Logic Of Convergence

While the government undoubtedly sees political merit in this approach, it distorts economic signals. Investors in VSNL's issue, for example, have very good reasons to feel aggrieved about the proposal to hasten the ending of its monopoly. Similarly, investment by existing fixed line providers may be hurt by opening up the service to competition. The result of all restrictions is to guide investment to those areas which may not stand the test of free competition. But prospective investors also know that the technological reality of convergence will ultimately sweep away all manmade distinctions between voice and data carriers, and by today's standards of innovation, that "ultimately" may happen pretty soon. That is a powerful disincentive to current investment.

 

Nowhere is the attempt to regulate against the logic of technology more apparent than in the ban on internet telephony. Internet usage is time and distance independent, which means that a long distance call can be made at the price of a local one. That's the reason why national incumbents consider internet telephony to be such a threat. But the threat will not go away by burying one's head in the sand. To be sure, internet telephony still has many glitches and quality of service remains inadequate. But remember that it used to be said not too long ago of ISDN (Integrated Services Digital Network), which is commonplace today, that "it still doesn't work". There have also been reports that existing telecom monopolies in Asia route long-distance calls through the internet, pocketing the large difference in charges. If internet telephony continues to be banned, India will have neither the technology nor the expertise to run it if it becomes the wave of the future. Fortunately the government is aware of all this. That is the reason why the ICE Bill is being framed and one of the proposed objectives of the ICE authority will be to remove the ban on internet telephony. If only things could move a little faster.