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Monday, 19 June 2006 00:00
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Telecom may be one of the country’s economic segments of fastest growth, along with offshoring and software services, but if the government has its way, both could suffer a grievous blow. Ironically, all this when the professed aim is to increase foreign investment. Apart from the fact that the proposed rules are quite ridiculous, what is stranger is that, after a meeting chaired by the Principal Secretary to the PM, it is now proposed these will not apply to existing companies that have foreign equity of 49 per cent or below, but will apply to those whose foreign investments are over this level. So, there are now going to be two types of foreign investors, those that are discriminated against and those that are not. Old Yankees can stay, new ones are unwelcome.

Some months ago, the new telecom policy put all manner of restrictions on both existing as well as new telecom players. At a time when Indians are heading top MNCs, the policy said, for instance, that all top jobs such as the CEO, CFO and CTO must be held by Indian nationals (See “This will encourage FDI?,” February 6). Presumably, the assertion is that only Indians are a safe bet. Under what is being proposed, existing firms who have up to 49 per cent FDI, such as Tata Telecom, will be allowed to retain their foreign CEO, but if they decide to up their FDI limits, the likes of Mr Darryl Green will no longer be welcome!

The other condition, linked to this one, also relates to the fear that foreigners can be counted upon to try and snoop on Indian networks, while Indian nationals won’t—try telling that to Amar Singh! What’s proposed is that no “remote access” will be provided to any equipment manufacturer or any other agency, including the licensee’s own international parent, at any location outside the country for maintenance, repair or monitoring. So, if like Bharti, your network is maintained by Nokia and Ericsson, both the firms will have to move their global network operation centre to India instead of the current practice of monitoring and maintaining the network from a single centralised location elsewhere.

While being security-conscious is a noble thing, other countries like China, Israel and the US, which are a lot more paranoid, impose no such restrictions. The reason is very simple—if a network’s security is designed in such a way that the person monitoring/maintaining the network cannot eavesdrop without authorisation (like the IB permission you need to tap phones in India), it doesn’t really matter if the network is being accessed in India or overseas.

But let us, for a moment, buy the argument that allowing remote access does make the network vulnerable. How does the network become less vulnerable if Sunil Mittal owns 51 per cent of it versus a situation in which he owns 26 per cent, considering that he cannot sell his shares to just anyone without the government’s approval?

Since other countries don’t have such restrictions, imagine what happens when they do. Indian firms such as VSNL own foreign networks that, at some point, they may wish to access from here. What if the other governments follow us and restrict VSNL’s remote access? In which case, VSNL, which offers global telecom solutions to Air India, for instance, will no longer be able to, sitting in India, monitor Air India’s networks on a 24x7 basis in London, New York and Tokyo, something vital for both Air India and VSNL. Add to this list the SBI, Infosys and Wipro, and imagine the consequences. The same, needless to say, will happen to global players such as MCI who choose to set up shop here. To carry this paranoia to its logical conclusion, why should Indian BPO units process sensitive US or European data sitting here in India where data security is a problem? The tit-for-tat possibilities are enormous.

The other security-related problem area is the new customer verification norms that have come into place from June 1. Clearly, you need to know the address of users, but in no other area (passports, driving licences, ration cards) are the service providers doing the verification themselves, it’s always the police that do this—while buying a car, you give the dealer your ration card details, and the police then verify this. So why should the phone companies be sending people to verify the addresses of customers, who pay them as little as Rs 150 a month and will probably shift vendors in six months to a year? If the problem is of fake addresses, then it is the government’s job to come up with identity cards and unique citizenship numbers—running these through a computer program to see which citizenship number has more than one phone is then a simple task. Given that four million people get a new phone each month, and there’s a user base of around 100 million already, it just has to be recognised that any solution that imposes either large costs, or delays, will effectively choke off telecom growth. To what end is not clear.

 

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