Wasted opportunities

When I was a kid I always felt bad that I could watch no other television channel than Doordarshan. Being an village there was no concept of cable. Then 4 years back, we got DTH. Not everyone can see the subtle effects of such apparently minor things. Freakonmics describes how penetration of television has changed lives of many Indian women living in villages. Many of the rural female populations realized that outside their village there is a world where women are competing with men, where they get more respect and so on. This changed the way they look at themselves and hence the kind of expectation they would have from their girl child.

Looking at purely economic aspect of DTH service in my village I realize that almost every house now has one. Even if we assume the expenditure to be Rs 200 per house I am sure around 1000 houses are spending collectively Rs 2 Lakh per month over this new medium of entertainment. This figure may not be accurate and purely hypothetical but the point it proves is that the penetration of multichannel medium has increases which has further increased the number of channels and variety of programs. We can safely say that many channels exist only because of the increased viewership due to DTH. Each channel probably is responsible for providing employment to few hundreds. Small shop owners sell DTH vouchers and make some money too. A new ecosystem has come into existence which did not exist 5 years back.

Now, how many people would have actually foreseen this ? Any educated person with his head on his shoulder is capable of seeing this change but the masses generally dont understand this. This is probably because most common people dont understand how economy works. (Let me be clear that I dont claim to understand it well either). Imagine people opposing DTH as a move to take “poor” cable operators out of business. If that had happened we would have never seen the thriving ecosystem of DTH systems.

One reason why DTH has worked is because it is cheap. You get a DTH connection for just Rs 2000. It gives you the freedom to control your monthly spending as well. It is economical. If the government had kept say 100% tax on the DTH box the whole system would have got stuck into stagnation without benefiting so many people.

Thankfully most things went right with DTH and we have a new business booming in the country.

But now let us look at the opportunity we lost. High Speed internet is like an information superhighway with potential humanity is yet to fully explore. Like all other Indian infrastructures India’s wire-line connectivity sucks. 3G could have changed all those equations. First of all government delayed the 3G auction by almost 5 years. When they actually auctioned it the sole aim was to earn some revenue instead of far sightedness. I guess Indian government does not understand technology as it should.

Common people argue that spectrum must be auctioned so that government makes money and the “evil” corporates have to pay from their nose. What these people dont understand is that whatever price that these evil telecom operators would pay will eventually get recovered from their subscribers. Interestingly converse it not true. During initial days of 2G scam people argued that if the companies got the spectrum cheaply the people benefit of that will be passed on to people. Price of a resource is always determined by the demand in the market and not the cost to company. A company will always sell a product for the MAX price customers are willing to pay. However if the government increases the cost to company or worse gives unfair advantage to selected few companies it is biasing the price discovery in way that it negatively affects the consumer.

Now that all the companies have paid through their noses for 3G spectrum, prices of 3G services are very high. Companies are unable to make up for the infrastructure they have built and hence trying to squeeze every possible rupee from their customers. 3G rates are ridiculous and hence I am still using 2G.

Had government shown some foresight, had given 3G spectrum for lesser cost and encouraged telecom operators to merely act as data carriers I believe we would have built a new ecosystem of wireless internet based devices. We could have had  wireless electricity meters, wireless sensors to keep an eye on weather, traffic and so on. But that opportunity is now lost.

2 thoughts on “Wasted opportunities

  1. Nicely written, In spite being a person from Information technology you have understood the how economy works. You are good economist ! Village people will take years to understand economics because at present politicians are depriving the opportunity of villagers by pouring goodies on them (by way of distributing freebies ) and if you go and explain to them (villagers) they will say you are educated fool.
    You need to write regularly to make awareness . Keep up the good work going

  2. Thanks a lot for your words of encouragement Sir. I have always liked Economics, I feel the basic of economics must be taught even at the lowest levels of education. It affects everyone and has the power to change the world around us.

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