Vantage point

Saturday, February 05, 2005


When Reliance started their mobile phone company using and tom-toming the 3G CDMA technology, the joke doing rounds was that 3G CDMA stands for "3 Gujju Chor- Dhirubhai, Mukesh, Anil".

This report - Govt threatens to cancel Reliance Info license would make us think that the joke really wasn't off the mark. Reliance was re-routing International calls, and passing them off as domestic ones to avoid paying charges to the Dept of Telecom.

I remember that a few months back when my friends in America had all gathered together during a long weekend, and called me up using the "extremely affordable" Reliance Calling Card. The number I receives the call from was a Chennai Reliance number. Later when they called again, it was a Kolkatta Reliance number. In fact the first question I asked my friends was "You are in USA, right? Why is this showing an India number then?"

So there is no doubt that Reliance has done what it has been accused of.

But a question begs to be asked. While Reliance did break the rules, were the rules themselves fair?

The media is making a big hullabaloo out of this violation by reliance, and are smacking their lips at the possibility (very remote) of RIM's license being revoked. Not one channel has really taken a look at the rule itself.

According to the current rules, direct dedicated links to a foreign carrier for the switched voice telephony bypass the authorised switched routes of the international long distance service provider and are not allowed. So if such calls are made, you have to pay charges to the DoT.

Let me translate this into plainspeak. DoT (BSNL and MTNL) had a monopoly as an International Call Service Provider. New technology like VOIP makes the old technology redundant, and consumers can make calls at a much cheaper rate. So DoT loses business and doesn't make as much money as before.

For me, this is a natural part of the business cycle. When new technology emerges, then firms sticking to old technology start losing money, but it is the consumers who benefit. After all, we don't have to pay 15-20 rupees a minute for ISD calls anymore, do we? And it is not exactly a "price war" where companies are just under-cutting prices to gain market share. It is plain and simple technological p-r-o-g-r-e-s-s.

So what BSNL and MTNL should do is, start VOIP services of their own, and market them well in India, and in the diaspora abroad. Whining about revenue losses due to technology, and punishing technology adopters like Reliance is stupid.

Think of it. Why should Reliance pay the government anything? It did not use the government's gateway, and set up the call entirely on its own (barring the last mile connectivity of course). How does Reliance owe the government anything?

Already, the legalisation of VOIP was delayed for years. even now there are idiotic rules like these in place which seem to take care of the bank balance of the DoT rather than the interests of the consumer.

Sure, Reliance has broken the rule. But the rule is wrong in the first place. It is archaic, protectionist, and anti-consumer. Because when Reliance pays up the 150 crores, it is not going to auction Mukesh Ambani's shares for it. It will coolly pass on the cost to the customer.

You and I are paying to keep the state owned TELCOs in business, rather than paying to get services from them!