SEPT 14, 2003
 Cover Story
 Personal Finance
 Case Game
 Back of the Book

Q&A: Jagdish Sheth
Given the quickening 'half-life' of knowledge, is Jagdish Sheth's 'Rule Of Three' still as relevant today as it was when he first enunciated it? Have it straight from the Charles H. Kellstadt Professor of Marketing at the Goizueta Business School of Emory University, USA. Plus, his views on competition, and lots more.

Q&A: Arun K. Maheshwari
Arun Maheshwari, Managing Director and CEO of CSC India, the domestic subsidiary of the $11.3-billion Computer Sciences Corporation, wonders if India can ever become a software product powerhouse, given its lack of specific domain knowledge. The way out? Acquire foreign companies that do have it.

More Net Specials
Business Today,  July 20, 2003
Limited Mobility: Unlimited Options
Will the charade of limited mobility end, and will it eventually get the status of a full-blown mobile service (which it is for all practical purposes)? Then how will the cellular lot be pacified? BT attempts to unravel the increasing knots in the telecom tangle.
The winner?: Mukesh Ambani, Chairman, Reliance Infocomm

Ever since 1999, when the Vajpayee government facilitated the migration of private telecom players from a licence fee regime to a revenue sharing system, in the process bailing out a few operators, the Indian telecom sector has been grappling with one tangle after another. Four years down the road, the situation appears to have only got knottier, with little changing in terms of clarity of policy. As new chapters in this never-ending soap opera keep getting opened (and reopened) just when you think the end is near, Business Today attempts a bout of crystalballgazing to figure out the most likely scenarios that will play out. Whatever the scenario, the consumer is the winner... and likely the limited mobility guys too. Read on...

"The limited mobility service will continue to be a full blown mobile service"

Let's just say that there's nothing limited about it. At least as of today. And some 3.2 million users who have opted for limited mobility services aren't complaining one bit. Sure, there will be attempts to limit that mobility to within a city, which is what the cellular companies are banking on to retain their loosening grip on the wireless telephony market. So will mobility be limited? That requires an amendment to the licences of the basic operators, the ones responsible for the limited mobility service. An amendment cannot be unilaterally effected and no company will offer its licence for amendment to its own detriment. To get a flavour of the mood in the limited mobility camp, read into this statement of Amit Khanna, the spokesman for the largest player in this arena, Reliance Infocomm. "We will do all that is required to ensure that our consumer continues to get the service." This could mean buying into a full-blown cellular licence or knocking on the door of the apex court to prevent any anti-consumer, anti-public-interest (but pro-operator) steps.
Probability: Very high
Who wins: Reliance, Tatas
Who loses: All cellular companies

"There will be litigation but it will not disturb either service"

Limited mobility is a legal service. The tribunal order does not prohibit multiple registrations, which allows the limited mobility firms to mimic a full mobile service. For now, COAI is content pushing the government to implement the order.

The cellular companies thought they owned the applecart (projected to be worth 800 million wireless phones by 2020) and there are some who are not interested in conceding a single apple (the names of a US-based multinational and a Hong Kong-based one often figure in this list) and want to rush to the Supreme Court to make their case with the backing of a pretty strong dissent note that is part of the judgement legalising limited mobility. The view of the pragmatists has, however, prevailed in the Cellular Operators Association of India (COAI) for now and they are calling for limiting mobility within a city as per the order of the telecom tribunal. This represents 80 per cent of the overall market. The logic: Concede the 80 per cent in exchange for an unfettered right to the balance 20 per cent market, which comprises those who roam outside the city. This also happens to be the premium high-revenue market. No courts. No fight. "But where is the fight? We have no quarrel with anybody," says Khanna unabashedly, whose interpretation of the order is simply this: Limited mobility is a legal service. The tribunal order does not prohibit multiple registrations, which allows the limited mobility companies to mimic a full mobile service. For now, the COAI is content pushing the government (a letter a day) to implement the order as they interpret it. It is only a matter of time before the action unveils in the courts, before the extremists take centre stage in the cellular association, and it will happen sooner rather than later. An investment of Rs 25,000 crore is at stake (and accumulated losses of Rs 8,000 crore, claims COAI). At stake also is their survival. The view that the pacifist policies are making the opposing camp stronger is gaining ground. This time round the cellular operators are gunning for a fight to the finish. Since the courts and the government would be unwilling to disturb service to the millions of limited mobility subscribers, the cell camp has even offered to take on the subscribers, lock, stock and barrel. A laudable offer, but the only hiccup in the whole plan is that in the Indian legal system, there is never a clear "finish". What is clear is the advocates' fee (A few lakh per appearance).
Probability: High
Who wins: The consumer
Who loses: Can't say

