Technological conundrums

It has been close to a month now since I left one of the premier institutes of technological education in our country and shifted base back to my technologically-challenged hometown. Don't get me wrong, I love this little bustling half-city still undergoing a rapid metamorphosis. After all, considering that English-medium schools went from being a status symbol to being a norm in a short span of 10 years, Jhansi does pretty well on the rapid advancement scale in this liberalized country of ours. However, to pore deeper into this microcosm of a mixed society, you know, like the model tier-2/3 cities that our economists hail as the beacon of future growth, one needs to utilize a basic and inadvertent fact of science- Look closely if something is wrong, look closer if everything looks perfect.

Among other things that happened by the virtue of privatization and competitive bidding (at least in a majority of the cases), it can be rightly said that the telecom revolution of the late-nineties has been the sturdiest example of a simple idea made big. Hence, India now has more cellphones than color televisions and more telecom operators than that in the EU. In economics' jargon, this might be presented as the neo-liberal revolution. Back in my hometown, it stands for cheap call rates and unnecessary small talk. Back in the day, when the landline connection was given in batches and a STD subscription was considered stretching the household budget thin, people would line up at a neighborhood STD booth on a Sunday night in order to make that long-awaited phone call to a dear one. And due to the fact that those visits were more regular than the timing of Tendulkar's backfoot punch, the owner and the user formed a social bond that extended beyond that of a shopkeeper and a customer. It wasn't rare to see these phone booths being housed in ice cream parlors or general stores, so that while people waited for their turn to come, the children could lay waste to some candy or ice cream. This was until the government decided to de-monopolize the IT sector and bring in the private players, which spelt the doom for the state-run BSNL and the privately-owned STD shops.

With call rates plunging to historic lows, notwithstanding the totally unfunny ad campaign of DoComo advertising calls at 10p/min, one must wonder, and rightly so, how these companies are managing to remain in the black. The experts promptly reply that it is the total subscription and the value-added services that are the cash cows for telecom sector these days. I sincerely hope this is another of those 'good in a textbook, bad in the real world' cases, because the way my cable operator uses his cell phones or my dad uses his, the prospects of Raja's beneficiaries don't look very good. While Blackberries and smart phones are slowly becoming the norm in the urbane populace, the interiors still prefer the good old 'talk and turn off' ritual. And their favorite is the 'same network-free calls' scheme, which has saved many a relationships and connected families to each other 24x7. Hell, I hardly know of any friends back at college who use caller tunes or have call balance in excess of 50 bucks (much more if the person in question is hitched, but then the cellphone is hardly ever free for external consumption). Where is the profit coming from?

The answer is, there isn't much profit to go around. All major telecom firms have been reporting a steady decline in profits every passing fiscal. Compounded with new TRAi initiatives like mobile number portability, new entrants in the market are finding it harder to gain a foothold. So India went from having the least developed communications market, to one with the most potential, to one with stifling competition, to one with declining profits. If you believe in the circle of life, perhaps the days of STD booths will come again. Or maybe not! In the clamor of dropping call rates and fierce competition among the service providers, it is time to think of merging the call market with the information market throughout the country and not just in metros. A push at the central government's level, by promoting e-governance aggressively and subsidizing 3G services in the less profitable markets should lend credence to the amorphous market in the interiors. DTH failed to become the next big thing due to the higher penetration and affordability of local cable operators. Merging all information services in one and providing a bigger basket for consumers to choose from sounds like a decent idea on paper. The roll out will be another story for another day.

Happy birthday to a dear friend who just turned 25!