.However,I shall restrict myself only to the recent ruling of TDSAT that usurped the jurisdiction of TRAI over the dispute arbritration.TRAI unfortunately has been reduced to noneity.Infact ocassionaly they mange to awaken themselves from intellectual rigor mortis and say something sensible.The last word on the same was on the broadband policy(which got rejected in toto)This reflects the true extent of TRAIs power anyway in the corridors of decision making.
At the risk of repition,infrastructure funds would flow only when there is clear regulatory regime.Hence provide the invstors a bang for their buck.There was no provision for Reliances fixed operator licence.However,they managed to pay paltry licence fees and got in the business of mobile services.How did they manage to do so?Its a question open to interpretation.
TRAI indeed has no role(I believe) in the manner in which the telecom companies raise funds.However,last year most of companies fell short of the quality of infrastructure in most of the circles...you AirTel and Hutch included.Reliance had just started its services then.
Predatory pricing is again a fallacy.If acquiring the customers is one issue,then by hook or crook they mange to get it anyway.If Tatas have launched in Punjab,they offered free calls to Tata phones till April.Free Internet access with Free data cable till Feb end.However,thats just the introductory offer.Is that not predatory to existing Reliances customers?Every operator indulges in the same.Perhpas their PTT which is very cheap at Rs.99/- per month.Is that not predatory?Over the long term,low prices only would be sustainable with large volumes.This is the reason that the prepaid segment is larger than the post paid.Scale up customers,give money upfront and then forget about them.Thats why the customer support for the prepaid is outsourced(I know about Airtel Bangalore that does it).Is that good for the companys image when the complaints donot get resolved or take inordinate time to be done so?WHO cares anyway?Try calling up the people concerned.Youd be surprised when you are shunted from one to another.
However,its a Hobsons choice.There is no real differentiator in the services as of now.Perhaps a bit on the value added services.
Lets leave the fancy price tags salaries of MBAs.I am not concerned with that.However,I suggest you refer to the AirTel broadband post.
Thanks for the info on the SNR.I wasnt aware of that.Another reason to keep contributing to this column.There is still so much to learn.
At the end of the post,I believe that there cannot be the last word on this.There would be divergent views on the same.I believe that with the depth of your knowledge about the Telecom industry you ought to post your own thoughts here.Or what needs to be done.I am trying in my own way.
As for the title of the post,this is very generalised.Yes,the telecom "revolution" has done wonders but at the cost of the immense profitabilty to the operators much of its not justified by ethical standards.I am not opening up a can of worms,but if you have some leverage in the political class of India,then its a win win situation for all.Its the customers having no say in the same have to suffer.I have just tried to highlight the same here.

Hi,
Perhaps an important aspect to clear is what you believe the scope of TRAI's activities are. Are they reponsible for even regulating the services/infrastructure that the mobile operators need to provide service? Should they regulate financial aspects today (in terms of lending by banks, FDI, etc which is currently under the finance ministry)? Tomorrow do they regulate power, transport, labour laws and so on?
They must ensure the standard of service offered by an operator and also protect the interests of both the operator and the consumer. That means looking at the long term. In the short term, some may be at a disadvantage.

Another fundamental.. How much profit do you believe a company can or should make? 0%? 2%? AirTel is a large integrated player, being the only private operator with a pan-India presence. That allows them a lot more savings that what their competition can achieve. They spend among the lowest per subscriber in the industry. They are very efficient, period. The TRAI has set ceilings on the phone rates possible.
Let's say AirTel did drop call rates. Making full use of the advantage they had. That would kill and destroy most other operators, who cannot sustain the low rates Airtel could possibly provide. That is predatory pricing which is what the TRAI stops. Otherwise a monopoly could emerge. This means that looking into the interest of all, operators and consumers, in the long term, they cannot let AirTel drop their prices further.
Which is also why they have MBA executives, with fat paychecks, who help them achieve this kind of efficiency and profit, making full use of the investment that their shareholders have put in. Such companies will encourage investors in India to put more money into them. Then FDI can be dropped. ;-) It can't happen both ways, let's face it. Low profits and heavy investment is a lot to expect any investor to risk.

There is always something you must give when you take something. You want the lowest FDI, huge investments from the local market, call rates such that companies make zero profit, and thus shareholders whose investment gives them no returns. Find me these national philanthropists.

With respect to Reliance petrochemicals, what is perhaps needed is the Petrochemicals Regulatory Authority of India. ;-) Who will determine price ceilings as appropriate. If TRAI does not prevent the same for Telecom, then we have an issue. But with the current scenario, with their current limitations, in terms of the market, they have done what can be done. With the long term in mind.

