|
|
            
|
L E A D E R Tech And The Tortoise The fracas over limited mobility is indicative of policy makers' limited capability in dealing with tech.
It took the Telecom Regulatory Authority of India (TRAI) to do its usual white knight routine and resolve an issue that threatened to drive a rift in the adolescent private telecom player community. This time round, the Department of Telecom, wasn't the bad guy; that role was usurped by Hughes Telecom, Shyam Telecom, HFCL and the Association of Basic Telecom Operators.
The technology behind this strange animal that goes by the name of limited mobility is Wireless in Local Loop (WILL), a technology that works on the CDMA (Code Division Multiple Access) standard. CDMA, a tech-standard developed by Qualcomm, achieves higher data transfer rates by splitting available frequencies and transmitting data in packets (or parcels). However, with most European countries and several Asian ones (India inclusive) picking the Groupe System Mobile (GSM) standard for cellular phones, CDMA was sort of assigned to the back-benches till it made a come-back as the basis for 3g (Third Generation) and 3g+ telecom networks. CDMA can also serve as a standard for basic telephony; only with most European and American markets already wired terrestrially by the time it made an appearance in the mid 80s, it was never really used in that context. Until, that is, harried basic telephony service providers in India discovered that will could help bring down their last-mile costs. Explains Sumantra Deb, a telecom analyst with itSpace.com: In densely populated areas, the cost of deployment could come down by as much as 50 per cent. Put simply, will could help these companies address the issue of economic viability, something that has resulted in a slow rollout in private basic telephony services over the last five years (around 2 lakh connections, including 13 village connections). The COAI's hackles are up because will allows for mobility in a 20-km radius. That would eat into the volume of cellular traffic for sure, but will phones cannot provide roaming facilities or SMS (Short Messaging Services), and be operated from moving vehicles. Policy-makers would do well to study the details of the limited mobility spat well. 4g technologies will see the lines between basic and mobile telephony blurring. The internet has already rendered the concept of paying inconsiderate international tariffs redundant; most people this correspondent knows make calls to the US using free dialers available courtesy Yahoo- and msn-Messenger. And the country is yet to formulate a policy on internet telephony. These problems aren't unique to India. Others have faced similar concerns (or are facing them now). Until now no country has taken the intrepid step of issuing a unified licence for all telecom and media services. Should India be the first? -Ashutosh Sinha A G R I - B U S I N E S S Negotiating the Agreement on agriculture of the World Trade Organization could prove tricky.
One school of thought believes India's new stand on agriculture will correct distortions in global agricultural trade caused mainly by significant domestic- and export-subsidies that the European Union and the US give to their farmers. This will, proponents of this school argue, help Indian farmers access export markets in the first world. Another school (there's always one) of thought believes that by insisting on certain safeguards to address issues related to food security and imports, India is actually playing into the hands of the EU (which never wanted agriculture to be part of the 1995, Uruguay Round of Multilateral Trade Negotiations) and the US, which can legitimately ask for concessions too. As Pradeep Srivastava, an economist at the National Council for Applied Economic Research, puts it: ''If India can ask for concessions, others can demand similar favours for themselves.'' One of the authors of India's new stand believes Srivastava's fears are unfounded. He says India's approach is part of the negotiating process where it doesn't really make sense to begin with a realistic set of demands and have little negotiating-currency. According to him, India's negotiating agenda hinges on two basic issues: protection for domestic producers; and greater market access. ''If push comes to shove,'' he adds matter-of-factly, ''India can always give up its claim for greater market access in return for protection of its domestic producers.'' There is reason to believe that any further liberalisation in agricultural trade can only help India. The country has a negative Aggregate Measure of Support (a parameter indicating the total domestic support given to agricultural produce) and a per capita annual income of less than $1,000. The first means the GOI can provide subsidies to the agricultural sector; the second, that it can continue with the Public Distribution System. In contrast, first-world countries with a positive AMS will have to prune subsidies-something that could render their agricultural sector less competitive. And that could give Indian farmers an opportunity to export, as long as they can compete with their counterparts from 137 WTO-member countries. The ideal approach, as suggested by Brajesh Jha, a scientist at the Council for Scientific and Industrial Research, seems to incorporate the best practices of running with the hares and hunting with the hounds: ''Align with the Cairns group (includes Australia, Argentina, and Brazil) and battle domestic- and export-subsidies; then, align with the least-developed of WTO's members and lobby for concessions to protect local farmers.'' -Ashish Gupta T H E M A C