"There will be no hike in limited mobility rates in the near future"

Before the year is out, the limited mobility players will have to shell out an "appropriate fee" for getting the right to offer the service. They may also be charged additionally for spectrum. Will it be a token amount? Will it be a significant amount? Will it be limited to the metros? The answers will be provided by the government and the regulator, though the case of the basic operators is that they have paid a higher entry fee than the cellular operators (more than twice for the circles). "We also get less spectrum and have much more stringent roll-out obligations," says the Secretary General of the Association of Basic Telecom Operators (ABTO) S. C. Khanna. When the national objective, as encapsulated in the telecom policy of 1999, is to increase the penetration of affordable telephony, this fee is unlikely to be on the higher side as it would ultimately burden the consumer. For the record, Reliance has ruled out any hike in tariffs.
Probability: Very high
Who wins: The consumer
Who loses: Reliance/Tatas

"A unified telecom licence will be a reality within 12 months

Shourie himself has admitted that it is futile attempting to limit mobility since it will be matched by a more intensive effort to get around the limits. And that will mean yet another round of litigation. There is thus a strong case for settling it once and for all with a de facto full mobility licence for limited mobility firms.

If licensing is a matter of policy and the government (in consultation with the telecom regulator) decides policy, then India will go the unified licensing way with minister Arun Shourie and Pradip Baijal, Chairman of the Telecom Regulatory Authority, gunning for it with all their might. This means that the limited mobility players will get to migrate to a licence with which they can shed the last vestiges of limiting mobility (multiple registrations). Shourie himself has admitted that it is futile attempting to limit mobility since it will be matched by a more intensive effort to get around the limits. And that will mean yet another round of litigation. There is thus a strong case for settling it once and for all with a de facto full mobility licence for limited mobility companies. If you are wondering what is in it for the cellular companies, they will get the right to offer basic telephony services also under a unified licence. "But I already have that right," laments COAI Director General T.V. Ramachandran. The cellular operators want much more. They want to get a long-promised right to the long distance market and they want to see the limited mobility players pay through their nose for riding roughshod on their turf. It will be a huge challenge to get the two opposing camps to find some common ground with regard to the terms of migration to a unified licence. Expect some litigation.
Probability: Moderate
Who wins: Reliance/Tatas
Who loses: The cellular companies

"The ultimate solution is the converged licence"

As if the problems within the telecom sector are not enough, there is a section of people that wants to revive the case for a convergence legislation, which brings together the broadcasting, telecom and internet communities, and proposes a super-regulator for all three. The Bill, tabled in 2001, has been in a limbo since December 2002 when a parliamentary standing committee had said that it was premature for the country to opt for such a legislation, but had nevertheless given detailed recommendations of the changes required. "Many countries have since moved towards a convergence regime. That is also the way technology is moving," says Khanna of Reliance. There is no doubt that voice, video and data will ultimately converge and we can see the first signs of that convergence. However, it is rare for legislation to precede technology. It generally follows technology (think cordless phones, legalised long after they became ubiquitous).
Probability: Unlikely in the near future

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