The only current concern I have is that the monopoly of BSNL is being sustained. And this is a company that need not post such high profits, since the money goes to the government exchequer anyway. The license fee the other operators pay, is just returned to BSNL. It should use all its profits for rural expansion. It can afford to take this risk, since it has government backing. Perhaps a target (number of new rural landlines per month?) should be set to it. Which can also be used to determine the total ADC it receives. That way BSNL has to work to get its profits, not such use their monopoly. When the ADC was reduced, the blackmail from BSNL knew no bounds. "We have to increase call rates, rentals, reduce free calls" etc. Why not post lower profits? This is where the cartel theories are best applied.. Protect BSNL's profits so that these cartels (read:politicians) make money. :-(
When TRAI recommended the last mile should be unbundled, DoT (read: BSNL) rejected the proposal. This would mean losing a monopoly it enjoys! Perhaps TRAI needs to have the veto in such cases, when no valid reason is provided! And the link b/w DoT and BSNL needs to be eliminated.
And if you don't like COAI figures, read TRAI figures. Either way my point regarding the volume model stands.
Looking at cross-subsidisation closely, only the integrated players have submitted their accounts. Pure play private operators have not done so. And I believe a very detailed account is expected by TRAI, containing sensitive information. I do not know more on the matter other than the show cause notice being issued, so I cannot say what really is happening and who is not doing their job.

A clarification: by "quality" of infrastructure I mean the actual phone call, not ancillary services like customer care, fault handling, etc. I mean the quality of the actual phone call. Ancillary services are the first to take a hit when prices drop. Which goes to explain the paltry customer care prevalent today. And that is as far as I want it to go. I don't want the degradation to extend to the actual phone call.

I have never been a Reliance/CDMA customer. When my friend got a reliance phone, I made a call. And I was shocked at how bad it could get. (No comfort noise generation! What kind of a phone is that? Use VAD, then use it properly for God's sake!! =:-0) I'm guessing here, but you must be a reliance customer (& fan ;-) ) to be able to say that the quality is good here in Bangalore. Or you have not heard a call from another operator here. CDMA has a defect known as a soft capacity, the signal SNR degenerates as the number of users increase. Reliance ought to put more towers when the SNR drop is noticeable. Well, let's leave it to the ear of the beholder ;-)

Hi,
Perhaps an important aspect to clear is what you believe the scope of TRAI's activities are. Are they reponsible for even regulating the services/infrastructure that the mobile operators need to provide service? Should they regulate financial aspects today (in terms of lending by banks, FDI, etc which is currently under the finance ministry)? Tomorrow do they regulate power, transport, labour laws and so on?
They must ensure the standard of service offered by an operator and also protect the interests of both the operator and the consumer. That means looking at the long term. In the short term, some may be at a disadvantage.

Another fundamental.. How much profit do you believe a company can or should make? 0%? 2%? AirTel is a large integrated player, being the only private operator with a pan-India presence. That allows them a lot more savings that what their competition can achieve. They spend among the lowest per subscriber in the industry. They are very efficient, period. The TRAI has set ceilings on the phone rates possible.
Let's say AirTel did drop call rates. Making full use of the advantage they had. That would kill and destroy most other operators, who cannot sustain the low rates Airtel could possibly provide. That is predatory pricing which is what the TRAI stops. Otherwise a monopoly could emerge. This means that looking into the interest of all, operators and consumers, in the long term, they cannot let AirTel drop their prices further.
Which is also why they have MBA executives, with fat paychecks, who help them achieve this kind of efficiency and profit, making full use of the investment that their shareholders have put in. Such companies will encourage investors in India to put more money into them. Then FDI can be dropped. ;-) It can't happen both ways, let's face it. Low profits and heavy investment is a lot to expect any investor to risk.

There is always something you must give when you take something. You want the lowest FDI, huge investments from the local market, call rates such that companies make zero profit, and thus shareholders whose investment gives them no returns. Find me these national philanthropists.

With respect to Reliance petrochemicals, what is perhaps needed is the Petrochemicals Regulatory Authority of India. ;-) Who will determine price ceilings as appropriate. If TRAI does not prevent the same for Telecom, then we have an issue. But with the current scenario, with their current limitations, in terms of the market, they have done what can be done. With the long term in mind.

