December 19, 2005

Back to the future

My Monday MidDay column -- in the paper today, but I can't find the link on the web once again. So here it is, appended below.


For years, my parents had a MTNL phone. Why? Well, that's hardly necessary to explain. For decades, MTNL, or an earlier avatar, was the only game in town. If you wanted a phone, you had to approach MTNL. Often, it must have seemed like propitiating the gods.

Except that even the gods probably responded faster.

I mean that only half-jokingly. Remember the "OYT" -- Own Your Telephone -- scheme? You signed up and if you were lucky, some single-digit number of years later you got a phone.

So anyway, my parents got this phone connection in the mid-80s, when phones were starting to be more easily available than before. (Maybe they only waited months, I don't know). Their number lengthened at the company's whim, changed once because they switched to a digital line, but the phone remained in place all these years.

Sure, there were problems. The line would die in the monsoons. They would get sudden huge bills because some unscrupulous lineman was allowing some unscrupulous customers to make long-distance calls and charging them to my parents' line. Etc. Nothing out of the ordinary, for long-time MTNL customers.

But still, the problems were a steady drain on my parents' patience and tolerance. One day a couple of years, they had finally had enough. Competition was finally here, they saw, and for the first time, they could deal with this Government once-monopoly in the best possible way. They could walk. And they did. They went to one of the players in the competition.

In getting their new phone line, they faced a few niggling problems -- the man in charge of installing did not return calls, turned up a couple of hours late once, that sort of thing. Perhaps these should have been warnings. But it didn't really register because the new phone line was set up fairly quickly anyway, and things seemed super-efficient after that. Bills were easy to comprehend, there was a helpline in place, repairmen turned up in good time, that sort of thing. Everything pointed to a hassle-free future, phone-wise.

Only, "everything" was largely on paper.

One day, my parents got a call from a customer service person, who told them they had not paid their last bill. They had, and had proof. But no, this person insisted they had not paid, and phoned repeatedly to demand payment. It took calls nearly all the way up the company hierarchy to put an end to this. Another time the phone went dead and technicians took days to turn up. They fixed it, but it broke down again just days later. Then another person called to insist they had not paid their next bill.

This series of problems became, and remains, the norm. Much like with MTNL earlier, it is taking a steady toll on their patience and tolerance.

So why do I tell this mundane story that, with variations, is likely the experience of many others?

Well, the last time two technicians visited to address some complaint with the phone, they referred to the constant problems and said: "You've got to understand that we've only been in this business five years. MTNL has had over 50 years of experience. They know how to operate a phone service. We're learning."

I realize that what two repairmen say can hardly be taken as a company's philosophy. Even so, with this explanation, what are we left to think? After all, this is the competition. People have come here from MTNL precisely because of its erratic service. Now the competition's own staff excuse their own erratic service by saying MTNL is their model!

And this reminds me of my repeated problems with my (private) broadband service provider. Calls to the helpline get stuck at call-centre employees who will only promise to "escalate" my problem and "fix it in 24 hours", neither of which has any effect. At least thrice, I've heard that a technician has reported to the company that he has visited my home and fixed my problem, when nothing of the sort has happened. This lie infuriates me, but there it is.

There are plenty more examples.

What's my point?

We hear so much about how private enterprise, and privatisation in general, is the answer to the problems caused by India's "socialist" past. That this medicine will rid us of the miasma of mediocrity and indifference we've suffered for so long. Yet my feeling, some 15 years into this process, is that the prescription isn't quite so easy. Case in point: my parent's phone.

And there's irony here. MTNL itself has changed, and for the better. I have just switched to their broadband service, which any number of friends nearly rave about. Their customer service center in my suburb -- where I visited to sign up for broadband, expecting the usual runaround -- is an astonishing model of polite efficiency. In minutes, I had both paid my bill and signed up.

And yes, my parents are seriously considering going back to MTNL.

So here's the final irony: what privatisation has done is drive some customers back to the arms of the public-sector once-monopoly.

