Q&A: Dayanidhi Maran

The completion of Year One in the UPA government was supposed to be an occasion to reflect upon and review targets. But Union Minister for Communications & Information Technology Dayanidhi Maran found himself in the middle of a raging controversy sparked off by Ratan Tata's proposal to pay for 3G licence, which the TRAI wants to be given on a revenue-share basis. He has just returned from Chennai, where Tamil Nadu chief minister Jayalalithaa--he confesses--outsmarted him this time in the by-elections (for Kancheepuram and Gummidipoondi seats). Maran speaks Kumarkaushalam of Business Today about Reliance Infocomm and regulations, and says that "trying to dig in the past is not going to help. The future is more important". The minister's future includes: a subscriber base of 250 million by 2007, extensive broadband connectivity; and an Indian language translation browser. He has no doubts who his allies are: Telcos who are willing to reach out to rural areas and hardware MNCs committing to make India their hub. Excerpts:

Q: As you complete one year in office, what's utmost on your mind?

A: How am I going to get you 250 million phones by 2007; how am I going to get the broadband connectivity; how am I going to get the Indian language translation browser. These three (objectives) will answer my targets for the future. We're going to get these three things.

Right now one in ten Indian have phone. By the end of three years, we will have two to three Indians out of ten to have phones. The idea is to have every Indian to have a phone. - But that is going to take time. You should be futuristic on the way we do it. You should make plans to have low-cost technology; make sure it's not expensive. I don't insist on cheap technology. Cheap is cheap. We need low cost technology at the best price.

Every time a person has a phone, the GDP increases. It's proven.

I've taken this initiative of trying to get this dream to reality. But we can't import all these. BSNL and MTNL have joined me in this effort. Since they are going to be a bulk purchaser of phones - around 80 million phones -- they will insist now on good quality service back up. This is possible only when local manufacturing takes place. My dream is that the major chunk of the (cape for) targeted 150 million (subscribers) is manufactured within the country.

We have already excellent and efficient skilled labour force in the software industry. Those MNCs have benefited from our skilled labour force (in the software). Why can't they benefit from the same set of skilled labour force for their manufacturing operations in India? LG has come in; Alcatel has tied up with ITI: they will start manufacturing their base stations in Mankapur, Rae Bareli, Naini Tal, J&K. Ericsson has modernised its factory; has gone into the next stage of base station manufacturing in Jaipur; Nokia has come in to Chennai; and will start manufacturing of handsets by first quarter of next year. They will also be manufacturing BTS soon from Chennai plant. Alcatel has already started manufacturing their handsets in Bangalore.

Q: All these activities should give you an FDI of $1bn by the year 2007 ...

A: We are expecting that; including $800 million this year. Manufacturing companies like Nokia are not going to come alone - they will come with their ancillary industries. Similarly, we are also trying to get other major chip manufacturers to come to India. I want PC manufacturers to have a strong base in India. So we see right now as the world is going to TFT manufacturing; tubes are slowly going to be phased out of the production.

So now we are pursuing TFT manufacturing because that is going to be the future of technology. I want hard disc manufacturing. My dream is to eventually have a wafer chip manufacturing. Once that happens we will have complete manufacturing set-up. Then you can expect a lot of price reduction. Because Indians can scale it up.

Q: You expect all this to happen over next five years.

A: By the time I leave

Q: Or come back again?

A: (laughs) I don't; I don't want that. By the time I leave I want to complete this (says firmly). I want to complete this in next three years; because let me enjoy for one year - the fourth year.

Q: So what kind of investments we may see, say...

A: It's going to be a chain process; it has started . I've made India a destination for manufacturers . now this will create a momentum, which I will not be able to forecast. Let me very (honest ). It's going to be a positive trend. After the announcement of special economic zones, I realise it's going to make easier for multinationals to come and start business here. The government is giving clear-cut policy on infrastructure now.

Q: Just curious to understand this debate around spectrum. Are you receptive to Ratan Tata's suggestion that the 3-G specific spectrum be allotted to telcos for a consideration of a licence fee of Rs 1,500 crore. Mr Tata seems to be suggesting that the spectrum being a scarce resource shouldn't be offered for free; and must attract a charge, besides letting the government secure a high revenue sharing possibility. Isn't it that, if implemented, this plan may give the government an amount which is double than what it would attract in FDI over next three years?

A: I got a sneak preview of Ratan Tata's letter from the newspapers. It came first in the newspapers before they came to my eyes (laughs). We have to be little careful with this. I don't want a Licence Raj. And the very idea of India as a success story is: its low cost of tariff. Highly priced spectrum will result in an increased cost for consumers. Why should the consumer pay so much? You cannot have monopolistic approach.

