In the great media build up to Hughes Tele.com's public issue over thepast few weeks, one of the stories that came up repeatedly in the country's financial dailies was that Hughes' monthly revenues in Mumbai were more than three times MTNL's average revenue of Rs 1,100 per line per month. That top corporates and hotels in South Mumbai, were switching to Hughes network. Combine this with the news that Hughes has mopped up around Rs 675 crore already through book building prior to its public issue next week, and it's a sign of the great success that private telecom firms have had over the past few years, right? Wrong. What these numbers don't tell you is that close to three years after Hughes license period began, it has rolled out less than a twentieth its committed number of fresh telephone connections - Hughes was supposed to put up 6 lakh new connections in the whole of Maharashtra by year 3 which ends on the 30th of this month, but has done just around 30,000 or so, and that too in more profitable areas like Mumbai and Pune. Nor is Hughes the only telecom firm to default in such a major way in its commitments. Of the six firms that have licenses to operate basic telecom services in six states, not even one has met its targets. Tata Teleservices has rolled out just around 20,000 lines after three years as against a promised rollout of 3 lakh lines, Reliance Telecom has not even begun its Gujarat services though it was to have provided 2.8 lakh connections, Essar hasn't done even one of the 5.2 lakh it promised in Punjab, and ditto for Shyam Telecom's 1.5 lakh in Rajasthan. India's telecom czar, Sunil Mittal of Bharti, has fared the best, but he too has done just 80,000 of the 1,50,000 lines he was supposed to connect by the end of this month in Madhya Pradesh. Naturally, none of these firms has set up even one village public telephone, despite having huge commitments here as well - Bharti's the best again, having done around a dozen against the target of 16,500! When I say 'commitment', I'm not using the term loosely, these were part of the license conditions of these firms. In fact, 15 per cent of the marks these firms got while bidding for these states, were for their rollout commitments, and another 10 per cent was allocated for their rollout for village phones - the higher the number of phones you promised to install and the larger the number of VPTs you put up, the higher the marks you got. These conditions were put so as to increase the country's teledensity - the idea was that private operators would build networks in unrenumerative areas as well. This single fact is likely to trip the government's plans to increase the country's teledensity from a pitiable 2.7 right now to around 15 by the year 2010. Till now all telephone lines - around 4 million last year, for instance - have been set up by public sector organisations such as MTNL and the DoT. And since the government has traditionally ensured that local call rates are charged way below what they actually cost, the DoT makes its money by over-charging on the national long distance or STD calls. But last month, the government decided to open up the STD market to the private sector - the ISD one is to be opened up in March 2002 - as this would increase competition and it was also a long-standing demand of the private players. The problem, however, is: how is the country's teledensity to be increased if the DoT doesn't have the funds to do so - last year's cut in STD rates alone resulted in a Rs 2,000 crore loss for it, and the increased STD competition will make it worse. The government, or at least the more visible part which resides in the Prime Minister's Office and is responsible for the country's telecom policy, is quite blase about it, and dismisses the problem by arguing that the private sector will take up the slack. One sure hopes so, but the private sector's record so far has been more than pathetic. The issue here, of course, is not so much of a faulty policy, as it is of the government consciously refusing to penalize private players, while going out of its way to curb the public sector players. In the case of the pathetic rollout of new telephone lines by private operators, for instance, the government has just penalized these operators a couple of crore rupees annually. Now clearly operators don't mind shelling out a few crore in penalties if it allows them to save thousands of crore in laying out unrenumerative networks in rural and poor urban areas. How serious the problem is can be judged from the fact that to increase teledensity to 15 by 2010, the country needs to set up anywhere between 15 to 20 crore new lines - the six private operators, by contrast, did under 1.5 lakh against a 3-year target of 20 lakh! Unless the government acts firm and cancels some licenses for non-fulfilment of rollout targets - and even sets new ones, considering that license fees have been reduced so dramatically under last year's New Telecom Policy - the country's telecom revolution will be stillborn. The teleCon revolution, naturally, will continue unchecked.Hughes Tele.com has 3 times MTNL's Mumbai revenues, but is way belowits commitment for new lines