The only current concern I have is that the monopoly of BSNL is being sustained. And this is a company that need not post such high profits, since the money goes to the government exchequer anyway. The license fee the other operators pay, is just returned to BSNL. It should use all its profits for rural expansion. It can afford to take this risk, since it has government backing. Perhaps a target (number of new rural landlines per month?) should be set to it. Which can also be used to determine the total ADC it receives. That way BSNL has to work to get its profits, not such use their monopoly. When the ADC was reduced, the blackmail from BSNL knew no bounds. "We have to increase call rates, rentals, reduce free calls" etc. Why not post lower profits? This is where the cartel theories are best applied.. Protect BSNL's profits so that these cartels (read:politicians) make money. :-(
When TRAI recommended the last mile should be unbundled, DoT (read: BSNL) rejected the proposal. This would mean losing a monopoly it enjoys! Perhaps TRAI needs to have the veto in such cases, when no valid reason is provided! And the link b/w DoT and BSNL needs to be eliminated.
And if you don't like COAI figures, read TRAI figures. Either way my point regarding the volume model stands.
Looking at cross-subsidisation closely, only the integrated players have submitted their accounts. Pure play private operators have not done so. And I believe a very detailed account is expected by TRAI, containing sensitive information. I do not know more on the matter other than the show cause notice being issued, so I cannot say what really is happening and who is not doing their job.

A clarification: by "quality" of infrastructure I mean the actual phone call, not ancillary services like customer care, fault handling, etc. I mean the quality of the actual phone call. Ancillary services are the first to take a hit when prices drop. Which goes to explain the paltry customer care prevalent today. And that is as far as I want it to go. I don't want the degradation to extend to the actual phone call.

I have never been a Reliance/CDMA customer. When my friend got a reliance phone, I made a call. And I was shocked at how bad it could get. (No comfort noise generation! What kind of a phone is that? Use VAD, then use it properly for God's sake!! =:-0) I'm guessing here, but you must be a reliance customer (& fan ;-) ) to be able to say that the quality is good here in Bangalore. Or you have not heard a call from another operator here. CDMA has a defect known as a soft capacity, the signal SNR degenerates as the number of users increase. Reliance ought to put more towers when the SNR drop is noticeable. Well, let's leave it to the ear of the beholder ;-)

Thanks Jason for commenting on the posts.
Your comments on the post has raised many points and I shall try and address them one by one.
First the contentious issue of raising funds.I d agree with you about the investment locked in infrastructure costs over a long period of time and it would prove risky in terms of volatile interest regimes.Specially with the long term gestation period of the telecom infrastructure.However,banks wouldnot ideally advance loans to this sector precisely because of lack of clear regulatory regime.Specially with TRAI being reduced to status of an onlooker.I have clearly mentioned in the posts repeatedly calling for a stricter and clearer regulatory framework.
You seem to suggest that lower prices lead to low quality of infrastructure.With that even suggesting that BSNL is bessotted with enough sense.I have never subscribed to BSNL but even minus the overburden of customers,BSNL has never ever delivered on the service front.
The reports of Bihar and Jharkhand are true.I dont recall the exact dates but somewhere about 4-5 months back these reports appeared.Hence I found it was prudent to mention the same.
I am still wary of the FDI which is not the magical cure all for lack of money in infrastruture funds.A year before I would have been happy to accept your view point.However,you have to read succint account of Joseph Steiglitz and his critique of World Bank policies.Specially the importance of the neo liberals taking over the economy and their bastardised prescriptions in terms of FDI.The ownership patterns change with the threat to the economy and national security.
As far as the monopolistic tendencies are concerned,my favourite example is that of Reliance petrochemicals.With the worlds largest grassroots refinery it has a stranglehold on the prices of the petrochemicals.Perhaps this looks impressive on the paper with the shareholder value being preserved.However,they have managed to restrict the imports of the petrochemical products and have a near monopoly in Indian market.The other player IPCL is almost non existent.They determine the prices and are usually higher than the current international prices.This doesnt affect us directly but indeed has an effect on the economy.Indeed it was the thrust of my another post as to Reliance adding weight in the value chain of Telecom,from gateways to bandwidth.It has all.
Thats the monopoly.Wait and watch when it happens down the line 10 years from now.
I am glad we agree on the depressing customer care.However,more funds doesnt mean that its going to improve overnight.What is needed is a change in attitude and a sense of involvement.This is out of scope here.
Last but not the least.I have had no issues with Reliance and yes I have been to Bangalore while roaming.Its again a matter of invidual perception.For any satisfied customer,there are many unsatisfied too.
As for the figures on the COAI,I have repeatedly mentioned that its just another trade union.Is it possible to explain the refusal of these companies to TRAI to provide data for audit to try and find out the extent of cross subsdisation?Most of the GSM companies refused to do.
What I could learn from you here is the technical issues behind the operations.Before I end,here is something that would gladden your heart.Bharti Televentures reported a profit of 131%.Yes,that number is correct.Make you own conclusions.