Now I don't know if I should report that the man who installed my MTNL broadband service called one morning to say he was coming in an hour or two. He turned up only four days later. When I called to ask, the customer service person explained that their installations had been "outsourced."


Postscript: Should have put this up earlier, but R has a interesting followup to this here.


Gautam said...

There are a few things I'd like to point out about the terms and usages in your post.

The telecom sector has not been privatised it has been liberalised. Privatisation is the process of selling the stake to non government entities. Liberalisation is the introduction of competition, not neccessarily in tandem with privatisation.

Also specifically in the Telecom sector there is a government regulated oligopoly. The TRAI presides over the sector, determining the right prices and best practices, and from time to time changing the rules of the game altogether.

If you notice, when the TRAI issues a new licence in a particular circle there is a flurry of activity and all firms cut prices and improve services, but within a year or two, the market has settled back down, the lines drawn, the options limited, the consumer once again the victim.

The victimisation that you observe from Private sector companies is certainly not justifiable, but there are deep rooted reasons relating to the good intentioned licensing system, which causes the consequences that you so rightly observe. The solution is in fact the removal of licensing which would permit free entry and free exit from that sector, and make life and profits tenous for the tel-cos.

When they feel the heat of competition consumers will feel the warmth of their services.

Ashok said...

Why has MTNL's service suddenly improved? It's precisely because of the competition.
Let me narrate a personal experience. I had problems with my broadband connection. So I went and met the divisional engineer or manager in Kandivali. He was an extremely polite guy and plied me with post-prandial elaichi before we got down to business.
He called for my files. The problem it seemed was not local. So his underling suggested I go to Prabhadevi to get my problem sorted out.
The divisional engineer was livid. Here's what he said: "Why should the customer go to Prabhadevi? If this is how we treat customers, he will go to VSNL. Find out what the problem is and fix it."
And if competition can improve the service of a lethargic monolith like MTNL, I have hope for the private players. Give them some time.

Dilip D'Souza said...

Gautam, thanks for the explanation of terms.

Tell me, is that the problem the ordinary customer citizen sees -- with terminology? We now have any number of private telecom operators: the customer sees this (and calls it) privatization. Simple.

The great benefits of this process -- call it what you will -- in telecom are two, as I see them. One, drastically reduced prices. Two, MTNL has spruced up. These are huge achievements, both.

But in your phrase "the customer once again the victim" is the point I'm getting at. When the dust settles, that's invariably the case. Have you noticed the trickle of articles about the pitiful service and punctuality of the various discount airlines? (OR maybe you've experienced some of it yourself, as I have). Sure, we have huge choice and cheaper fares -- but service has suffered, or not improved. Where is this "warmth"?

I'm not sure liberalization/privatisation alone improves service across the board. Or put it this way: there are too many irritating problems.

I enjoy reading you, and I'm glad you're posting again.

Ashok, "give them some time"? This telecom operator I mentioned has had at least five years -- in that time, I've watched their service decline. You're saying they should get more time before I quit? My private broadband provider started out excellent, when I first signed up. Over the last 3-4 months I've had such enormous hassles -- meaning their service has declined too -- that I'm left with no choice but to walk again. You want me to give them more time? And I sign up with MTNL for broadband because everyone says their service has spruced up, and my first experience with them leaves me annoyed (the technician taking four days to come when he said two hours).

My feeling is, we've got to be more demanding as customers than say "give them more time". That will be the true liberalization.

wise donkey said...

:)) quite true.

most of the corporates in private sector attach importance to marketing. but rarely do they care about customer service.

Anonymous said...


I agree with the commenters. What you are seeing is more choice as a consumer and that's because of competition. Whether that best choice happens to be MTNL (for you) or Airtel (for someone else) shouldn't really matter. Personally, I don't really care who provides me good service - a government owned organization or a private organization. But I DO care about having a choice and seeing service levels go up because of competition. I don't care to have a monopoly in any sector, whether that monopoly is government owned or private.

and btw, I wouldn't be so quick to dismiss "cheap fares" and "huge choice". You value warmth, i value price. One of us at least is happy. In the good old monopolistic days, we would neither of us have been happy. Giving consumers a product at a good price is itself a sign of 'warmth" and responsiveness to consumer needs (one of which, not to belabour a point, is price). Again - this is purely a result of competition.