Q: In one of the recent documents, I read DoT advocating a case for technology-neutrality in spectrum allocation. And now Trai has also come out with this viewpoint, strongly endorsing the stand on technology-neutrality. Now, the GSM lobby seems to have certain reservations on this; their presentation is that CDMA -- being five-times more spectrum-efficient - doesn't deserve more spectrum. So in such a situation, how do you view these two antagonistic positions?

A: I am not the deciding factor on that because basically WPC (wireless planning commission) is going to decide on the spectrum issues .. We've set up a certain terms of references that Trai needed to follow. Trai's recommendations will be taken into consideration based on our terms of references. WPC, which has got a history of 50 years of handling spectrum in this country, can do a good job. And DoT is there to assist them. And we will come out with a policy that is technology-neutral .. And which is within the world standards.

Q: I'm again - at the risk of repeating myself ..

A: (laughs) .. You realise I'm not going to answer that question .

Q: Does it (neutrality) mean, that if one (GSM technology) is being give 5 (Mhz), the other (CDMA technology) will also get 5 (MHz).

A: I'm not going to get into the controversy of who is better or who is bad. We should know what is the market demand.

Q: So all your efforts are aligned to your future market expansion goal.

A: We've decided to increase telephone connectivity to 250 million. We started reverse working it on the theory: spectrum is a scarce national asset; I don't want this resource to be landed on somebody's laptop so that he should be controlling it. It should be shared so that every Indian benefits. We've that responsibility. DoT will take utmost precaution in showing that this national asset is distributed evenly.

Q: How long will it take you to approve these recommendations (spectrum)?

A: Basically, this is a part of a process. Trai was sitting on it for 18 months. This was given to them in 2003 for recommendations. We just wanted to know their views. These are not binding on us. Now we are going to have discussion with the players. Their feedback is important. I want to ensure that my department takes correct decisions.

Q: You have also talked about following international norms in the allocation of the 1900 MHz spectrum to service providers.

A: I am not going to say anything . Should or should not. Previous government in 2003 had asked Trai to give recommendations on three specific terms of reference. After 18 months they have given much more recommendations out of the terms of reference (laughs). So now we have to involve all in a consultative process.

Q: So, what steps do you think the department needs to take to institutionalise best practices, or empower right people in order to have a scam-free regime continuing?

A: It's a tricky question. What are you trying to ask me now (laughs).

Q: Every time there is a controversy, people tend to turn to you for justice. Not many people we've talked to have faith in the regulatory authority. By and large the perception is that the Trai recommendations have traditionally been partisan. That often makes parties turn to you and DoT for justice.

A: Is it credit to me or to my department or ..

Q: Of course, it's to your credit. But well-established institutions must also exist at the same time.

A: We are here as a facilitator. We are trying to ensure that every player gets his due share. They are not victimised. There are lots of complaints but that is not for me to solve now. In fact my recommendation to all operators is: "Stop coming to Delhi for lobbying". Our job is to take care of your interests. How do you that; that happens when I start taking care of the interests of the Indian consumers. I want my Indian consumer to have the best technology at the lowest cost. And by getting that I make everyone happy.

Q: Would you like to comment on Mr Baijal's scorecard?

A: I don't want to. I don't know.

Q: I thought I would get your frank assessment. I was reading somewhere you were quoted as praising Mr Baijal for bringing cellular tariffs down.

A: I don't know. Each one of us is here to do the job. I'm here to do mine.

Q: Are you happy with the status of institutionalised processes and infrastructure that have been framed to support your year 2007 target?

A: I'm very upset with the international bandwidth prices. Broadband is expensive to India because of the cartel which prevails. There is so much of idle bandwidth. In fact, we've recommended a lot to TRAI to work on it but the TRAI has not been able to do anything on it efficiently till this moment. Why should an Indian consumer pay five times a price for the broadband. His counterpart in the USA is having a better and cheaper broadband. Why should you and I pay higher prices. This is because of the cartelisation of the international gateways, which are controlled by a few and who are not opening up. I think a more needs to be done.

Broadband penetration is directly related to PC penetration. Unless we have PC penetration, we will not have broadband penetration. What's the point of having electricity without bulbs? So we are working on low-cost PC.

Q: So you would like to address the entire value chain of the infocom activity.