Thanks Jason for commenting on the posts.
Your comments on the post has raised many points and I shall try and address them one by one.
First the contentious issue of raising funds.I d agree with you about the investment locked in infrastructure costs over a long period of time and it would prove risky in terms of volatile interest regimes.Specially with the long term gestation period of the telecom infrastructure.However,banks wouldnot ideally advance loans to this sector precisely because of lack of clear regulatory regime.Specially with TRAI being reduced to status of an onlooker.I have clearly mentioned in the posts repeatedly calling for a stricter and clearer regulatory framework.
You seem to suggest that lower prices lead to low quality of infrastructure.With that even suggesting that BSNL is bessotted with enough sense.I have never subscribed to BSNL but even minus the overburden of customers,BSNL has never ever delivered on the service front.
The reports of Bihar and Jharkhand are true.I dont recall the exact dates but somewhere about 4-5 months back these reports appeared.Hence I found it was prudent to mention the same.
I am still wary of the FDI which is not the magical cure all for lack of money in infrastruture funds.A year before I would have been happy to accept your view point.However,you have to read succint account of Joseph Steiglitz and his critique of World Bank policies.Specially the importance of the neo liberals taking over the economy and their bastardised prescriptions in terms of FDI.The ownership patterns change with the threat to the economy and national security.
As far as the monopolistic tendencies are concerned,my favourite example is that of Reliance petrochemicals.With the worlds largest grassroots refinery it has a stranglehold on the prices of the petrochemicals.Perhaps this looks impressive on the paper with the shareholder value being preserved.However,they have managed to restrict the imports of the petrochemical products and have a near monopoly in Indian market.The other player IPCL is almost non existent.They determine the prices and are usually higher than the current international prices.This doesnt affect us directly but indeed has an effect on the economy.Indeed it was the thrust of my another post as to Reliance adding weight in the value chain of Telecom,from gateways to bandwidth.It has all.
Thats the monopoly.Wait and watch when it happens down the line 10 years from now.
I am glad we agree on the depressing customer care.However,more funds doesnt mean that its going to improve overnight.What is needed is a change in attitude and a sense of involvement.This is out of scope here.
Last but not the least.I have had no issues with Reliance and yes I have been to Bangalore while roaming.Its again a matter of invidual perception.For any satisfied customer,there are many unsatisfied too.
As for the figures on the COAI,I have repeatedly mentioned that its just another trade union.Is it possible to explain the refusal of these companies to TRAI to provide data for audit to try and find out the extent of cross subsdisation?Most of the GSM companies refused to do.
What I could learn from you here is the technical issues behind the operations.Before I end,here is something that would gladden your heart.Bharti Televentures reported a profit of 131%.Yes,that number is correct.Make you own conclusions.

Hi,
About FDI... You cannot reduce FDI to a matter of foreign ownership or not. There are issues such as the exchange rate with the dollar, how much of the company will have to divest in order to raise the required capital from the local market and so on. Why 49% even then? Indian investors are still phobic, they will not invest large amounts into such high risk propositions such as infrastructure companies. With the exception of Bharti, all operators intend to tap the local market, especially with the recent IPO craze. If investors compensate and are ready to take the risk, fine. But I don't think that will be the case.

A company needs to make its shareholders happy. What it does is always for its bottomline. This is simple undeniable truth. Do you think manager salaries are any lesser in another other industry? With the competitive nature of the mobile industry they need to get the best heads to work on their balance sheets. :-) And that will cost.

Customer Care is bad. They ought to spend more on it. But when bottomline issues exist, it is a tough call. Everyone of us is paying far less for our mobile services today. Five years back, customer care services were far better. But I was also paying a far dearer amount. A prepaid sim was Rs 1200. It Rs 99 now. I know people in college who just keep buying sims every other week. Today postpaid users do enjoy marginally better services than their prepaid counterparts. I personally feel this marginal improvement does not warrant postpaid services.

