Blog Post

Thoughts On 3G Policy; MTNL Ready To 3GO In 3 Months; RCom Launches GSM In Delhi

If you can’t compete, legislate. In terms of telco, the policy seems to be giving a clear hand-out to PSU’s MTNL and BSNL. A report by the Standing Committe on IT this year stated BSNL was losing 8% market share every year to private telcos. Both telco’s perform averagely on QoS as well in performance indicator reports. Now sample this report which states MTNL is ready to roll out its 3G network within 3 months of being allocated spectrum. All both these laggards must do is match the highest bid. What they get in return is a headstart of four months over private telcos. Now, I don’t exactly have free market tatooed on my arm, but shouldn’t the mandate and roll-out obligations of a state-run PSU differ to a private telco? Shouldn’t a state-run telco be mandated for example with a more focussed rural approach with a different emphasis from firm’s trying to maximize shareholder value? I guess its only a matter of when and not if the BSNL IPO happens, and going by the 4% jump in MTNL’s stock price on the day of the announcement, I wouldn’t be too suprised if the lines between policy makers and stakeholders are blurred.

We have stated this before with reference to the TRAI – DoT battle over 3G foreign entrants. While no-one can doubt that even the new entrants are perfectly capable of raising funds, roll out obligations for those starting from a base of zero will be both challenging and expensive. Further to the same, RCom has launched it’s GSM services in Delhi, starting by offering 1000 connections to employees as a beta. As Anil Ambani stated on the annual results conference call, roll-out across other cities continues on a war footing.