Mohit Saraf's
Views on "Talking on the NET. Should it be allowed" in Forum Section of tele.net magazine|November 2000

The telecom policy does not allow net telephony. Do you agree with this policy?

The current policy on net telephony is devoid of ground realities. The approach of the government is to ignore technological advancements rather than to position itself to reap the benefits. It is almost impossible to enforce such a ban. It is evident from the fact that, despite the ban, it is being used widely and there are hardly any efforts to stop it. Local regulations cannot tame or restrict the application of latest technological trends in a highly interlinked global telecom network. The purpose of regulation should be to further the interests of consumers.

Today the telecom sector is driven by technological innovations. The pace of technological convergence is faster than what was expected. In the spheres of communication and information technology, geographical boundaries of nations have no relevance. In view of this, it is not possible for the country to isolate itself from global trends. It has to adopt the emerging technology-driven trends or else it will be bypassed or isolated. To illustrate the point further, “call-back facility” is illegal in around 70 countries, including India. Despite the spirited protest by these countries, including India, against the developed countries, the originator of the call-back facility, in the meeting of the Study Group-3 of the International Telecommunications Union (ITU) at Geneva, it did not stop. The ban on call-back in India did not stop call-back from developed countries, especially the US. However, the rationalisation of international telephones rates in 1999 by DoT did minimise its impact. Hence, the solution lies in not making things illegal but falling in line with the global trend.

The oft-repeated logic of not allowing net telephony is the drop in the revenue of voice telephony licensees. This is not a sound rationality to deprive consumers of cheaper service. The telecom companies should find new avenues of revenue generation by proper positioning, diversification, strategic business decisions and better management to cover up this drop.

The policy on net telephony should be changed. However, the concept and principles of the revenue-sharing arrangement in the case of international net telephony should be taken up at ITU as it bypasses the settlement rate regime.

If net telephony is to be allowed, when should it be started?

India is already late in taking proactive action. The decision to allow net telephony should be taken as soon as possible.

Should the existing voice telephony licensees be compensated? If so, what should be the compensation?

Net telephony will have an adverse impact on the revenue streams of voice telephony licensees. Hence, they need to be compensated because of the following reasons:

• Voice telephony licensees quoted the licence fee based on certain known terms and conditions. One of the conditions was that the voice transmission would be carried by the authorised operators within their service area. Net telephony will divert part of the voice traffic to ISPs. This amounts to alteration of the condition on the basis of which the licence fee was fixed.

• In a normal technology-driven situation, the rule is the “survival of the fittest”. The market absorbs new technological trends and the companies take their position depending on their strengths. It is a different situation because the ISPs are also transmitting voice, encroaching on the domain reserved for voice telephony licensees by the licensing conditions.

• Net telephony can erode the revenue base of voice telephony licensees, thereby making them vulnerable to various risks.

It is not possible to quantify the amount of compensation. However, some parameters on the basis of which compensation formulae can be arrived at are:

• Extent of voice traffic diversion.

• Differential tariff of voice transmission between the voice transmission licensees and net telephony.

• Computers and telephone penetration.

• Growth rate of net telephony.

The compensation formulae should be arrived at on the basis of the all-India average and should be applied uniformly, irrespective of the service area. The extent of compensation should be reflected by lowering the licence fee of the voice telephony licensees. It will be better if the work of evolving the formulae is entrusted to an independent authority, that is TRAI.