DOT Hatao, Desh Bachao: Get rid of the Dept of Telecom to save the country
This was my clarion call to reform telecom sector. PM Vajpayee after taking the oath for the office in the fall of 1998 talked about IT as India’s Tomorrow. I got inspired and requested a meeting. In that meeting I told PM that if he thinks IT industry is India’s future then he has to do a couple of things quickly. A strong industry can not be built on a third world telecom infra-structure that India had at the time. I also told him that he also has to allow a VC industry to emerge in India.
He told our delegation to come up with a detailed recommendations. After returning to US I organized a group at Stanford (specifically at scid.stanford.edu) to develop policy recommendations for telecom liberalization in India. Group was by and large funded by me and it took over an year to study all the liberalization models, 13 to be very specific, that had been tried around the world. The main points were to do a big bang liberalization and do a revenue share with rather than a license sale to the potential operators.
We finally presented these to the then Telecom Minister Ram Vilas Paswan. He dismissed them out of hand and told me that I was wasting my time. Telecom is not the problem in India it was the population. I told him that he was not the health minister and he should worry about Telecom. He further told me that Telecom is a National Defense issue also to which reprised that he was not the defense minister either. I left that meeting hopping mad. I had wasted a year and over a million dollars!
An interview with Economic Times followed where I issued this clarion call. DOT was very profitable department and was the second most coveted, after the Railways, by the politician. It offered maximum opportunity for patronage. I returned to US before the interview was published.
After I got back to US, I got a call from NK Singh, principal Secretary to the PM at the time. He told me that PM had seen the interview and was interested in talking to me further. I flew back to India and went to see the PM. PM asked me why did I gave that intemperate interview. I reminded him that he had asked for the recommendations and his minister of Telecom had dismissed them out of hand. He simply said that he understood my anger. I was ushered out of the meeting and NK Singh walked out with me. I asked him why was it necessary to ask me to come back for this 5 minute meeting? He said just wait.
A couple of weeks later Paswan was replaced by Pramod Mahajan. Government adopted our recommendations without any change and the new policy went into effect on Jan 1, 2001. On that day India had 17 million land lines and 1 million mobile connections. A year later India still had 17 million land lines but almost 80 million Mobile phones. Telecom revolution had begun in India.
Sam Pitroda is talked about as the father of Telecom revolution India. He was against this liberalization. He said that “one man, one telephone is a wasteful western luxury that India can ill afford”. He was in favor of local technology and a communal system that he had pushed earlier. When Congress party came back to the power, the first thing they did was to re-institute the telecom licenses, resulting all sorts of scams. We had recommended revenue share to forestall this eventuality.