A: It's the combined effort. Then comes the local language content. Less than 5% of the population speaks English. That means you need software in local languages. Until and unless you have that, this will not happen. We should benefit the person who is using it. A person who buys the PC should not use it for (merely) gaming; he should use for developing his business or life career too.

We have already started the process of Indian language computing. A Japanese does not have to pay for the Japanese phones (browsing); a Chinese does not have to pay for his Chinese phones; whereas an Indian has to pay for the Hindi phones. It's not the end of it. There is no compatibility.

So we've started the first process. We are releasing 220 phones. More than 500 phones are going to come for Hindi. All the popular Hindi phones are free. By the end of this year, all 22 official languages will have phones. So Language should not be a barrier. Phones should not be a barrier.

Translation software, optical character recognition software - we have developed it - we are going to give it for free. For all of us mother tongue is most important - as it is in Europe, a multi-language continent. We need to be proud of our languages - that's what keeps India moving.

We are also now in the process of developing Indian language translation browser. So tomorrow your English magazine can be viewed by a person in Punjab; he just types the web address and gets the English magazine translated online in Punjabi. I bring the content in so there is some use for him to have computer.

From here follows the e-governance project: here he gets all his services in local language. The moment he gets the content in local language we are in for a revolution in PC.

With telephone revolution, you can pick up the phone and speak to the other person in the same language so there is no barrier. But in PC it (communication) has got be English, so far.

Q: The gap in urban and rural tele-penetration is widening. Can this be bridged?

A: In next 10 years, this will not be there. Rural India is cash rich. Around 70% of country's population is from rural India. Cities are stagnating. Around 30% of the 100 million phones are in the rural India now. Of the targeted 150 million, around 80% will go to rural India.

Q: So this expansion will remain attractive to PSUs only.

A: No, no. Private players have no elbowroom here; they will start cannibalising themselves.

Q: If they remain stuck in the urban areas.

A: Already there is 28% tele-density in the urban areas. They have to go to areas where there is less tele-density.

Q: So what's the other incentive for them to go to rural India. Is it ADC or ..

A: ADC is for the past; it's not for the future. ADC is for the past for BSNL, which has been subsidising the services in rural areas.

Q: So what's the new ADC philosophy?

A: Now we call it new USO fund. Earlier the fund was only for the fixed lines (fixed wirelines and wireless ). Now we have decided to provide it for creating passive infrastructure like towers and shades. So in remote villages four or five operators can share common towers. So this is an incentive to the private players also to come. So just come and plug and play.

Q: So in rural areas, private players can also come and share BSNL's infrastructure ..

A: No no no ... that is a passive structure specific to USO fund. BSNL has invested its own money. Their infrastructure in rural India is their USP - how can one share one's USP. These private fellows will never go to rural India. This (sharing with BSNL) will be like spoiling them; overfeeding them.

Q: You have given a knockout punch to private operators in your memorable phrase `they have been taking, taking and taking' while the government has been giving, giving and giving'. I guess they are still in a daze (at your unexpected reaction).

A: (Laughs) yes that's a fact...Who is stopping them from going to rural India. The moment you make it easy, they will never do it. They will stop. We've given them enough of relaxation through various policies.

Q: Are the rollout obligations still relevant?

A: No, they have stopped it; previous policies have stopped it. There are no rollout obligation. If you want BSNL to share its infrastructure, then they won't. They will just ask BSNL to give roaming. That's it. If BSNL lets private operators get roaming, they will never go to the rural area. I need competition. Some competition for BSNL too --- they shouldn't feel complacent to fix its prices.

Q: With this kind of competition, what level of tariff cut do you envisage by the year 2007?

A: Tariff is going south. Tariff is controlled by Trai and the operators.

Q: But you would have identified those fat layers that could be knocked off?

A: A lot of things are going to happen. I'm not going to announce that now.

Q: Just need your `south' perspective.

A: I'll ask you: There are now roaming charges of Rs 3 per minute for private operators. If BSNL can offer roaming for free, why can't private telcos offer for free. BSNL is a late entrant; BSNL will expand 14 million this year and another 40 million next year. When that happens, private telcos will be forced to compete. So one way I can reduce tariff is by using BSNL. The more BSNL expands, the more these private telcos will come down. And there will be a lot more value-added services. In the coming months, BSNL will have a target on landlines - with more value added services.

Q: What is your assessment on the quality of services that we may get by 2007? The quality of wireless services continue to be inferior to the fixed line.

A: Right now we are over-crowded. Because everyone wants BSNL connection. There is a waiting list for BSNL mobile phones - not for private phones. There is a low tariff, a 15-second pulse ..

Q: And an element of trust ..