Cost of calls.. Interesting that you have compared to McDonalds or KFC. Have you actually had their meals from other countries? They are FAR FAR better in quality and taste. Yes, you are paying less here. They compensate in the quality/taste of the product. The $1 local Pizza Hut is NOT equal to a $5 pizza outside! Would you accept the same for your calls? Would you be fine with distorted calls, by stuffing calls into squeezed spectrums? (which are among the lowest in the world here in India). Costs can keep reducing but at one point it becomes a question of cost vs quality. Should you drop below that point? I would prefer to have choice. I would really be saddened if every operator became like Reliance Bangalore, with calls sounding like its coming from underwater! ;-) If you have the chance to come to Bangalore, try Reliance and try Tata Indicom here. You will immediately understand what you are really getting for the pretty much the same cost.

Visit coai.com. GSM operators post thier figures. You can clearly see that 6 month or so could easily cut their base by half. Rates are fallen with the idea that revenue will come from volume. So volume becomes critical to survive. When a fledging small time operator is losing in this game, it may get acquired. It is the nature of any maturing industry, of acqusitions and mergers. It makes companies bigger and better competitors, working with economies of scale.

How can you be so paranoid? BSNL has sims allocated according to its capacity in most places (Thank God for that! ;-) ) I also know that they have matched their capacity to the number of subscribers. So I am not exactly sure what you are saying is happening in Bihar, Jharkhand...

Hi,
About FDI... You cannot reduce FDI to a matter of foreign ownership or not. There are issues such as the exchange rate with the dollar, how much of the company will have to divest in order to raise the required capital from the local market and so on. Why 49% even then? Indian investors are still phobic; they will not invest large amounts into such high risk propositions such as infrastructure companies. With the exception of Bharti, all operators intend to tap the local market, especially with the recent IPO craze. If investors compensate and are ready to take the risk, fine. But I don't think that will be the case.

A company needs to make (and keep) its shareholders happy. What it does is always for its bottom line. This is simple undeniable truth. Do you think manager salaries are any lesser in another other industry? With the competitive nature of the mobile industry they need to get the best heads to work on their balance sheets. :-) And that will cost.

Customer Care is bad. They ought to spend more on it. But when bottom line issues exist, it is a tough call. Every one of us is paying far less for our mobile services today. Five years back, customer care services were far better. But I was also paying a far dearer amount. A prepaid sim was Rs 1200. It�s Rs 99 now. Today postpaid users do enjoy marginally better services than their prepaid counterparts. I personally feel this marginal improvement does not warrant postpaid services.

Cost of calls.. Interesting that you have compared to McDonalds or KFC. Have you actually had their meals from other countries? They are FAR FAR better in quality and taste. Yes, you are paying less here. You call it localization. They compensate in the quality/taste of the product. The $1 local Pizza Hut is NOT equal to a $5 pizza outside! Would you accept the same for your calls? Would you be fine with distorted calls, by stuffing calls into squeezed spectrums? (Which are among the lowest in the world here in India). Costs can keep reducing but at one point it becomes a question of cost vs. quality. Should you drop below that point? I would prefer to have choice. I would be really saddened if every operator became like Reliance Bangalore, with calls sounding like they are coming from underwater! ;-) If you have the chance to come to Bangalore, try Reliance and try Tata Indicom here. You will immediately understand what you are really getting for the pretty much the same cost.

Visit coai.com. GSM operators post their figures. You can clearly see that 6 months or so of slack could easily cut their base by half. Rates are fallen with the idea that revenue will come from volume. So volume becomes critical to survive. When a small operator is losing in this game, it may get acquired. It is the nature of any maturing industry, acqusitions and mergers do happen. It makes companies bigger and better competitors, working with economies of scale. Of course, monopoly should be prevented at all costs. Personally I feel the protection offered to BSNL, in the guise of �national interest� and �rural expansion�, simply maintains its monopoly. It is still a monopolistic sloth in the end of the day.

How can you be so paranoid? BSNL has sims allocated according to its capacity in most places (Thank God for that! ;-) ) I also know that they have matched their capacity to the number of subscribers. So I am not exactly sure what you are saying is happening in Bihar, Jharkhand. Please let me know.

Andhra Pradesh is the first circle where BSNL's base has actually fallen. And ask any Andhrite about BSNL. Calls Dropped, Network Congestion are the order of the day. Again, Cost vs quality! If every operator in Andhra slashed their rates to what BSNL offered, and reduced their network quality to BSNL's, where would I, the user who needs to make a simple clear call, when I want, turn to?

AirTel dumping their customers... AirTel would be answerable to its shareholders. And to the courts. It would hit its bottom-line, being a volume driven industry. I don't think the T&C mentions that they have the right to disconnect a connection at will, without reason. If they do, then that is something the customer agreed to. Get the connection from another operator.

