12th March

Lower Call Termination Rates

The article talks about the merits of lower call termination charges which would bring down the tariffs as well as encourage greater broadband penetration. It also talks about developing the rural telecom infrastructure with the help of USO funds as well as state supported infrastructure.

The decrease in lower termination charges would increase the broadband penetration and would be a boon for internet telephony. It’s time telecom should move towards IP-based networks and cheap internet telephony. Customers should only pay for broadband usage and any VAS. Presently ISPs provide only limited telephony which cannot be used to connect to landline or wireless phones. With lower termination charges, a free play in internet telephony would allow ISPs to offer services where the call originates from internet and terminates at regular telephone. However, telecom companies fear that lower tariffs mean lower revenues and also it would discourage telecom penetration in rural areas. However, with lower tariffs, the increase in volume should compensate for loss of revenues. Rs.20k in the Universal Service Obligation (USO) can be used to develop rural telecom infrastructure. State supported infrastructure could reduce companies’ investment in infrastructure and thus make it possible for them to reduce tariffs further. 

What’s needed for DOT and regulator TRAI is to use USO funds to establish fibre-optic network in rural areas which would help increase the broadband penetration as well as provide backhaul infrastructure for wireless services. 

More power in the offing

The article discusses about the recent steps to increase the power equipment capacity in the years to come. However, it is skeptic that with frequent power thefts and laxity of govt with respect to power sector policies, will this increase result in increase in power production and supply?

It is estimated that domestic capacity of power systems would grow four-fold in next five year. Currently annual capacity is about 10K MW. New capacities would boost equipment supplies as well as timely completion of power projects. With L&T joining hands with Mitsubishi for 4K MW of power equipment capacity to come up by 2010, Bharat Forge collaborates with Alstom for 5K MW power machinery capacity to come up by 2011 and the market leader BHEL itself planning to rev up its capacity by 50%, it points to a huge increase in market for power systems and a virtuous cycle of high power generation and dormant growth. But the question is whether this boost would result in increase in power production and supply? The lethargy of govt with respect to power projects and more then that inability to deal with power thefts has led to considerable revenue leakages in power distribution. 

What is needed at this point of time is a proactive power policy with no room for populism but for a free market where quality power is availed at competitive prices. Recklessness and populism has, for long, ailed state power utilities to coagulate funds for increase in speedy capacity addition. The increase in equipment capacity is needed to clear the investment backlog.

Anatomy of grey

The article talks about the increase in the grey hairs of the US President Obama and contrasts it with the Indian PMs who hardly experience such greyishness with their head with special case of Narsimha Rao.

The PM of 1991 in fact had bettered his eye-sight as well as overall health during his term as PM. However, it is seen that the US President Obama has seen the grey matter in his head ever since he took the position. As opinioned by some doctors, a single year as US President is equivalent to two years for less elevated individuals as far as wear and tear in the body is concerned. But for India, leading the world’s largest democracy and a greater challenge of leading a coalition of number of different ideologies has not deterred the politicians from going for the hot seat. With majority of Indian PMs above 60 with the oldest being Morarji Desai who took the PMship at 81 in 1977, there has been no significant decline in health of increase in greyishness on the head. The youngest of them, Rajiv Gandhi, however, showed a good increase in grey hair during his term of seven years which ended in unfortunate assassination. 

Thus, it cannot be more evident from the facts above that the high office does have an effect on everyone who takes it. The Obama example only highlights the importance of grey matter needed to take up the big job.