By : Abraham Paul, MD
Activity: 2 comments 483 views last activity : 01 22 2012 07:02:55 +0000
Give impetus to Rural Telecom.
By Abraham Paul, MD & CEO Future Groups (
In spite of the few hiccups in the beginning, the privatization has pushed Telecom business in
Most of the issues in the beginning were due to inertia of the incumbent provider in changing their old mindset. The main aspect of telecom expansion being that it virtually reduces space making the distance immaterial, the initial decision of making the GSM Wireless Telecom license areas co-terminus with existing telecom circles was one of the major flaws. Over and above disallowing of direct interconnects between different networks of the Service Provider forced them to make multiple investments on one side and loss of revenue to the incumbent operator on the other side.
Bringing in the concept of Pan India Telecom with Unified Licensing was a positive step to correct few of these earlier wrong doings. But the present decision of the Telecom authorities calling exclusive bids for Rural Telecom Operation is going one-step-forward-two-steps-backward. Naturally, one wonders whether the authorities have sufficient thought about the impacts.
The market space in most of the rural areas is small and therefore, bringing another set of Service Providers for Rural Telecom business will have severe impacts.
1. The Telecom market potential in all the rural villages put together in any Circle by itself is not enough initially to make the business viable even for a single operator.
2. More operators within the circle means more division of wireless spectrum allocation and more individual numbering plans.
There will be more anomalies related to spectrum usage, interconnects, call routing and charging & revenue sharing issues between networks.
3. Further splitting of the Circles for carving out and segregating the villages into small non-contiguous operational areas is impractical especially in the Wireless service. Certain amount of overlap is un-avoidable and can cause technical, operational and administrative problems.
4. Creation of another set of operational areas/operators within every circle defeats the whole concept of Pan India Telecom.
5. It is impossible for the new entrants to take on and sustain business in part of a major area already licensed and covered by many existing network operators. In most of the Circles, FN/GSM/CDMA put together, there are already 4 to 5 Licensed Service Providers who would stake claim for village operations in their licensed area. Then there are the Pan India licensed Service Providers.
6. As the rural areas grow into villages and small towns within the space of the Circle, the country will be burdened with numerous operators and networks and sufficient reasons to open out endless litigations.
Scope of Telecom Business in the rural areas.
a) Limit the number of networks. As the business volume in the village areas of the Circle is low, one way to make the business take off is to allow only limited number of Service Providers just enough to keep the competition live. If two operators each of the Fixed Network, GSM and CDMA/ DECT technology, the small market space has to be shared by six Service Providers, and none can survive.
b) The Wired / Wireless differentiation is slowly vanishing. From the business perspective, the differentiation between Fixed Network and Mobile Networks is slowly diminishing. Voice, Mobile Data/Internet characteristics in
c) Wireless networks would become economically viable.
The critical differentiation is in the local loop. About 80% of the cost of telecom in rural areas is of the local loop. As the cost of wireless technology systems have come down, it would become more economical to adopt predominantly Wireless technology in the rural networks. Already, CDMA based service has penetrated the Fixed Network area as an alterative to Wired Networks.
Segregation of Service Provision and Network Operation: A better business option.
Managing the Telecom Business and running of Telecom Networks are entirely different ball games. The business becomes more viable by limiting the number of networks in an area for better utilization of resources and at minimal investment costs.
The idea is to conceptually segregate the
Telecom Service Provision and Telecom Network Operation.
Telecom Service Providers sell the service to the customers and manage the Telecom Business and Telecom Network Operators set up, run the networks and sell network service to Service providers.
To avoid crowding of networks in low potential areas, every company need not have their own network operation everywhere, but shall be possible to mutually share the Networks. It shall be made mandatory for the existing FN/GSM/CDMA in the Circles and Pan
Network Operation by the Consortium of Service Providers.Having already given license to many Service Providers in every Circle, the network operation in rural areas to be set up and run by the Consortium of these FN/GSM/CDMA and Pan
This way it is not necessary to a wedge in a new set of Service providers or Network operators to the Circles exclusively for the rural telecom business. This will be opening out another Pandora’s box.
The ADC in the present form should be done away with.
Looking from this context of this paper, the ADC in its present form is considered unjust and absurd. By segregating service provision and network operation and the rural networks are run by the consortium of licensed service providers, the ADC becomes unwarranted and could be done away with.
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