Vinod Anand | 31 Jan 2012

If we leave it to Government to invite tenders for service franchises, they may take so long frustrating the private initiatives.

PRIVATE ENTERPRISES may on their own submit proposals (as indeed there are already more than a score) but the offerings will be so diverse that one can not be compared with the other. What is called pilot project is a matter of literary understanding in the absence of criteria. A reasonable compromise between tenders being called and private offerings being considered 'case by case' is that the Ministry/Regulator gives a public notice requesting for proposals (RFPs), to be submitted within 60 days of such notice with information content as (a) Specify the areas; (b) The investment levels year-by-year over a 5/10 year period or tele-density levels to be achieved; (c) Proportion as between urban and rural lines, until telephones are given on demand and public telephones as a matter of policy, irrespective of cost, for habitations with population over a certain figure, the figure to be less in remote and inaccessible areas; (d) Extent of foreign exchange involved and how it would be arranged (Equity, GDR, loan, suppliers credits, deferred payments etc.) (Say. 49% of investment).(e) Who are the foreign allies if any, areas and what their operational experience is?(f) Local loop or access technology to be implemented (no repeated digging of roads);(g) What other services (e.g. cable TV) are intended to be provided?(h) What interconnections are required, radio spectrum wanted, how traffic to areas other than the franchised area, is planned to be carried and what obligations are expected from Government / DOT?(i) How soon would the system be up to give say 50K, look, and 200K lines?Each of these criteria should be given a publicized predetermined weight age.

Revenue Sharing or Public Service Obligation Sharing: When a condition like they should provide a certain proportion of lines in rural, remote and inaccessible areas is imposed, they are sharing the public service obligation burden. Therefore there is no ethical justification to require them to share their revenue or pay a hefty royalty. After all they would be paying income taxes on their profits, to the Government. However, in lieu of providing the rural lines, they may be asked to contribute certain sums, not in the first year, but after they get significant cash-flows, in discharge or default of public service obligations.The radio-spectrum may be required to be paid for.

But the payments should not be extortionist. The idea is: we want private sector in, to roll out service, to take risks, to compete. Therefore we act in a facilitative manner for a few years, not in an inhibitive and repellent manner. We view private investment, enterprise and efficiency in a mutually beneficial relationship.Demonopolising domestic long distance and international services: In developed countries it is in these sectors that demonopolisation and competition began. Traditionally, revenues from long distance services (which were priced far above costs) enabled large cash- flows and profits to extend the network and to, later on, subsidies local services, especially the 'local only' callers.

In India, that would still be desirable but it must decline i.e. price must be driven down towards costs, gradually. The object can be achieved by having a cap on long distance prices but at the same time ending monopoly in these sectors also.We need to expand the intercity network so that the revenue-generating traffic is not choked. Just as we want more investment to extend the network, we need investment to remove the long-distance bottle-neck also.While we had over 40 trunk circuits per 1000 DELs, the figure seems to have come down to about 25!

We see the result -- busy tones too often, for too long on STD and ISD. This is yet another reason for demonopolising and attracting investment into long distance. Besides, we want the benefits of competitive culture. So we must have demonopolisation of intercity service and facility provision also.