Gautam said...

Thanks for the complements Dilip, I certainly appreciate it.

Well just because people at large use a term improperly, does not mean that they should not be dis-abused of their misunderstanding. Certainly you as a journalist and writer of some repute must help people understand the differences in the terms.

Certainly consumers must always demand the best, and if MTNL is providing the best service they should get it from them. My only contention is that we must look at the causes behind this situation, rather than just the symptoms.

Many consumers sincerely believe that there interests are being fully taken care of by TRAI or the Ministry of Civil Aviation as the case maybe. And these organisations try to project themselves as working for consumer interests. However we must pull up these watchdogs as well and demand they fulfill the service they claim they provide.

Both organisations face severe moral hazards, the former in favour of BSNL which is a major recipient of User Deficit Charges which it does not account for properly. The latter because it also runs the two national carriers. The rules should apply equally to all players, and we as consumers should demand that in our own interests.

In order that I am not misunderstood: I don't think bad service is excusable on the part of any corporation - privately run or government owned. And this extends to the regulators as well.

Dilip D'Souza said...

N, I don't much care who provides me that good service either, and that's just what I'm getting at. Whether the competition provides me with an excellent airline like Jet, or a much improved Indian Airlines (sorry, just "Indian" now) is immaterial to me.

I dismiss "cheap fares", meaning lower prices in general? I explicitly say that the great benefit of the process of the last several years is "drastically reduced prices" -- I meant in telecom there, but why would I not welcome it in other sectors? I'm happy for cheap fares, and there are times when that overrides the poor service.

One thing I wish liberalization/privatization would change is attitude: on the consumers' part, in particular, I wish it would make us more demanding than to say "Give them more time".

Gautam, I really did mean that -- when I first started looking at blogs, I always found yours a thought-provoking perspective.

Appreciate your point about the terminology. I will remember that.

I think it's a good to remember that we should also monitor the performance of the regulators.

Dilip D'Souza said...

TTG, you [insert-spelled-out-synonym-for-"foul"]-mouthed ranter...

First, this was about my parents, but never mind.

Second, no, they didn't pay a bribe to the private operator.

But third, you ask: How many times have you been charged for over-billing? How many times has your phone died with the private operator?

For [insert-spelled-out-synonym-for-a-word-that's-pronounced-"fuck"]'s sake, what do you think I wrote in the [insert-spelled-out-synonym-for-the-word-"damned"] article anyway? Not over-charged, but they were harrassed for weeks for not paying a bill they had already paid. Their phone died several times.

Only three private operators? I can think of at least four or five for landlines, offhand.

But other than that, tell me, you think I (and my parents) did not look into the others? They switched from MTNL to this one after checking all that was available. They are now checking all the others, and switching back to MTNL is one alternative.

Nobody denies the choice. I positively revel in it. Please stop addressing spelled-out-synonyms at me on that count.

What perturbs me is something else altogether: the assumption that the privatization/liberalization process alone will solve all our problems -- whether of service, price, corruption, whatever. It might -- I'm open to that -- but I'm not persuaded yet. That's why I keep picking on that "Give them more time" -- it's that kind of attitude that undermines.

On that [insert-synonym-for-word-that's-pronounced-"fucking"] note...

Anonymous said...


I absolutely agree. Consumers should be much more demanding and I think with more competition they will get used to being in a position of power rather than helplessly taking whatever the monopoly decides to give them. We were always so used to 'adjusting" that what can i say but give it a little time (the attitude change that is!).

I wrote that about cheap fares, because of what you said in response to Gautam's message which was: "Sure, we have huge choice and cheaper fares -- but service has suffered, or not improved. Where is this "warmth"?" (I think that example was to do with discount airlines). I wrote what I did because to me providing cheap fares is enough 'warmth"!!


Ashok said...

