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October 16, 1998


Intel presents the future of business computing

The Tough Customer: What happens when your customer turns into a competitor? With MTNL and VSNL, it is anger, suspicion and 'off-record outbursts'. Priya Ganapati in Bombay

A fortnight ago a Rediff investigation revealed that lack of telephone lines had put on ice new Internet accounts from ISP monopoly Videsh Sanchar Nigam Limited.

Email this story to a friend. With that the ball had fallen into the court of another monopoly, the Mahanagar Telephone Nigam Limited.

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A hot pursuit in that investigation has now led to issues that go beyond the two companies and into the heart of matters that will decide the pricing mechanisms between ISPs and telephone companies.

To begin with, both the monopolies are being dismantled. Private-sector ISPs and telephone companies are set to take on large government businesses.

With such a scenario for a backdrop, VSNL and MTNL are rolling up their sleeves to ready for the battles to come.

Some senior officers of the VSNL had pointed a wagging finger at MTNL for not supplying telephone lines in time and crippling their chances of garnering as many new Internet customers as possible before the private companies cut in.

Till some time ago, VSNL had not been able to provide new Internet accounts for about two months in Bombay and one and a half months in Delhi and Bangalore.

MTNL's Chief General Manager, Bombay, Ramani Iyer had then shot back: "Let's take a more practical view of things. We should not trade charges, but the truth is VSNL does not have the equipment like routers ready. Even if we provide the lines they may not be ready with the equipment."

But the grapevine winked to draw attention to MTNL's vested interest. The phone company is planning on becoming an Internet service provider itself. "Why then," argues Mr Don't Quote Me, "would MTNL encourage VSNL's thriving ISP business?"

Rediff decided to put this plausible, valid and suspicion-rousing hypothesis to test. This reporter simply confronted MTNL Chairman and Managing Director S Rajagopalan with it.

"I deny there has been any delay (in providing lines to VSNL) on the part of MTNL. In fact we have been asking VSNL to take 2 MB streams instead of individual lines as it would help them provide better service," Rajagopalan defends.

"Our (basic telephony) performance itself in many areas is sub-optimal. How can we then be unkind to others? If you see we are first being unkind to ourselves."

"It is an unfair accusation. You have to remember that the country has been under monopoly status for the last 50 years. You have three telecom monopolies in the country (the Department of Telecommunications, MTNL and VSNL). But that is not our fault. You cannot hold it against us. We cannot help being a monopoly in some circles," he emphasised.

In this context Rajagopalan draws attention to the rapidly changing market. "We are entering a free market arena. Why has the country opened up its basic cellular services? Only to provide multiple choice for consumers... To encourage more choices... Tomorrow, based on my tariff, it is possible that VSNL might change its tariff structure and even improve its services."

"It is not wise to depend only on one person. I firmly believe in market forces as long as there is no technical limits on the number of players. Market Darwinism will ultimately prevail," he declares.

VSNL Deputy General Manager, Marketing, T K Datta retaliates. "As it is, MTNL's response is always slow. If there is a problem with MTNL in the future we will go to private telephone companies like Hughes Networks that is laying a basic telephone network in Bombay. If MTNL is not able to provide proper service VSNL can have its own service using radio modems."

Rajagopalan refuses to be held to ransom. "There are (private) basic service providers already in Madhya Pradesh. Bombay will have them soon. So if you don't want calls to pass into my network you can always go to them."

But such posturing may never leave the offices to reach the actual battlefield. Datta voluntarily notches down his position a mark or two when he sympathetically says "If you see the cellular service providers they would definitely have to speak to those with a fixed telephone network. Can MTNL say that we will not provide the lines? No. These are two different streams of revenue of MTNL. However, one stream can, to a certain extent, provide loss of revenue in the other stream."

Rajagopalan has some answers to this. "When we enter into agreements with other ISPs then terms and conditions will be there. For example you can have a condition that any fault should be attended to within certain period otherwise there would be a penalty. The solution to such questions is well-drawn interconnectivity agreements."

Elaborating on MTNL's ISP aspirations he says "We will provide state-of-the-art Internet services. We are investing about Rs 10 crore (Rs 100 million) and we will have many points of presence across the country. Our ISP service will be well-planned with connections on 2 MB streams."

Lines is the point
VSNL's slammed doors on new Net customers. 'Undercapacity,' they say. 'Quibbling with MTNL,' says Rediff.

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