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March 18: R K Takkar, the soft-spoken Secretary of India's Department of Telecommunications (DoT) and Chairman, Telecom Commission largely responsible for the implementation of the country's mammoth telecom reform programme, retired today. He was replaced, somewhat unexpectedly, by M P Modi - Secretary of Coal.
In India as elsewhere, large bureaucracies with significant centralised control over funds, operations and policy end up depending to a fair extent on the people in charge, so this change in the top non-political post in the telecom sector is significant. The Telecom Secretary, a bureaucrat and lifetime government employee, is subordinated to the Communications Minister, who has to be a member of Parliament - but the bureaucracy does all the work and its head is the de facto originator of most decisions.
Mr Takkar, who had no previous telecom experience, was open-minded enough to seek the views of others, especially the telecom industry. He was able to start the complex tendering process for basic and cellular services, which is still going on; he managed to issue several licences for basic, cellular and paging services across India. He was firmly behind separating the operations of the DoT - which will continue to provide basic telephony in competition with private firms - from its policy-making and regulatory role, and had spoken in favour of a truly independent Telecom Regulatory Authority of India (TRAI).
Mr Takkar was due to retire last October, at a time when the tendering process was in a mess due to the sudden announcement of "caps" (limits on the number of licences per operator) by the Communications Minister, in August - who proceeded on a lengthy vacation abroad, apparently for reasons of health. The whole telecom privatisation programme was also facing a suit in the Supreme Court, brought by various left-wing groups. Mr Takkar was ordered to keep his job until further notice.
The Supreme Court gave the go ahead to telecom reforms last month. Most cellular licences have already been granted (the exceptions are rearranging their equity and funds, to meet an April 15 deadline). Letters of intent have been issued to the winners of the first two rounds of bids for basic telephony (including one to the Hughes-Ispat on Thursday, for Maharashtra including state capital Bombay), and only eight out of 20 telecom circles (regions) are left. A third tender was announced on March 15, bids to be opened on April 15. Although TRAI, the telecom regulator has not been set up yet - Parliament was too busy with political maneuvering for the general elections in May to pass any legislation - an ordinance (executive order) has been issued for its constitution. There was nothing left, really, for Mr Takkar to baby-sit (except for the minor matter of Internet regulation).
Mr Modi, the new Secretary, will not have much to do as far as the telecom licences go, except perhaps to decide what to do if, due to the elections, there are not enough bidders for the leftover circles in the third round. He will probably have to leave those circles alone till after the elections, when he could be replaced anyway by the new government - probably a coalition of several parties.
Mr Modi could find the judge, engineer and banker required to create the TRAI. They will be on five-year secured tenure to minimise government interference, but their selection could compromise the regulator's independence. Luckily, although little is known about Mr Modi in telecom circles - which rarely mix with coal mines - he was selected to head another independent regulatory body, the Insurance Regulatory Authority. That regulator, and hence Mr Modi's prospective job, was postponed by the Finance Ministry's decision to leave liberalisation of the currently public-sector insurance to the next government. However, Mr Modi's selection by the pro-liberalisation Finance Ministry could suggest a generally progressive attitude.
Returning to the matter of Internet regulation: Mr Takkar was close to dismantling India's ridiculous restrictions on datacom. He was strongly in favour of low entry barriers on Internet services, and rejected the need for legislation to curb free expression on this new medium. There was some understandable reluctance to this from lower-level DoT personnel, whose raison d'être is to restrict. Mr Takkar, though, had no serious objection to any of the suggestions made in The Indian Techonomist's policy proposal for freeing the Internet, once the technology was explained to him. Mr Modi, of course, has no telecom experience, but nor did he require financial experience to be selected to head the insurance regulator -ignorance appears to be the government's way of ensuring impartiality. He is unlikely to do anything about the Internet before the elections, without knowing all about it. Thankfully, his source of information will not be the DoT's datacom licensing wing - Mr Takkar assured The Techonomist, the day after his retirement, that Internet policy will be discussed in his brief to his successor.
For information on:
Telecom bids - http://dxm.org/techonomist/news/bids.html
Cellular services - http://dxm.org/techonomist/news/cellular.html
Telecom regulator - http://dxm.org/techonomist/regu.html#TRAI
Internet policy - http://dxm.org/techonomist/news/ndp1.html
March 23: Singapore Telecom, which won a licence to operate cellular services in the south Indian state of Tamil Nadu along with its partners HCL and the Hindujas, is uncomfortable with the large licence fee. The consortium had originally bid $172 million for a 10-year licence; in order to receive the second of two licences available it will now have to match the $266 million bid of BPL-US West. The other partners - HCL is India's largest info-tech group, the Hindujas are UK-based billionaires - are bullish and want to pay the increased licence fee. Singapore Telecom, though, is expected to reduce its equity.
Meanwhile in Singapore the company signed an agreement with India's Srishti Videocorp to broadcast the first digital satellite channels over the South Asian region. Srishti, which controls a number of transponders on the Intelsat 704 satellite, broadcasts its own mediocre channel (called YES, for Youth Entertainment Services) and leases space to other broadcasters, including the Discovery Channel. Reception quality is far from excellent, and Srishti hopes that digital transmission will significantly improve this, and also provide (with MPEG-2 compression) room for yet more TV programming.
This is debatable, for most of India's estimated 150 million satellite TV viewers go through cable networks, who do not have digital decoding equipment. Viewers are reluctant to pay for additional channels when services are of dubious quality; in any case, broadcasting in India makes money based on its sheer volume - paying little more than $5 per month, viewers' subscription fees alone add up to $600 million, growing at 30% per annum.
This would explain Intelsat's increased activity in the region. It held its board meeting in Mumbai (once known as Bombay) last week, and announced the opening of its first regional office (outside the US) in India.
To know why an Indian broadcaster has to uplink from Singapore, not India, see http://dxm.org/techonomist/regu.html#IBA
March 24: The $400 million HCL Group, India's largest information technology conglomerate is starting a joint venture with Perot Systems Corporation, which belongs to the American former computer-salesman and billionaire politician Ross Perot. The joint venture aims at capturing a major share of the market for outsourcing services in the Asia-Pacific Region.
Perot Systems meets the outsourcing needs of clients around the world in areas such as financial services, healthcare and manufacturing. HCL, which does many things including computer manufacturing (it is Hewlett-Packard's Indian partner) and training, has a presence in most south-east Asian and west Asian countries. With cheap, well-trained Indian labour to rely upon, it is in a good position to work with Perot Systems. The group expects this joint venture to exceed $100 million in first-year revenues, by concentrating on large-scale projects.
See also http://dxm.org/techonomist/news/11feb96.html March 25: At a press conference today it was announced that Perot Systems and HCL shall hold equity in their joint venture at an equal ratio (50:50). This is not necessary, as India's government even allows 100% foreign equity in the field of computers; obviously HCL did not want a minority stake, and Perot Systems wanted as much as it could get. A similar approach was followed by IBM and Tata some years ago, when they formed Tata Information Systems Ltd.
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