Poor man8217;s call

The poor man8217;s cellphone is here, and it is to be hoped that it is not going to go the way of the people8217;s car, leaving broken middle-class dreams in its wake. Of course, at rates cheaper than a landline, the MTNL cellphone is in no danger of becoming a status symbol. But it does run the risk of becoming a service that subscribers can only aspire to use 8212; not because of the price but because of traffic density. There is a precedent of sorts in Bangladesh8217;s Grameen Phone, the pathbreaking cellular service which was originally set up to offer connectivity to women entrepreneurs in the villages, and then developed a presence in the cities as well. Traffic on the Grameen network is so high that for urban users, its phone is no more useful than an electronic paperweight. While users in the villages are prepared to wait hours to get a call through, urban users are forced to fall back on another network. This is the principal pitfall that MTNL will have to watch out for. It must resist the urge to increase itssubscriber base until it develops network capacity. Despite the cap that MTNL has put on the number of connections, the advertisements which appeared in the leading dailies on Monday, expressing gratitude for the overwhelming public response, conveys the impression that it may want to expand the service sooner rather than later.

There is some puzzlement at the fact that private cellular operators have welcomed MTNL8217;s initiative, saying that the government has assured a level-playing field. The government, of course, has done nothing of the sort, but the industry8217;s response is logical nevertheless. MTNL8217;s low rate of Rs 1.40 per call is, to some extent, made possible by a cross-subsidy from the landline network. True, the private operators do not have access to a similar cash cow, but the fact remains that for many, MTNL8217;s cellphones will look more attractive than its landline options. In other words, the subsidy will drop over the years, truly levelling the playing field. This may currently be a bit of adirty war and the Telecom Regulatory Authority of India may be miffed at being ignored by the very organisations it is supposed to police, but in the end, the consumer is going to be the winner. Even if the MTNL network clogs up, it is bound to drive down the prices of the competition. And eventually, the argument for dismantling the state monopoly on telecom traffic will be strengthened.

This monopoly is all that stands in the way of a telecom boom in India, in products ranging from telephony to Internet access. A number of infrastructure providers are eager to set up shop here, using digital wireless and other satellite-based distribution systems. Internet technologies have made the distribution of all sorts of data products Internet to pager or fax, for instance and services dirt cheap, but the government has been rather reluctant, over the last five years, to embrace these. But now, it will have to realise that if these are put in place, the loss of revenue from its legacy systems will be far lowerthan the social cost of denying the population the very technologies that can fuel a boom in the information industry.