PHONE REFORMER FINDS BUREAUCRATIC LINES CROSSED

ERIC ELLIS, New Delhi

02/01/1994

MR N. VITTAL thinks of himself as the Mikhail Gorbachev of India's Department of Telecommunications.

 Drafted by India's reformist Finance Minister, Dr Manmohan Singh, to shake up India's communicatively challenged telephone "network", Mr Vittal is being hailed by foreigners scrambling for the world's next big telecommunications market. But he is despised by the DOT's elephantine bureaucracy.

"The Indian people are fed up," Mr Vittal says. "I must be frank, there is a lot of resistance to my plans. I have 3,000 bureaucrats who do not want the monopoly to go." The task facing the whirlwind Mr Vittal is staggering.

India's 900 million people share just six million lines of a piecemeal, rusting, pre-digital system. (Six are in Mr Vittal's New Delhi office).

Even in the big urban centres like Delhi, Bombay and Calcutta, it can take eight years to get a line connected. For outlying areas, forget it. Mobile cellular phones remain a glint in the reformists' eye.

Delhi expatriates swap dinner party telephone horror stories. One resident Briton went on Christmas leave, to return to a non-itemised six-figure phone bill. Someone at the exchange had, for a modest backhander, transferred temporary use of his line to an extended family with many relatives in the US

By contrast, another American couple who live in an old Delhi house surrounded by the mansions of India's bureaucratic elite boast they have never received a bill in their 18 months in Delhi, be it telephone, gas or electricity.

Telstra's Anton Abrahams, currently setting up office in New Delhi, estimates that India needs $US35 to 40 billion ($49 to 56 billion) simply to modernise the system and add another 13 million lines - Mr Vittal's target by the year 2000.

But even that 1-in-50 ratio pales in comparison with the OECD average of one line for every two people.

And on top of this, India has foreign reserves of just $US8 billion.

Undaunted, Telstra is one of at least 20 foreign telecom companies beating a path to Mr Vittal's door, hawking everything from system renewal and network management to paging and cellular services and advice on setting up an independent regulator.

India is frustrating going, but Telstra says it is committed for the long haul, bidding for a paging network and a network management system through the Australian Government's aid program.

Delays notwithstanding, Indian telecommunications are hot in the international capital markets.

The international carrier VSNL, which Telstra has tried to buy into, sought$US500 million in one of India's first Euro-issues but was convinced by foreign banks it could double it, the theme of India and telecommunications combining two hot properties. The issue is expected to go out at a frothy 75 times earnings.

The forces ranged against the reformist Mr Vittal are awesome.

Every member of parliament currently has the right to allocate 15 lines to friends, colleagues or whoever, who has the 30,000 rupee ($1,400) "priority connection fee".

The DOT itself is a metaphor for the enormous task facing India's reformers. Mr Vittal describes it as the "judge, jury and accused". The Department has 470,000 employees, many of whom do nothing but draw a salary and pay dues to the 40 unions, many communist-controlled, that dominate the workforce.

Brahmin bureaucrats enjoy privileges like mansions at leafy addresses, cars and foreign travel, while their lower caste staff process submissions that yellow in musty offices, consigned to files that are never opened.

But Mr Vittal is committed to change and foreign competition, whatever the cost. "You cannot make an omelette without breaking a few eggs. I am an optimist. I am sure I will not meet the same fate as Mr Gorbachev."