`We do not work only for profits'

Interview with K.B. Brahmadathan, Chief General Manager, Chennai Telephones.

K.B. Brahmadathan, Chief General Manager, Chennai Telephones, joined the Indian Telecommunication Service (ITS) in 1970. Widely travelled in the course of his career, he is considered to be an expert in the deployment of optical fibre technology. In this interview he gave V. Sridhar, Brahmadathan explains how BSNL has managed the rapid expansion of the network in the city and outlines his plans for Chennai Telephones. Excerpts:

How would you characterise the current situation in Indian telecommunications? Mobile telephony has grown at a scorching pace in the last year. Does this mean landline telephony is passe?

I believe that the landline has a role. My favourite analogy is the comparison of the wall clock at home with the wristwatch. Both are relevant. Even if everyone at home has a watch on the wrist, a wall clock at home is not without its use. I think the growth of landline telephony will be much slower, but it will not lose its relevance. I do not envisage a sharp increase in the landline users, particularly in the bigger cities. But I am astonished to note that in Chennai, where the competition is most intense, although 80,000 landlines have been surrendered, we have given 60,000 new landlines. So, the net loss is only 20,000 lines. My feeling is that people, particularly those in the periphery of the city, still feel the need to be connected by landlines.

Do you see this situation changing in the future?

I do not see any significant change in the trend. There are almost 3 crore landlines in the country and the total [number of people on the] waiting list in the country is only about 14 lakhs, of which 5 lakhs is in Kerala. It is very clear that the mobile phone is going to overtake landline telephones by the end of the year.

What does this imply for BSNL?

Our cellular project is very attractive because the cost per line is very low - at only Rs.3,000-3,500 a line. BSNL's average revenue per user (ARPU) per month is more than Rs.500 in Chennai, when compared to BSNL's nationwide average of less than Rs.400 a month. In fact, Chennai Telephones' monthly ARPU is higher than that of the industry, including the private operators.

BSNL was a late entrant into cellular telephony - entering as the fourth operator in most telecom circles in the country. How did you manage to get over this disadvantage?

One of the first decisions taken by BSNL's corporate office, after BSNL's formation in October 2000, was to launch a cellular service. And, compared to many other projects launched by government-run institutions, BSNL's cellular project had a very short gestation period. The actual rollout of the mobile service started in 2002. We have recently finalised an order for equipment for launching 15 million cellular lines in the country. The tender was finalised within 4-5 months, which is a very short time for a government-run company, which is subject to various checks and balances unlike privately run companies. This was mainly because decision-making powers were delegated to the different circles by the corporate office. In Chennai, we have placed orders for equipment for 4.5 lakh lines, worth about Rs.122 crores. The pace at which decisions have been taken in BSNL is comparable to that of most private operators.

Can you describe how BSNL was able to shrug off the disadvantage of being a late entrant in the business?

Phase I of our cellular project started in October 2002, when the rollout actually started. Unfortunately, Chennai Telephones' entry was further delayed because BSNL's operations in Chennai, Kolkata, Patna and some other centres were using C-DoT equipment, which we could not use for cellular operations. This meant that BSNL's services in Chennai could commence only in April 2003. That was Phase II. We started initially with a capacity of only 1.2 lakh cellular lines in Chennai. In Phase III this was increased to 3 lakh lines. In Phase IV, the number of connections is set to increase by another 4.5 lakh lines.

This kind of rapid growth must have strained your organisation. How have you coped?

Nobody wants to give credit to a public sector organisation. People usually only want to point out our mistakes. People are not asking: "How did we [BSNL] manage to do so well?" Instead, people are now asking: "When there is so much demand for services, why are you not able to satisfy the expectations of the people?" Public Sector Undertakings are accustomed to such a negative approach. We cannot buy equipment off the shelf, like private operators do in a competitive environment, because we are dealing with public money and are accountable for every rupee that we spend. PSUs are also pilloried for their faults; the good things they do are rarely appreciated. To be very honest, we never thought we would get such a rousing welcome from subscribers of our services.

The ARPU a month in Chennai Telephones' network was among the highest in the country. What is the situation now?

The ARPU usually comes down after the network registers a big expansion. When there were only 1,00,000 lines in the entire metropolis, the ARPU was about Rs.1,500 a month. The ARPU in Chennai Telephones is now over Rs.800 a month. It is the highest among all the BSNL Circles, barring Jammu and Kashmir.

How have you managed to cope with deregulation in the telecom industry, particularly in a situation where cartels are in operation?

