As the chairman of Cellular Operators Association of India (COAI), K V Seshasayee is in the hot seat. His aim is to drive the limping cellphone industry into profitability. At the same time, he has to manage the Hinduja group's cellular telecom firm Fascel in the Gujarat circle which has the largest number of subscriber base in India among the state circles at 70,000. An IIT Madras alumni, Seshasayee has received training from the United States and England on defence and communication systems. Seshasayee has also worked with Defence Research and Development Organisation and was responsible for pioneering simulation and testing systems. Seshasayee spoke to DEV CHATTERJEE on COAI's new agenda, problems of the cellphone industry and the fast-changing industry's future. Excerpts.As the Chairman of the COAI, what do you think about the entry of a third operator like MTNL and DoT in the cellphone circles?As per the NTP which has been accepted by the COAI MTNL and DoT canlaunch cellphone service if they so desire. We would like consumers to benefit from increased competition. The penetration of telephones which is the lowest in the world could increase. But we are worried over MTNL and DoT's continued stand that they are above the telecom regulator.In order to achieve a level-playing field, it is necessary that all the rules and regulations, framed by the independent Telecon Regulatory Authority of India (TRAI), should be adhered to by all players. In the long run, the cross-subsidisation of MTNL's cellphone network through its land-line phones, would hurt consumers as all of us were moving towards a lower tariff regime. We welcome competition, but the ground rules should be unambiguous, transparent and equal for all.In fact, the New Telecom Policy 1999 has even cleared the entry of a fourth operator after the DoT/MTNL's foray as the third operator. We are asking for an entry fee paid to the old operators as it happens all over the world.Telecom financing inIndia has been a major deterrent for the growth of private networks. What do you think can be done in this regard?In India, lack of experience of the lenders in the telecom industry has been the main obstacle for the private operators to raise funds. While financial institutions like ICICI, IDBI and IFCI do finance the telecom industry in a limited way, banks do not deal with a new industry at all. Besides, due to present regulations, the IPO (initial public offering) route is also closed for us.Thus, we are talking to various people in the government, including the communication ministry and the prime minister's office to set up a Telecom Finance Corporation, on lines with the Power Finance Corporation. With a corpus of around Rs 10,000 crore, this telecom-specific corporation can lend us funds and can arrange financing from abroad. Unlike in India, internationally insurance companies and mutual funds invest heavily into new telecom ventures. With TFC at the helm, we can channel these funds intoIndia.With the convergence of telecom and IT related activities, what is the future of the cel phone industry in India?It's a matter of time before the cellphone industry starts driving the entire telecom industry and finally the economy. While at present, the capital expenditure per line for setting up a land-line and a cellphone is about $ 600, in two years time, the cost of a cellphone will come down to $ 300 per line due to massive investment being made in upgrading technology by the cellphone industry. Meanwhile, the technology in basic telephone has more or less remained the same. I foresee more Indians owning cellphones as tariff and equipment prices go down substantially. Due to lower penetration of phones in India (15 per cent in metro cities like New Delhi and Mumbai), the potential of the telecom industry is enormous.By 2001, the third generation of telecom equipment/services will come to India which will include cellphone operators offering value-added services like internet,banking, video transfer etc.After the clearance of the NTP by the Cabinet, what else are your expectations from the new government so that the industry can take off?The Cabinet clearance of the NTP is a very good move and it's on the right track. The government should now be pro-active and give the same treatment to the telecom sector as it gave it to the information technology sector. As job creation potential of the telecom industry is very high as compared to other sectors, we expect more and clear powers to the telecom regulator. Moreover, the DoT's role should be clearly defined though it has already been bifurcated into DoT and Department of Telecom Services which will give it increased focus. Besides, we expect less obstacles in fund raising plans and more transparency.The present government is already on the job and we hope that in the next few days, we will be able to overcome all problems.Globally, the telecom industry is witnessing major restructuring with M&A activitiesgaining momentum. What repercussions do you think this could have on India?The telecom industry is becoming the hottest industry with many competitors buying each other, merging and offering one-stop services. In India, many companies like Swiss PTT, Bell Canada, NTT, Bezeq have already left India in order to concentrate on their home markets. Frustration caused by Indian regulations was another reason why they left. These companies are, however, investing in China, Taiwan and East European nations due to an independent regulator, favourable and clear cut policy framework. Besides, in the US and West European countries, the operators are upgrading themselves to provide more services to consumers which has resulted in less focus in India. We should now focus on delivering the intent of the NTP to Indians, which is higher penetration at lower tariff.