There is a lot of legislation in India to protect the interests of NLD/ILD operators. If these were removed, these operators would suffer greatly. And roaming would be really cheap. In UAE, there is no such thing as national roaming. Incoming is free anywhere in the country. And outgoing is the rate from where you make the call.

Any further cuts without legislation change, would be possible only with predatory pricing, with biggies such as AirTel or Reliance could do. But they can't. That's why I largely think TRAI has its effect. Everything can improve, no doubt. But to mock the existing system, which such a myopic view is unfair.

If you do not wish to roam take CDMA. Take Reliance, with their disgusting call quality (at least in Bangalore). On the CDMA front I am really looking forward to Tata Indicom. Their call quality here in Bangalore is simply amazing. But they do not offer roaming where I need it. And that is why I'm on GSM. At least until the Tata's expand. I'm glad there is such good choice in this country, it is not so in many other countries. (Don't forget the cost of living here!)

(esp Bangalore)
For those who want it cheap (as it can get now)and roam everywhere, but are ready to give up quality, BSNL or Reliance. ;-)
For those who want excellent voicequality, Tata Indicom.
For those who want roaming & good voice quality, most private operators (AirTel, Hutch) (1800 Mhz operators have better voice quality)

Thanks a ton for the above post Jason.My knowledge is amaturish,yes but there were host of other issues that I left unsaid.The reason was to keep the post clean without encumbering it with details.
First the FDI.I digress with the idea of foreign investors investing in such a crucial sector of the economy.At the hint of slightest trouble,these people are known to sell off their stakes and exit with their capital.Perhaps the main reason why there was a meltdown of the economy in the late 90s in the South East Asia.The reason that India remained immune was the capital controls exerted on the Indian FDI that prevented the flight of capital.If they exist,as they do now,then perhaps this is not an eye candy for the people investing in our sectors.Why do you want foreign control over our jugular?
Let it be left like that since no two economists have ever agreed.There are several other ways to raise capital.Primarily,it could be by divesting their stake in the Indian Market.Just the way Reliance Info is planning to do.Loans is another even though it maybe from any other country.
As for the high costs of the network,clearly there is something amiss.If the setting up of network is so expensive,I believe these people ought not to be in the business in the first case.How do you explain the fancy price salaries that are paid for NOT doing their work?Agreed the businesses are set up and someone has to get in the same.However,its not clear to me that despite all the hoopla,their customer care sucks.I have read many first person accounts who have succesfully sued these companies.Lets not deny that.
Finally,the cost of the call.India,despite the tremendous progress,or so called progress is still a developing country.It has the lowst per capita income otherwise.Vis a vis other countries,where the cost of living is exorbitant,it is unfair to compare the prices across the board.Why do that anyway? Does MacDonalds have the same prices across the world where it has set up shop?Or even KFC?The idea behind selling a product is localisation.This includes price factor too.Now,if that isnt clear to you,I am indeed surprised that this is the basic tenet of economics.Drop the prices to attract more customers.
This isnt a persecution complex that finds its way on these posts.The basic idea is to try and expose the underhand dealings and cartelisation of services.First we had numerous operators across the country.Now the entire GSM market is in the hands of a few biggies.Specially the high prices these people paid out to acquire other networks.This ofcourse has to be recovered from the paying customers.Could you explain why?Perhaps flush with fresh funds they would get more greedy,acquire the standalone operators and cut the regulator to size.This is the organic growth of the businesses who aim and aspire to control the economy.What if Air tel decides to cut off the people at will?Are they answerable to anyone anyway?
Despite the ills of BSNL,you just have to read the media accounts appearing for Bihar and Jharkhand.Strangely though,they appeared just before Air Tel was due to launch its services.After that it seems to have eased.Poof!I can see something here for sure.
Last but not the least.Connect and termination charges are fine.I am sure there could be ways and means to cut that.I would be willing to learn from you as to how is this affected.I admit I am not knowledgeable about the same.However,its still very expensive to roam in GSM.