We cannot do a thing outside the law. We are accountable to the Comptroller and Auditor-General, the Central Bureau of Investigation, the Central Vigilance Commissioner, the consumer fora and courts across the country. We are more transparent, accountable and accessible compared to any other telephone company in the land. The most important weapon we have employed in such a situation is to reduce constantly rates for our services. I am fond of saying that "BSNL compromises only on tariffs, nothing else." We started the practice of not charging anything for BSNL-BSNL calls, even before the Calling-Party-Pays principle was invoked. BSNL played a major role in bringing tariffs down from Rs.16 to Rs.3 a minute. And, other operators had to follow suit. The point is that the additional cost of providing a line (also called the marginal cost) is hardly anything. This has made it possible for us to reduce further; we now have probably the lowest rates in the world for mobile services. Today, if you are using BSNL's post-paid Plan 525, and want to call someone in Kanyakumari from Chennai and just want to convey that you are arriving tomorrow morning (for a call of 15 seconds), it will cost you a mere 10 paise. The punch line in the advertisement of one of our competitors is: "Wherever you go, our network follows." We say: "Wherever you go, BSNL welcomes you, others will only follow you."

How do your billing systems compare with that of other operators?

We have a completely transparent billing system. It is possible for a subscriber to send an SMS [Short Message Service] to find out his current bill amount. We do not have any hidden charges. If anything, we only have hidden rebates. We have also scored over others because we do not levy any roaming charges. When a subscriber goes from here to Delhi, for instance, he pays only the normal STD charges. He does not have to pay anything else as a "roaming charge". The Telecom Regulatory Authority of India had recently conducted a survey. It found that Chennai Telephones maintained a very high level of transparency in its billing operations. The Indian subscriber is very demanding. They want all the details in their telephone bills. Initially, we had some problems because the imported billing system could not present the detailed billing that was demanded by consumers in the Indian market. Now we have overcome the problem, and customers are satisfied with our billing systems. In fact, the integrity of our billing is one of the main reasons for our spectacular growth.

Any organisation growing at a rapid pace encounters problems. How have you coped?

In the good old days, there used to be long waiting lists for telephones. To be honest, we were too casual in dealing with customers. But, with competition, our mindset has also changed. We now have customer service centres that cater to the needs of customers. We also have senior officers in charge of these centres so that they can handle the technical queries of customers. We also have a system that results in senior BSNL officials handling complaints of a serious nature so that they are rectified immediately. We have also simplified the procedure by which bills are paid by customers. But we still have problems that are associated with the rapid growth that we have registered in the last couple of years. When I see long queues of people waiting for a pre-paid connection, I feel bad, even though I am also happy that there is a tremendous demand for our product. The Hindu recently carried a picture of a police lathi-charge on people waiting for pre-paid cards of our cellular service. We have now taken measures to convince customers that they will get the cards even though they may have to wait for a while. We have made arrangements for people to wait in a more dignified manner at the customer service centres when they come to buy the cards. My idea is to ensure that people are not harassed simply because they want a mobile phone connection. The subscriber base of Chennai Telephones has increased from 1.2 lakhs to 3 lakhs between April and September 2004. This kind of growth obviously creates problems.

What is the relevance of a landline?

One of the major differences between the mobile and landline services are that the quality of service of the landline is far superior to mobile service. This is why we often ask people, "please come on the landline". This is the reason the landline has acquired the status of a premium access network. In many countries, landline charges are higher than mobile tariffs. This is because the landline connection is more robust. The mobile service is at the mercy of the weather and other factors. The landline is far more reliable, while offering a better quality of service.

Private telecom operators have criticised the Access Deficit Charge, particularly because a large part of this fund goes to BSNL. Can you defend BSNL's position?

My views would obviously be prejudiced in favour of my company. But I will give my perception anyway. The average maintenance cost of a landline, as calculated by TRAI, is about Rs.400-450 a month. Income below this implies a loss for BSNL. In many parts of the country, we provide service charging rents of Rs.50 a month. Most of the customers in rural areas - at least 60 per cent - make calls within the ceiling for free calls. At Rs.50 a month, the subscriber gets 100 free calls. Thus the average revenue for BSNL from such consumers in only Rs.50 a month. None of the other private service providers has reached out to the areas we have covered, particularly in the rural and semi-rural areas. BSNL has compensated for this failure by the private operators because we have social obligations. We do not work only for profits. That would result in BSNL focussing only on the main urban centres. The ADC ensures that we have a level playing field so that we can do business without compromising on our social obligations.