There was more to my post than just the last line.
True, we have to be more demading as customers. That's precisely why I went and met the divisional engineer.
But for your demands to carry any weight you have to have an environment where you have a choice. Otherwise, you could make all the demands you want and get nothing in return (as in the past when MTNL had a free run).
If there's a system that can change things overnight, I will gladly vote for it.
But in most sectors that have been liberalized and where there is competition, the difference is quite significant.

Umesh Patil said...

I would say Dilip is trying to point out that whether it is a private company or a public sector company; on many occasions as an end customer he does not see the difference in service level. True MTNL improved afterwards. The larger point which he is making here is ownership and competition structure is having less impact in Indian market. I think one has to accept that point here. I guess the solution here is less in the hair splitting of private / public or Free Market / Restricted Market.

What about Trial Law? When one reads carefully Dilip's account, in the end it is clear that as a customer his parents did not have the recourse to courts to pull that company to honor its service contract. There is no Class Action Lawsuit where many such customers can come together and effectively make companies prohibitively expensive not to honor the service contract. At that point it matters less whether the company is privately owned or public sector and whether there are many other competitive players or not. All that is of no use, if as a customer I do not have effective and demonstrative recourse in enforcing the service agreement or contract.

Trial Law in America has lot of bad things. But we can not forget how it forces the businesses to be on the toes. Whole Democratic Party is built on the money of Trial Lawyers and conducive policies to them.

I never see such a powerful litigation oriented environment in India. In absence of that, private or public; how does it matter? Every one will break the service contracts with impunity.

Rahul Siddharthan said...

(and stop using American spellings :-p. It's Privatisation/Liberalisation :-p x10)

Actually the Brits used to say "privatization" -- check the OED, or any Brit book typeset before about 1970 -- and the Canadians still do. I suspect the -s- happened when the Brits started hating Americans more than they hate the French...

As for merits of privatisation/liberalisation/whatever, I think the basic issue is competition. Monopolies are bad (private monopolies, like electricity and telephones in much of the US, are as bad as state-run monopolies like EdF and France Telecom in France). Competition is good. Adam Smith recognised that over 200 years ago. Hence antitrust laws, etc.

Also, some sectors (like post or public transport) are necessary and not always profitable, so the government is obliged to pitch in and supply these services. Even in the US, the post is a government operation, and the railway (Amtrak), such as it is, is basically government-supported too. In the UK, they tried privatising the rail in the 1990s, with disastrous results. British Rail was bad but its successors are dreadful. Whereas in France, the state-run SNCF is excellent, except when they go on strike...

Dilip -- you do seem to agree that competition is what improved MTNL, Indian Airlines etc. You're complaining about budget airlines? The Americans have a saying "You get what you pay for" (not always true but not always false). Besides, Air Deccan is improving too, from what I hear.

Dilip D'Souza said...

TTG, for becoming PM, get in line. I'm ahead of you.

Two other points: I'm glad you mentioned both primary education and health. They need attention just like opening up telecom etc have had attention.

As for how far we are into the process -- I believe we haven't done more than a somewhat shuddering start, and have overlooked some areas and aspects. I have not much desire at all for the "twain" you mention to meet (though I would have liked to meet Mark Twain...), but I think there has to be a lot of thought given to just how liberalization is happening, who it is benefiting, how to spread its benefits to those who feel they have been left behind.

And do look at this, especially the comments.

I have received, at last count, 257 blank calls on my mobile since your comment went up. You're keeping yourself busy, aren't you?

Shinu Mathew said...

Oh My God! back and forth [spelled-out-synonims] are making me laugh. And Dilip Sir, the response to TTG's abusive language was even better.
And may be this is the reson some 16 comments just for this post lol.
Hope to meet you soon.

Dilip D'Souza said...

Rahul, I love the discount airlines, I mean the idea of having them. But there have been some articles about their inability to keep to schedules, their poorly-trained personnel, that sort of thing. Teething troubles, some of them, but they are there nevertheless.

Travelled SNCF a few years ago, and my train got delayed by 30 minutes somewhere. When we reached Paris, there was a man standing there handing out post-paid envelopes for us to send in our tickets and get a 200 Fr (before Euros) voucher for future travel on SNCF, because we were late. I got the voucher and gave it to a friend who was going to France about six months later. I was thoroughly impressed.