Thanks a ton for the above post Jason.My knowledge is amaturish,yes but there were host of other issues that I left unsaid.The reason was to keep the post clean without encumbering it with details.
First the FDI.I digress with the idea of foreign investors investing in such a crucial sector of the economy.At the hint of slightest trouble,these people are known to sell off their stakes and exit with their capital.Perhaps the main reason why there was a meltdown of the economy in the late 90s in the South East Asia.The reason that India remained immune was the capital controls exerted on the Indian FDI that prevented the flight of capital.If they exist,as they do now,then perhaps this is not an eye candy for the people investing in our sectors.Why do you want foreign control over our jugular?
Let it be left like that since no two economists have ever agreed.There are several other ways to raise capital.Primarily,it could be by divesting their stake in the Indian Market.Just the way Reliance Info is planning to do.Loans is another even though it maybe from any other country.
As for the high costs of the network,clearly there is something amiss.If the setting up of network is so expensive,I believe these people ought not to be in the business in the first case.How do you explain the fancy price salaries that are paid for NOT doing their work?Agreed the businesses are set up and someone has to get in the same.However,its not clear to me that despite all the hoopla,their customer care sucks.I have read many first person accounts who have succesfully sued these companies.Lets not deny that.
Finally,the cost of the call.India,despite the tremendous progress,or so called progress is still a developing country.It has the lowst per capita income otherwise.Vis a vis other countries,where the cost of living is exorbitant,it is unfair to compare the prices across the board.Why do that anyway? Does MacDonalds have the same prices across the world where it has set up shop?Or even KFC?The idea behind selling a product is localisation.This includes price factor too.Now,if that isnt clear to you,I am indeed surprised that this is the basic tenet of economics.Drop the prices to attract more customers.
This isnt a persecution complex that finds its way on these posts.The basic idea is to try and expose the underhand dealings and cartelisation of services.First we had numerous operators across the country.Now the entire GSM market is in the hands of a few biggies.Specially the high prices these people paid out to acquire other networks.This ofcourse has to be recovered from the paying customers.Could you explain why?Perhaps flush with fresh funds they would get more greedy,acquire the standalone operators and cut the regulator to size.This is the organic growth of the businesses who aim and aspire to control the economy.What if Air tel decides to cut off the people at will?Are they answerable to anyone anyway?
Despite the ills of BSNL,you just have to read the media accounts appearing for Bihar and Jharkhand.Strangely though,they appeared just before Air Tel was due to launch its services.After that it seems to have eased.Poof!I can see something here for sure.
Last but not the least.Connect and termination charges are fine.I am sure there could be ways and means to cut that.I would be willing to learn from you as to how is this affected.I admit I am not knowledgeable about the same.However,its still very expensive to roam in GSM.

Don't get me wrong though. Charges can drop further.
But to make the statement that indian telecom is a farce, is really pushing it.
So you first wash your eyes.. and get a clearer, more complete picture. Find out the ACTUAL reasons why something happens, then decide whether it is right or wrong. And how it can be improved. Don't put up this pseudo-victim image, who wants someone else to somehow do whatever he somehow thinks should be possible.

Don't get me wrong though. Charges can drop further.
But to make the statement that indian telecom is a farce, is really pushing it.
So you first wash your eyes.. and get a clearer, more complete picture. Find out the ACTUAL reasons why something happens, then decide whether it is right or wrong. And how it can be improved. Don't put up this pseudo-victim image, who wants someone else to somehow do whatever he somehow thinks should be possible.

Hi,
It is very clear from your article that you have only an amateurish knowledge of the industry and how it works.
To put across the controversy that private operators are working to put down BSNL on an all-india basis is plain rubbish. It would cheaper for them to just expand their network!
Where did you learn that it is an artificial scarcity? The SIMs are issued according to available capacity. I suppose if BSNL issued more than their capacity, with the network congestion you would probably believe private operators have jammers installed. Imagination is the limit!

The main advantage of GSM is roaming. If you knew how calls are routed and how termination charges are calculated you would understand why GSM roaming costs more. Perhaps what is in order is to remove the monopoly of BSNL. It claims it requires ADC for rural expansion. Yet the profit it declared last fiscal is equal to the ENTIRE ADC amount from private operators. As a government company, in the name of 'national interest' it should not be posting such high profits. Either the amount should go for speeding up deployment of rural infrastructure or not be charged as ADC. That would drop call costs. I would prefer the first option.

Perhaps your only really relevant point is the fact that CDMA is better for data services that GSM. This is largely true. That is why 3G-GSM, (successor of CSD, GPRS, EDGE) uses WCDMA.

And about your talktime issue. It costs about $580 for a GSM operator to maintain a subscriber. You want them to offer $6 talktime per month which you can completely use? Perhaps for only incoming, eh??

About FDI.. There is something known as the cost of raising capital. Yes, it costs to raise money. Also telecom investment is a long term, and very expensive investment. Indian banks cannot and do not have the bandwidth to take up the loan requirements of all private operators in India. Would you accept if your bank told you that all your money has been loaned out to telecom operators, so you can withdraw your money after 15 yrs? I don't think so. For now most companies have raised money from the equity markets.

