As far as India is concerned, I do not know whether the slowdown is affecting us. Because, the market is still very new.

I think what is also very critical in India is the simplification of the licensing and tax regime. Convergence has removed many a boundary and we should keep pace with it. I still see issues like interconnect not settled.

Thing will not be easier as new players will come with smarter economics.

One thing I can tell is that Indian network service providers can actually learn a good deal from the experience of the West. They should focus on the buyer right from the beginning.

I think it is too early to comment on India’s telecom market. It is just the beginning.

Paranjoy Guha Thakurta

We have some interesting insights on the Indian market. Are Indian operators making the same mistake as those in the West have done in building huge networks?

Manoj Chugh

Well. Let us first get there. We are still nowhere near that league, though in terms of size, India has the 10th largest telecom network in the world. But I think we have to make it reliable and robust to serve the needs of our country. I think in India, we are still in the capacity build-out stage, at this point of time. So whether we have overdone it or not is a question that we can ask ourselves only after three to four years.

CS Rao

But yes, I do think some of the cellular operators have built excess capacity. What they should is get more subscribers….

Manoj Chugh

… or encourage people to use SMS. You do not even have to get more subscribers to get more revenue. You can get more money from the same subscribers.

CS Rao

Yes, data services is one more good revenue generator. Otherwise, it is just voice. Coming to capacity, today in the 19 circles, taking 2 operators per circle and 100 base stations per operator per circle, we are talking of 3,800 base stations. Going by a simple thumb rule, if one base station supports 1,500 customers, the present infrastructure can easily support around six million subscribers.

The focus should now be to add subscribers, and, more importantly, as we discussed in the global context, add more services that will be used by these subscribers. Tariffs have come down, substantially. To add more subscribers, one cannot lower the tariff much more.

Apart from radio capacity, my personal view is that, even for connectivity, some of the operators have incurred unnecessary expenditure in building their own fiber infrastructure, when they can easily lease it from DoT, which has a 35 percent utilization. The effort should be more to stimulate the market, help increase the talk time and thus revenue per user. There is no point spending $60 million to $100 million on fiber and transmission networks.

Again, it is easy capital at play. This time, not in the form of valuation/equity, but vendor financing. Today, they do not have money. Total outstanding in the Indian market is worth $800 million. Today, everyone is going to court. These could have been avoided. There is no need to take the initial network cost so high unnecessarily.

I think they should be a little responsible and observe a fiscal discipline. Otherwise, they will face a similar situation in a year to 18 months from now.

Pran Mehra

I think it is a chicken and egg story. But I still think that dialogue between the user and the operator is a must.

Manoj Chugh

There is going to be consolidation. I am hopeful that will solve much of the debt problem. Thankfully, we have not spend much money on 3G licensing. Because the technologies like wireless LAN 802.11A will also eat into 3G markets. What I believe is that, different kinds of service providers like cellular providers and ISPs will come together.

So I think it may not be a liner 2G to 2.5G to 3G. It could move as a cohesive ecosystem through partnerships and create opportunities for all of them. And I think the capacity will not go unutilised. The Indian players will certainly not repeat the same mistakes.

Paranjoy Guha Thakurta

Well, I think none of us has the monopoly on truth. Let me clarify. In the US, recession means a negative growth for two successive quarters. In India, if the growth rate slows down for an industry segment from 8 percent to 4 percent, that is recession.

There are some positive developments. In most developed capital markets, there is a direct one-one relationship between the turnover of stock exchanges and total market capitalisation. In particular periods, one may go above a little above the other and vice versa.

In India, market cap at times, is three times the turnover of stock exchanges. Thankfully, that is changing. We will still have crests. But instead of Us and Vs, we will have gentle waves.

To that extent, I share Mr Manoj Chugh’s optimism. And that coming from a journalist like myself, who has made a career of criticising all governments and playing the role of a cynic, cannot be anything but positive.