R O S T U F F The central bank may actually be able to cut interest rates without fear of an inflation backlash. May be it had something to do with US Federal Reserve Governor Alan Greenspan's decision to prune the interest rate by half a percentage point (down to 6 per cent) on January 3, 2001. May be it had something to do with the praise the Fed's move has drawn from politicos, economists, and market movers. Or may be it stemmed from economic exigencies. Whatever be the motivation, on January 6, 2001, while speaking at a function in Pune to commemorate the foundation day of the National Institute of Banking Management (NIBM), the Reserve Bank of India's Governor, Bimal Jalan, expressed a desire to see the interest rate 'soften'. To ask a question straight out of Macroeconomics 101, though, won't that mean a higher rate of inflation? Actually, it will not. It was the rise in world crude prices that pushed inflation beyond the 8 per cent mark in December, 2000. And most spikes in inflation in recent months have been on account of the consequent rise in fuel prices on manufactured goods and foodstuff. Still, crude prices are already down 30 per cent, and JP Morgan Securities expects inflation to taper off in mid-February, and drop below 6 per cent post-April. Morgan's take seems a trifle cheery, but other economic indicators do point towards a lower interest rate. India's manufacturing sector recorded a 5.8 per cent (year-on-year) growth in the first seven months of 2000-2001, as compared to 7.2 per cent in the corresponding period in 1999-2000. A cut in the interest rate could result in an increase in investment activity, and, therefore, jumpstart in the sector. Predicts Aashish Pitale, Vice-President, JP Morgan Securities: ''The RBI will reduce the bank rate by 50 basis points in the early part of the next financial year. It may also reverse the 0.5 per cent increase in the Cash Reserve Ratio (a hike in this normally reduces the quantum of funds a bank can lend) effected in July, 2000.'' Ergo, when, not if, the question that needs to be answered in the context of a softer interest rate. -Roshni Jayakar P A R A L L E
L E C O N O M Y Low gold imports doesn't mean the metal has lost its lustre in India; it means a thriving smuggling racket. If numbers can tell a story, these two sure do. The first is the GOI's estimate of the amount of gold imported into the country till October, 2000 (from April, 2000): 175 tonnes. The second is the Geneva-based World Gold Council's estimate of the total demand for gold in the three months between July and September, 2000, in India: 205.6 tonnes. Surely, the country's populace couldn't have gotten suddenly disenchanted with the yellow metal? If you're thinking of a nine-letter word that stars with 's', ends with 'g', and boasts a middle strangely reminiscent of Joanne Rowling's term for people not endowed with magical powers, you're right on target. As a senior official in the Directorate of Revenue Intelligence put it: ''The ever-increasing demand for gold, which is now subject to a higher import duty, has fuelled a huge business in smuggling gold.'' Seconds Mukul A. Sonawala, the aptly-named President of the Bombay Bullion Association: ''There are distinct signs that the smuggling of gold has suddenly perked up.'' As a WGC report puts it: ''Official imports at 114 tonnes in q3(October to December) in 2000, continued to run well under year-ago levels of 176 tonnes in q3, 1999, but unofficial imports are estimated to have risen to 45 tonnes, 15 tonnes up on q3, 1999, due to extensive smuggling.'' Indeed, as the DRI officials and traders believe, the recent spurt in the smuggling of gold is a direct fallout of the GOI's January, 2000, decision to up the import duty of gold from 5 per cent to 10 per cent. That increase just proved adequate enough to tip the balance in favour of the illegal route. On January 12, 2001, an ounce of gold cost $290 (Rs 13,050) on the international market. An ounce imported into India would, thus cost Rs 14,355. People in the bullion trade point out that even assuming smuggling overheads of between 2 and 3 per cent, and margins of 7 per cent, people who buy smuggled gold can save around Rs 1,004.85 an ounce (or Rs 334.9 for every 10 grams). The (5 per cent) solution? Prune duty; kill smuggling. -Ashish Gupta W H E E L S So what if it sours some new year parties, car companies have sound reasons to raise prices. If you're old enough to drive, well-heeled enough to buy a car, but have been left cradling your head in your hands (and still without a car) by the recent spate of price-hikes, sorry, friend, we have no sympathy for you. After all, a price hike has been imminent for the last six months. In fact, if you'd bothered to read those tactical ads car manufacturers have been issuing for some time now-not the strategic ones; those show haystacks or islands-you would surely have caught the message between the lines: Buy Now Or Repent Later. You should have woken up at least on December 22, when Hyundai raised the prices of all variants of the Santro and the Accent by between 2.04 per cent and 2.24 per cent. Maruti waited till January 9, 2001, before raising the prices of all its offerings (other than the Zen diesel of which it sells, on an average, a mere 400-odd a month), while Tata Engineering raised Indica price on January 11. Daewoo hadn't raised its prices when this magazine went to press, but is expected to in the last week of January, 2001. The rise in prices isn't without basis: over the previous year, the global prices of raw materials like steel and composites (which account for 25 per cent of car manufacturing) have zoomed; the rupee has weakened against the dollar, making imports expensive; and Hyundai and Maruti launched upgrades of the Santro and the 800 without passing on all of the subsequent increase in costs to the customer. Indeed, the only reason the price-hike didn't come earlier was because demand for wheels flags in the third quarter. ''The market is depressed in November and December,'' says Young-Chang Kim, CEO, Daewoo India. ''If you up prices in that period, your product will suffer.'' Agrees B.V.R Subbu, Director (Marketing & Sales), Hyundai: ''Even if the cost impact happens in October, you have to hold back a price-hike.'' There's another reason for pre-announced beginning-of-the-(calendar)-year price increases: they help boost third-quarter sales. Admits the CEO of a car major: ''An advance announcement of a price increase boosts immediate sales.'' Now, repent loser. -Suveen K. Sinha
|
|
Issue Contents Write to us Subscriptions Syndication INDIA TODAY | INDIA TODAY PLUS | COMPUTERS TODAY © Living Media India Ltd |
 |
 |
The bone of contention was limited mobility
(several tech-wags have pointed out that there is no such thing and
although we agree with them, well let that rest). And the good guy was the
Cellular Operators Association of India. The association was driven by the
legit belief that since its member-companies had been issued licences for
mobile telephony and since the GOI had agreed to limit the number of
companies operating in a cellular circle to four (including the
State-owned erstwhile monopoly service provider), allowing basic telephony
companies to offer limited mobility was unfair.