In his newspaper column (& subsequent Blog post), titled Back to the future, Dilip laments that the telecom companies and indeed most private service providers have been found lacking in the quality of service that they provide. Agreed. My view is that Privatisation is one thing and the quality of private companies is a whole different kettle of fish. Confused? Let me explain using the same example that Dilip used. His parents having been tired of the Government owned MTNL telephone service, decided to use the services of a private service provider. After the intial promises by the new service provider they found that the new guy himself was lacking in service & quality.
Now, to the point as to why I seek to differentiate the benefits of Privatisation/Liberalisation & service quality of private companies.
a) The D'Souza family in the 1980s would have got their landline thanks to the OYT (Own Your Telephone) scheme for Rs. 8000 with a delay of 'just', 16 months (yes that was the waiting time for an OYT telephone then). Now a telephone line is available for a fraction of that cost within a week (on the outside). This is the effect of privatisation/liberalisation. (Also remember that Rs. 8000 in the 1980s would be worth more than double that now)
b) In the early 1990s, the D'Souza family would have had to shell out Rs. 11000 per annum for getting a 8 kbps internet line. Now thanks to privatisation/liberalisation, they can get a 512 kbps line for Rs. 6000 per annum.
So it is clear that privatisation/liberalisatoin has brought in welcome changes already. Now for the most important benefit that privatisation/liberalisation has bought in
c) In the early 1990s, if the D'Souza family were dissatisfied with the telecom service provider, too bad, nothing could have been done about that. But now in 2005, they can kick out a service provider and bring in a new one. Simple.
Today if an MTNL or an BSNL or an VSNL or an SBI is shaping up, it is because of the competition that they are facing. If not, trust me nothing much would have changed. Organisations like Indian Airlines & Doordarshan have reacted to change very late and hence have seen a big depletion of their market share. Their services have been found lacking and their survival has mainly been due to monopolistic practices, which is their last bastion of resistance.
In a free market it is quality that sustains eventually. Currently the telecom industry is evolving, now there are more prospective customers than actual customers. So telecom companies target new customers disregarding existing customers (and hence not bothering about service quality). The market for a telecom company now can even be called infinite, I don't think that there is any service provider who can even give a ball park figure of the total consumers in a city, they don't even need to, that is the sheer size of the market. This is true for most retail businesses in India today. You would find that just as soon as a retailer takes your money, his interest in you wanes rapidly. Once the trend changes then there will be a time when existence of companies is heavily dependant on service parameters and cost reductions. This trend would change with the coverage of the market (the shrinking of the number of potential customers & by the entry of newer players). You can look at most of the western world to understand this.
Actually the western model of free market sometimes doesn't look free anymore. A free market in my opinion is a market where the entry barriers for any product or any company is low enough to allow for new entrants every year. This would mean that new, innovative & quality products reach the consumers every year. With the growing branding & advertising costs in the western world, there has been an automatic imposition of entry barriers for new companies.
Simply put, you have to be really big to play with the big boys.
Back to the issue on hand, so till the market trend reverses and the market becomes finite for service providers, does one have to put up & shut up? The answer is a resounding No. Opting for newer service providers & newer products give life to these companies & products, giving them the opportunity to be quality players in the industry. It also weeds out bad companies and bad products.
What you see is an economy in transition. Sit back, grab buckle up, grab your remote & enjoy the ride.
b) In the early 1990s, the D'Souza family would have had to shell out Rs. 11000 per annum for getting a 8 kbps internet line. Now thanks to privatisation/liberalisation, they can get a 512 kbps line for Rs. 6000 per annum.
So it is clear that privatisation/liberalisatoin has brought in welcome changes already. Now for the most important benefit that privatisation/liberalisation has bought in
c) In the early 1990s, if the D'Souza family were dissatisfied with the telecom service provider, too bad, nothing could have been done about that. But now in 2005, they can kick out a service provider and bring in a new one. Simple.
Today if an MTNL or an BSNL or an VSNL or an SBI is shaping up, it is because of the competition that they are facing. If not, trust me nothing much would have changed. Organisations like Indian Airlines & Doordarshan have reacted to change very late and hence have seen a big depletion of their market share. Their services have been found lacking and their survival has mainly been due to monopolistic practices, which is their last bastion of resistance.
In a free market it is quality that sustains eventually. Currently the telecom industry is evolving, now there are more prospective customers than actual customers. So telecom companies target new customers disregarding existing customers (and hence not bothering about service quality). The market for a telecom company now can even be called infinite, I don't think that there is any service provider who can even give a ball park figure of the total consumers in a city, they don't even need to, that is the sheer size of the market. This is true for most retail businesses in India today. You would find that just as soon as a retailer takes your money, his interest in you wanes rapidly. Once the trend changes then there will be a time when existence of companies is heavily dependant on service parameters and cost reductions. This trend would change with the coverage of the market (the shrinking of the number of potential customers & by the entry of newer players). You can look at most of the western world to understand this.
Actually the western model of free market sometimes doesn't look free anymore. A free market in my opinion is a market where the entry barriers for any product or any company is low enough to allow for new entrants every year. This would mean that new, innovative & quality products reach the consumers every year. With the growing branding & advertising costs in the western world, there has been an automatic imposition of entry barriers for new companies.
Simply put, you have to be really big to play with the big boys.
Back to the issue on hand, so till the market trend reverses and the market becomes finite for service providers, does one have to put up & shut up? The answer is a resounding No. Opting for newer service providers & newer products give life to these companies & products, giving them the opportunity to be quality players in the industry. It also weeds out bad companies and bad products.
What you see is an economy in transition. Sit back, grab buckle up, grab your remote & enjoy the ride.
2 comments:
Possibly the best thing about liberalization is the competition, which as you say is forcing the SBI/IA/MTNL etc to shape up. But I'm a little worried about the "newer and newer" options. How good are they, how many are they, and how much energy should I expend in continuous switching?
Just thoughts.
To tell the truth I in a real delight of that you have created. I cannot call it as site at all. It is the whole world and life for the people keen by this theme, for people with the common interests. I think, that the purpose of your site is to unite people with similar sights.
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