Pareshaan said...

Govind the line-man had been a part of our family make-up for more than a decade.
Every fortnight he would disconnect our phone, appear at our door, take a freshly slaughtered chicken, and a bottle of rum, chat with my Grandma, and leave. Shortly after his visit our phone would be up and running.
I still remember my father giving him his last chicken and bottle, and telling him that we had a cell-phone now, and he need not bother visiting our premises any longer. It was a tragicomic moment.

Pareshaan said...

Oh god, have to say this, the war of words between TTG and you - Exhilarating, and very funny. Sorry for being trite and irrelevant - Again!

Anonymous said...


I have seen similar sentiments on Annie Zaidi's blog as well, the theme being "that the private sector can be as inefficient as the public sector or even worse."

At some level, this has to be true. After all, if all private sector firms were super-efficient, we should observe far fewer private firms going out of business, both in India and other places. So your point, in my opinion, is somewhat obvious. I can only guess that you are making this point because you feel that privatization and liberalization are being touted as some sort of panacea for all problems. I have never come across a proper reference to the persons touting such views; indeed, the economists that I know are all too aware of the problems with a free-market economy. The economists who argue for a freer economy, are in general, not libertarian (those arguing for minimal state intervention in the economy). They want active intervention in the economy - in things like law and order, infrastructure, primary education etc. The disagreement with the loony fringe on the left concerns the nature of the intervention.

Assuming that your experience with the private telecom company is in fact representative of all customers, have you thought about why the government should be concerned about it? Just to put things in perspective, the teledensity (the fraction of persons with a telephone) is around 10% in India. This means that roughly 90% or so of Indians don't have telephones! So why is our beloved government so concerned with this elite 10%? If the private companies are providing shoddy telephone service at the moment, let them and allow the private sector take care of the problem. Shouldn't the government be concerned with the other 90%? Unfortunately, such misplaced concern is in fact, representative of a whole slew of other policies. And forgive me for saying this, but by bringing up this telecom example, you have revealed your own elite bias. I am not criticising you; all of us on this forum - including myself - are part of the same elite but it helps to recognize ourselves as such and to be aware of our own biases.

I will end with one final point. The economist Kaushik Basu [at Cornell University] pointed out - I can't recall where - that India operates a parody of a free market system where things which should be in the private sector are not but things which should *not* be in the private sector are in fact allocated through the free market. For instance, not even the most ardent freemarketeer would say that driving licences should be allocated by putting a price to them and selling them to whoever can pay the price. That's what seems to happen in India, though. In parts of India -- say, UP/Bihar etc. -- the legal system effectively operates on free market principles in the sense that you can get any judgement you want by paying an appropriate sum of money. We get to hear this only when when something spectacular happens -- as for instance, in the case where someone managed to get an order against the President of India. And most importantly, in parts of India, the state is effectively privatized in the sense that the government no longer even pretends to act neutrally with respect to all its citizens. Bihar under Laloo (where Laloo would not visit sites of conflict if the victims were of "high caste") and Gujarat under Modi, or for that matter even the centre (in 1984) are good examples. The point about effective privatization of the state is not mine; it is made by Rajeev Dhavan, a leftist of note -- see his introduction to the Indian edition of Marc Galanter's "Law and Society in India" published by Oxford University Press.

Perhaps you should consider the "free market economy" that we operate currently before considering whether liberalization and privatization can really make things worse.


Dilip D'Souza said...

Suresh, you say: you have revealed your own elite bias.

And thank you for pointing that out. It is always worth remembering. Yes indeed, why should this government care for the interests of us 10% phone-owners over the 90% non-owners?

I don't believe liberalization and privatization will make things worse: I look to them to make things better in many respects. I'm only concerned that we don't conclude that they are the answer to every ill. Yes, I don't have the "proper reference" you speak of -- but it's an impression I have of the views of some people. Not a small number of people, I think.

Unknown said...

surprisingly PSU? :)