A: Yes trust too. BSNL is in the process of expanding. By June end, it will expand in the northern circle; by July it will be going southern circles. By August western circle. In next four-five months, we will be able to give mobile phones on demand. This will reduce the congestion in the networks.

Q: Issues governing Reliance (Infocomm) continue to loom large over the telecom landscape. Earlier you carried out the threat of licence ..

A: Me? Not me. I'll never do it. I never threaten anyone (laughs). I'm afraid of ..

Q: Okay you let them off the hook after telling them to pay a fine of Rs 150 crore for international call-tampering.

A: That's because of a norm. I think the Reliance issue is settled. They paid the fine.

Q: But they can still challenge this (TDSAT judgement) in the Supreme Court. Two months have passed (since the judgement) and one month remains (should they opt) to take the matter to SC.

A: They are free to do it. India is a democracy. And I believe in democracy. If I accuse someone, the accused has the right to defend. I believe in that. I think the case is over as far as I am concerned. I've other important things to do.

Q: Do you think that a big subscriber base is a shield to indulge in anti-licence activities?

A: However big or however small, do only what is in the law of the country. If you are wrong you are wrong and if you are right you are right. (Nothing else qualifies). I've a target. Let's not waste time in all this petty squabbles. We've a job. Every operator has a job. We all join hands and get the numbers. So many Indians are waiting for phones. Let's give them phones. We are getting distracted.

Q: So we should now move away from distraction and focus towards constructive targets.

A: They have their own problems. (laughs) I don't want to be a part of their problem.

Q: As industry looks headed for a consolidation., we are seeing a spurt in predatory and hostile bids. Do you think such a scenario is good for the health of the industry.

A: No one can stop it. That's a part of the capitalism. (Interrupted by a phone call).

Q: In the interest of small, regional cellular operators, are you in favour of charging NLD or ILD licence fees proportionate to their requirement in any specific circle (as compared to the current position wherein one has to buy an expensive all India license)?

A: They have made the demands. We are looking into it. Ours is a continuously evolving, dynamic ministry. My job is to listen to them .. and change (positively).

Q: (Any guesses on ) When is the notification on FDI limit of 74% in telecom likely to come. What is the thinking on the prospect of management resting with the foreigners, who will have a majority 74% stake.

A: I have no comments on that now. It's all said. We have to go by the guidelines.

Q: There seems to be difference in opinion between your ministry and Finance Ministry in the treatment of strategic stake versus financial stake?

A: No no...We are in the process of giving final guidelines. It's small one or two correction. That's all. Let me make one thing very clear: We all work in tandem. We all think alike. We all act alike. We give some opinions, which are corrected --- but there is never any drastic change.

Q: So India is now comfortable with the idea of conceding majority 74% stake to foreigners.

A: India is a democracy. Political parties might have differences (on any issue). But when we join together and take a decision, we stand by it. That's why in the last 14 years in the telecom we've been consistent. Otherwise nobody would have come and invested in India. Our policy is stable.

Q: Except for that shift towards Unified licence regime (that let WLL-M players enter wireless market).

A: Even with regard to those policies, we follow it (stand by it). Whatever decision are taken are being followed.

Q: So past can't be undone.

A: Let's not waste our time. The future is more important. Trying to dig in the past is not going to satisfy you. You are not going to complete the future targets. We've a target.

Q: What's your directive to the cable TV operators? How can they participate in the anticipated broadband revolution?

A: The market forces will take care of it.

Q: Do they need to upgrade or adopt ...

A: I don't feel the Indian cable industry can handle it much better. Because they are too disintegrated ..there are too many operators.

Q: How do they fit in this content strategy of the broadband?

A: The way it is going, I think the broadband is going to be more success on the air.

Q: Wireless?

A: Yes. That's going to be the future. That's the solution. It will become more and more clear with the advent of 3G and 4G phones and HSDPA. That's you are talking of wireless solution and Wi Max on the threshold. We can see the shift. It's cheaper, it's reliable. It's all on the threshold. It's all happening. We are competing with the international standards. We are buying off the shelf. I believe we should not compromise on technology. We deserve the best.

Q: Your software exports target is $50 billion by ..

A: by 2008.

Q: Do you think India is going to concede its competitive advantage to China in the next coming years considering their recent claim ...(that the scale of their software economy has grown larger than India's)?

A: India's software export is only 5% of the world share. It should grow further. It is realised that we should go in specialised areas and offer training programmes in colleges. We should keep on going to the premium layers instead of gong to the janta market (popular-end) - any country can do the call centre business.

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