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Re: challenge to Mr. Vijay



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[Topics under debate]: GOOD GOVERNANCE
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vamsi@siliconcorp.com wrote:

> ............
>
>     I am asking a simple thing here: why do people of India think that

> DoT will make better use of capital resources to expand the rural
> telecom than, say, the private sector?

In theory, because the private sector is driven by profit, and the
conventional wisdom is that with the low densities phone subscribers in
rural
areas, there is not much profit to be made in bringing telecom to rural
areas,
so private companies won't do it.

This theory may or may not be wrong. In a parallel example of the
pre-divestiture [monopoly] bell phone system in the US, for about 70
years,
bell, assuming that long distance was used primarily by business, kept
long
distance rates high and used the profits to subsidise local [home] phone

service. If rates were kept at a level more reflective of the actual
cost of
the service, would the phone user base have grown to the point it did
where
they would then use long distance in volumes high enough to cause the
consequent drops in the cost of long distance service? I think it is
debatable
either way. The point is that non-free market solutions have in the past
had
varying degrees of success in the area of telecomm.

In practice, the long tradition of incompetence and corruption in goi
bureacracies does not inspire confidence in the likelihood that they
will
deliver what they promise.

-Charu



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