I couldn’t resist citing the entry in People’s Democracy which is the official mouth piece of the rag tag left in India. Remember, this is the official mouth piece- it means that they often have their foot in their mouths.
I am often reminded of Don Quioxte who has the habit of charging at the wind mills believing them to be r oppressive giants sent by evil enchanters! This is indeed laughable, but then you could extend the same analogy to the present day Left who fumes and foams at their mouths without visibly doing anything on ground.
Coming back to the write up in their mouth peice- it lays a succint case for NOT abolishing the Access Deficit Charge for BSNL on the plea that it is the only telecom operator who extends rural services. One India plan is trashed (rightly so- you could give them the benefit of doubt and lucid interval here) on the plea that it would destroy the margins of the Public Calling Booths which dot the nation. It hasn’t happened; One India plan is almost a failure and BSNL would have to discontinue it soon or increase the charges for the same.
Let’s see, what this worthy gentleman has written.
1)
The drop in incomes of the two telecom PSUs – BSNL and MTNL — due to lower long distance revenue and reduction of ADC transfer is likely to be of the order of Rs 5-7 thousand crore. This could completely erode their profit base.
This means that Access Deficit Charge is the MAIN reason for their profitable existence. Indeed so, and I have mentioned it here innumerable times which doesn’t warrant any more repetition.
2)
The second attack on BSNL’s revenue is lowering of the Access Deficit Charge that BSNL gets from other telecom operators. In order to reduce the long distance calls to Re 1 per minute, the Access Deficit Charge (ADC), which was a substantial portion of every long distance call, had to be brought down substantially. Earlier, 30 paise per call was an ADC levy, which resulted in an annual transfer of about Rs 5,000 crore to BSNL for subsidising its rural operations.
Now, ADC is like a modern day jazziah. We as mobile users are forced to subsidise the fixed landline users. ADC has been contentious all over the world, but more so in India, because BSNL doesn’t really have anything to show in it’s balance books. What it does show is customer apathy and incompetency to attract new users. Rural operations are in a state of mess. Agreed. BSNL’s optic fibre cable reaches in close proximity to most of the villages across India. Yet, they haven’t set up telephones. It took them 50+ years to realise that they have rural obligations as well! Wow. What an excuse.
Further he writes,
Effectively, BSNL, which is the only company providing rural telephony, is being asked to take a major hit in its revenue, while companies that are wilfully flouting the terms of their license of providing 10 per cent rural telephones get away scot-free.
This is true. But the intentions behind these claims is a suspect.
Some “sense” emanating from this fossillised brain:
There is little doubt that the model of telephony is changing from the earlier distance based circuit-switching network (Point Switching Telecom Network or PSTN) to the current data based packet switching networks. The Internet model and the earlier voice based telephone models are quite distinct.
Though, who would kill their investments in PSTN and switch to VoIP on a massive scale? If this isn’t laughable, what else is?
3)
In all telecom networks, the long distance revenue has always been used to keep the cost of telecom access low. The simple argument for doing this is that unless the telecom network expands, the call rates and consequently, the revenue cannot grow.
Whoa! Where did he get this information from? In US, telcos are giving unlimited long distance calls with bundled Broadband.
Now listen to this person’s argument:
So instituting a telecom regime where the long distance calls do not provide any surplus for the local network can only force the local call rates and access charges to rise and would work against the immediate goal of increased teledensity.
I wonder whether the distance matters really. BSNL has invested in cables long time back. They have recovered their investments. Mostly. On what premise, the long distance calls need to priced? The only stumbling block is the Access Deficit Charge and till the time it goes away, there wouldn’t be any progress on that count.
4)Rural Urban Divide:
If we look at the telecom scenario currently, we will see that the telecom boom has not only passed the rural subscribers by, it has widened sharply the rural urban gap. As TRAI itself has noted, “the large differential between rural (1.94 per cent) and urban teledensity (31.1 per cent) cannot be sustainable. The authority recognizes that without focus on rural areas, sizeable growth in telecom sector would not be possible
Agreed. Yet, why was the goverment a mute spectator while the companies refused to scale up in rural areas?
Now read what this professional heart bleeder has to say:
Major players like Reliance and Tatas have not even provided fixed lines. They have preferred to use the Wireless route in order to keep their capital costs low and attack the high–end market. As against less than 1 per cent rural telephones being provided by private Basic Operators, fully 35 per cent of state-owned BSNL lines are in rural areas. Obviously, without BSNL, we would not have any rural phones in the country.
True. But BSNL has been there for 50 years or more! Why forget that? They obviously have a head start. Tata’s not having a pie in fixed line telephony are commiting monumental stupidity if they wish to scale up in broadband. They are digging their own grave, or rather, lighting up their own pyre, by tying up with local cable operators to set up broadband. Reliance is around the corner dude. Wait and watch their thrust in fixed lines.
This part is interesting.
So how do the PSUs with their huge legacy investments in copper cables compete in the market? It is time the PSUs realise that what they view as their sunk costs – the copper cable network – is precisely their strength. They need to think that in the future, data networks will largely be the land based while the voice network will be wireless. The focus for their landline operations has to therefore shift to Internet and Internet based services.
Major fault in assumptions. VoIP won’t happen all of a sudden. It’s going to hurth the PSU’s investments. Unless of course, some new incumbent realises the value of changing with the times. Landline is an expensive proposition. Investments can’t be scaled up as in mobiles.
“People’s Democracy” is a sham. It gives some glorified bunch of idiots to rant about the Government’s policies while being a part of it! I wonder whom are they decieving.
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