quot;Telecom industry8217;s problems can be solved if DoT8217;s functions are separatedquot;

While the telecom industry is in deep trouble, the equipment manufacturers are also suffering. Nokia Telecom India is among them and has put...

While the telecom industry is in deep trouble, the equipment manufacturers are also suffering. Nokia Telecom India is among them and has put off its manufacturing plans for India by three years. It hopes that the market will pick up by then. But unlike the operators, Nokia welcomes the entry of MTNL as a cellular phone service operator as it feels that this will expand the market. Its Managing Director Hanu Karuvirta explain the dynamics of the telecom industry to NAVIKA KUMAR in a conversation.

The telecom sector, which was the sunrise sector till two years ago with investors being very upbeat about the prospects of this sector, suddenly seems to be floundering. Where according to you, is this sector today? On a scale of 1 to 10, how would you rate the investor confidence in the sector today?

India, when it took the initiative to liberalise this ector was one of the few developing countries which was forward looking in terms of its recognition of the technological advances in thefield of communications that had taken place the world over. The implementation of the liberalisation process however, has led the sector into such doldrums which have marred investor confidence.

Delays in taking key decisions are preventing the sector from gaining its natural momentum. India has survived the Asian crisis and this is proof that the fundamentals are strong in the country. The problems of depression in this country are probably more on account of internal restraints in decision making at the government levels rather that bad fundamentals.

In 1994 and 1995 when the liberalisation policies were unveiled, the excitement levels from investors could be said to be around 9 on the scale while today I would say it has dipped to the level of 3. The government will have to take some serious and quick measures to resolve the problems of the sector before it is too late.

What are the 8220;key8221; government decisions that you think the government should take in order to give the sector a new lease oflife?

The most important decision that the government needs to take is separation of the three functions currently being performed by the Department of Telecommunications DoT 8212; policy framing, service provision and regulation. Unless these roles are separated from being held within the same organisations, conflicts between private operators and the DoT will continue to happen as this the root of the problems currently faced by the sector.

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Once the government successfully does this, the market forces will set into operation and correct all that is ailing the industry today and the sector will be on the path to recovery.

What were your investment plans when you entered India and where are these today?

Well, as a company, Nokia still feels India is a very good diversified market which offers scope for all types of products for companies 8212; be it in the low, middle or high end of the price range. However, the time frame has now changed. What we earlier expected to achieve in two to threeyears may now take five years. As a result we have put off our decision to set up a manufacturing base in India for at least three years and we hope that the market will pick up by then.

Do you think equipment manufacturing companies like yours, are being forced to get products which have technologies which are a few years old as the service providers in the country are financially not in the pink of health and are compromising on bringing the latest state-of-the-art products into India?

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This is not true at all. We have been doing global launches of the latest array of products simultaneously in India. Whatever latest technological advancement is made by us for the world market is available in India. The only problem that we find is that the volumes in India come from the middle and low end of the market which are more visible than the high end. We have just launched a new high capacity GSM system which increases the capacity of the network 10 fold and reduced the price by half. These technologieshave all been introduced in India as service providers recognise the need for installing such equipment for growing networks, at least in the metros and large cities in India. Operators know that these equipment will have to be in place to meet the demand requirements for tomorrow even though the present market may appear to be sluggish.

Operators have been resisting the entry of MTNL in the field of cellular services. As an equipment manufacturer do you think MTNL8217;s entry will broaden the market frontiers for you?

It has been the experience the world over that any new entrant in services always meets with resistance in the first phase. However, often, this entry instead of reducing the share of the existing operators often increases the size of the market itself which helps healthy shares for all operators. This is what I expect to happen if MTNL enters the fray. The scope of the market will be expanded and this will spur market growth and set in motion the growth rates which have so far beeneluding operators so far.