You seem to think a huge controversy is brewing and everybody is working against everybody else, to ensure the consumer is disadvantaged. Perhaps you should see the telecom industry in other countries. Try making a call for $0.023 (ie 2 cents) anywhere else in this world. Paying $3.4 per month ;-). If that's too expensive for you, just use the local PCO! They have better coverage too!

Hi,
It is very clear from your article that you have only an amateurish knowledge of the industry and how it works.
To put across the controversy that private operators are working to put down BSNL on an all-india basis is plain rubbish. It would cheaper for them to just expand their network!
Where did you learn that it is an artificial scarcity? The SIMs are issued according to available capacity. I suppose if BSNL issued more than their capacity, with the network congestion you would probably believe private operators have jammers installed. Imagination is the limit!

The main advantage of GSM is roaming. If you knew how calls are routed and how termination charges are calculated you would understand why GSM roaming costs more. Perhaps what is in order is to remove the monopoly of BSNL. It claims it requires ADC for rural expansion. Yet the profit it declared last fiscal is equal to the ENTIRE ADC amount from private operators. As a government company, in the name of 'national interest' it should not be posting such high profits. Either the amount should go for speeding up deployment of rural infrastructure or not be charged as ADC. That would drop call costs. I would prefer the first option.

Perhaps your only really relevant point is the fact that CDMA is better for data services that GSM. This is largely true. That is why 3G-GSM, (successor of CSD, GPRS, EDGE) uses WCDMA.

And about your talktime issue. It costs about $580 for a GSM operator to maintain a subscriber. You want them to offer $6 talktime per month which you can completely use? Perhaps for only incoming, eh??

About FDI.. There is something known as the cost of raising capital. Yes, it costs to raise money. Also telecom investment is a long term, and very expensive investment. Indian banks cannot and do not have the bandwidth to take up the loan requirements of all private operators in India. Would you accept if your bank told you that all your money has been loaned out to telecom operators, so you can withdraw your money after 15 yrs? I don't think so. For now most companies have raised money from the equity markets.

You seem to think a huge controversy is brewing and everybody is working against everybody else, to ensure the consumer is disadvantaged. Perhaps you should see the telecom industry in other countries. Try making a call for $0.023 (ie 2 cents) anywhere else in this world. Paying $3.4 per month ;-). If that's too expensive for you, just use the local PCO! They have better coverage too!

Hi,
It is very clear from your article that you have only an amateurish knowledge of the industry and how it works.
To put across the controversy that private operators are working to put down BSNL on an all-india basis is plain rubbish. It would cheaper for them to just expand their network!
Where did you learn that it is an artificial scarcity? The SIMs are issued according to available capacity. I suppose if BSNL issued more than their capacity, with the network congestion you would probably believe private operators have jammers installed. Imagination is the limit!

The main advantage of GSM is roaming. If you knew how calls are routed and how termination charges are calculated you would understand why GSM roaming costs more. Perhaps what is in order is to remove the monopoly of BSNL. It claims it requires ADC for rural expansion. Yet the profit it declared last fiscal is equal to the ENTIRE ADC amount from private operators. As a government company, in the name of 'national interest' it should not be posting such high profits. Either the amount should go for speeding up deployment of rural infrastructure or not be charged as ADC. That would drop call costs. I would prefer the first option.

Perhaps your only really relevant point is the fact that CDMA is better for data services that GSM. This is largely true. That is why 3G-GSM, (successor of CSD, GPRS, EDGE) uses WCDMA.

And about your talktime issue. It costs about $580 for a GSM operator to maintain a subscriber. You want them to offer $6 talktime per month which you can completely use? Perhaps for only incoming, eh??

About FDI.. There is something known as the cost of raising capital. Yes, it costs to raise money. Also telecom investment is a long term, and very expensive investment. Indian banks cannot and do not have the bandwidth to take up the loan requirements of all private operators in India. Would you accept if your bank told you that all your money has been loaned out to telecom operators, so you can withdraw your money after 15 yrs? I don't think so. For now most companies have raised money from the equity markets.

You seem to think a huge controversy is brewing and everybody is working against everybody else, to ensure the consumer is disadvantaged. Perhaps you should see the telecom industry in other countries. Try making a call for $0.023 (ie 2 cents) anywhere else in this world. Paying $3.4 per month ;-). If that's too expensive for you, just use the local PCO! They have better coverage too!
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