High Cost Of Dialing
That the World Trade Organisation (WTO) agreement should have been agreed by so many countries is welcome because it opens up telecom monopolies (both government and private) to pressures of domestic and foreign competition. It would have been churlish for India to stay out of an agreement that covers 93 per cent of the global market. The agreement, which took three years to thrash out, covers basic telecom, cellular phone services, satellite systems, data transmission and paging. It means lower costs for consumers costs of international telephone calls may drop by 80 per cent.
The Washington-based Institute for International Economics estimates cumulative gains from the liberalisation at $1,046 billion between 1997 to 2010, equivalent to 4 per cent of global economic output. For South Asia, the gain would be $56 billion, but this is just on telecom services, excluding the multiplier effects on telecom equipment and the information and communications technology sectors. The accord is likely to come into effect on January 1, 1998 after being ratified by the legislatures of individual countries.
The liberalisation is not uniform across countries. Individual countries have their own market access offers. Last year, the telecom talks broke down when offers by countries like Indonesia, Malaysia, Canada and Japan were not felt to be substantial enough. Even now, the offers on foreign equity permitted varies from 10 per cent in some countries to 100 per cent in others. The Indian commitment continues to be 25 per cent, an offer made last year, although India does permit upto 74 per cent foreign equity in telecom companies and theoretically more than 95 per cent if a multi-tiered pyramid holding company structure is adopted in telecom. The increment in Indias offer has been to accept some of the principles laid down for regulation of basic telecom services. The mindset of preserving monopolies, however, continues. For example, India has made no commitment to phase out Videsh Sanchar Nigam Ltds monopoly on international telecom services, although this policy will be reviewed in 2004. Nor is there a
commitment to phase out the department of telecommunications monopoly over national long-distance services, although this will be reviewed in 1999. India has also stuck to the principle that international services must be used to subsidise domestic ones. This is fine as a negotiating stance at a multilateral forum. But regardless of the negotiating position, these liberalisations are needed urgently if the Indian consumer is actually to benefit from cheaper and more efficient service. According to some estimates, the cost of using a telephone is 29 times higher in India than in the United States. This is hardly a situation of which India can be proud.