R.S.P. Sinha, chairman and managing director of MTNL, has clearly defined the priorities for the company: customer satisfaction, technology upgradation and market share, in that order. In an interview with tele.net, he talks of present and future telecom trends, and the key issues and concerns. Excerpts…
How do you perceive the Indian telecom industry in terms of growth and business opportunities?
A basic criterion for growth in telecommunications is teledensity. India’s teledensity is not at par with that of developed countries or even semi-developed ones. As we are still way behind the others, especially in rural and semi-urban areas, there is scope for progress.
The same applies to business opportunities. The market is enormous with a huge population still uncovered. In my view, the two continents to watch out for are Asia and Africa. They were earlier considered economically backward, but are now going to be the real, fertile grounds for telecom growth.
Which segments do you expect will do well in the coming years?
To begin with, the segment that will generate the maximum ARPUs is the upper strata of society. However, as teledensity grows, business is going to be volume driven and most operators will target the other end of the spectrum. This is the case now in India. With tariffs and handset prices falling, mobile phones have come within the reach of the common man.This is because the potential lies in that segment. If we look at C.K. Prahlaad’s pyramid, tier 1 has about 75 per cent of the total population. It is this segment that will become more important, particularly in light of the impetus being given to rural telephony.
So far, only Europe seems to have adopted 3G in a big way. When can developing countries like India be expected to launch 3G?
On the 3G front, we have already prepared tender documents. In fact, we are in the process of issuing the letter of intent.However, 3G spectrum is not finalised yet.The moment it is ready, we will be amongst the first operators in India to launch 3G.
The problem with 3G adoption in Europe and the rest of the world is that the costs involved are high. Not only are the handsets more expensive but even data charges are soaring. Unless prices come down, volumes will not be obtained. And if volumes lag, growth will be affected.Hence, instead of ignoring this fact, let us focus on it and not compare ourselves with the latest in the world. For example, Mercedes cars are sold outside India as well as here. However, with the majority not being able to afford even a two-wheeler, there is only a small consumer base for Mercedes cars. Likewise, there will only be a small segment that will be able to afford 3G services, which will undoubtedly hamper its adoption and success.
What is the future after 3G?
I would say convergence. The future will see data and video convergence with telecom in a big way. The effort will always be towards obtaining the highest compression at the lowest price. MTNL, for instance, is going to launch the latest MPEG 4 set-top box, which has higher speed compared to the MPEG 2 set-top boxes in operation the world over. Today, we talk about speeds of 2 MB, 4 MB, 8 MB, 20 MB, etc.; in the future, we will have a speed of 100 MB or more.
The telecom sector is currently in a consolidation phase. Do you expect more mergers and acquisitions in the future?
Let us consider China, which has only two mobile operators in contrast to India where there are many. Over time, in India, only a few players will remain as the smaller ones will find the canvas too big to cover. So, I expect more consolidation to take place. It is taking place everywhere. MCI and Worldcom merged recently. British Telecom and AT&T came out with some kind of a marketing set-up in 1999. The intention had been to achieve worldwide coverage when the joint marketing strategy was formulated. They were the world’s largest telecom operators.
How would you compare India to other South Asian countries?
Whether we compare India with the world or with other South Asian countries, most of them are way ahead of us. For example, in terms of teledensity alone, whether it is Singapore or Malaysia, they are all soaring higher. Indonesia too is far ahead of us if one compares rural teledensity. China also, no doubt, is way ahead of us.
What are the trends in the telecom sector?
In the traditional telecom sector, voice was the killer application. Today, data has become vital. Though voice will continue to grow in absolute terms, percentagewise, data will grow faster. Hence, technology that can assimilate both data and voice is important. Basically, there will be a convergence of telecommunications, data and broadcasting. Wireless technology will be preferred for its cost effectiveness. The fixed line business, on the other hand, has suffered not only in India but throughout the world, primarily due to the fact that it is more expensive to roll out wireline networks vis-? -vis wireless networks. It costs almost Rs 50,000 to make one wire operational. Initially, it was Rs 20,000-25,000. But the fixed line business has turned the corner with the increasing demand for broadband. In India, broadband is a key thrust area. The number of such connections has been steadily on the rise and with the launch of IP-TV, etc., fixed line services are seeing a comeback as the quality of service on fixed lines is far better than that on wireless networks. British Telecom also started broadband technology on fixed lines hardly four to five years back. This should have been done earlier in my opinion.Fixed line operators throughout the world are now trying to reinvent and reposition themselves. Ultimately, broadband can be obtained on wireless also, but cost and spectrum will always be constraints. The only problem today is that the existing fixed line network is on copper and the speed requirement will be higher with the passage of time. Hence, copper needs to be replaced with optic fibres. All our exchanges in Delhi and Mumbai are interlinked with optic fibres.
What, according to you, are the concerns that need to be tackled?
Spectrum is a major concern as there are many operators and hence, it has been distributed amongst all. Another issue that has come up recently is verification of credentials. This is a major problem as in our system we do not have identity cards for individuals and have to depend on the documents that the customer brings. A connection is provided on the basis of these only. There are situations in which the documents are not genuine and hence the operators become liable. But we are trying to be more careful about the whole process. It is also necessary to keep pace with the latest technological developments and incorporate them at the earliest in order to provide customer satisfaction.
In your opinion, are policy constraints deterring foreign investors from coming into the country?
I do not think so. There is no disputing the fact that the telecom sector is capital intensive and requires huge investments. At the same time, the security aspect also has to be kept in mind as it is a sensitive area.
What are the key thrust areas for MTNL?
The two areas that MTNL is looking at are broadband and GSM. On the GSM front, when I took charge, there was a customer base of 360,000. Today, it is more than 2.2 million. We did suffer a bit on account of lower capacity. However, today we anticipate demand and are ready with capacity. Also, we have made all the latest technology deployments, whether it is GSM, broadband or IP-TV. We are also focusing on sensitising our staff, especially the line staff, to customer relations.They must understand that they are the ambassadors of the company. I conveyed to them them that if they could bring in additional customers, then out of six months’ rental, they would get one month’s rental as commission. Apart from this, I explained that customers will not come by themselves and say “yes, I want a connection”. You have to sell the product by generating confidence and faith. Once you succeed, it has a ripple effect and more people want to come to MTNL.Therefore, customer care is our priority.Latest technology is the second priority and market share is the third.
