A K Bhattacharya: Issues beyond ownership structures

NEW DELHI DIARY

Till even a few years ago, there were no "drop boxes" from Mahanagar Telephone Nigam Limited (MTNL) to allow its customers in Delhi and Mumbai to make payments either by cheque or credit card advice. Its customers would stand in queue outside the MTNL bill payment offices and spend anything between 30 minutes and a couple of hours, depending on the length of the queue and the mood or efficiency level of the person at the payment counter.

Things began to change when the private mobile phone companies launched their services and started accepting payments against their bills through cheques or credit card advice, which could be dropped in boxes kept in convenient stores and petrol pumps located in different corners of the city. MTNL too began installing "drop boxes" to receive payment cheques from their customers. Many MTNL customers were relieved to use those "drop boxes" as that meant an end to the long wait in a queue to pay telephone bills. And now customers can even make electronic payments for MTNL bills using the Internet.

There is a lesson to be learnt from the MTNL experience. Competition brings out the best in companies. For years on end, the state-owned fixed telephone service provider in Delhi and Mumbai, secured in the comfort of a monopoly situation, made no special move to make its customers' life a little more easy, either in terms of providing a reliable and quality service, let alone simplifying its bill payment system. Within months of competition hotting up, MTNL got its act together. Not only did it enhance its capacity to virtually eliminate the waiting list of applicants for telephone connections, it also improved its customer service.

Of course, the caveat here is that not all public sector undertakings are as strong or market-savvy as MTNL turned out to be in this case. Indian Airlines also showed remarkable alacrity in responding to competition, when private airlines like Jet Airways began nibbling at its market share. But it soon lost the battle, largely because its top management failed to sustain its marketing initiative and the government refused to impart operational autonomy to the PSU airline and meet its additional capital expenditure. There are several other PSUs which simply could not face up to competition from private sector players and withered away. India Tourism Development Corporation, a giant PSU once upon a time, is one such case. With privatisation on hold, ITDC and its hotels continue to languish as marginal players in the hospitality sector, with private sector hotels cornering the cream.

And wherever the government managed to privatise state-owned utilities, private sector entities made a big difference to the way customers were being serviced. The distribution business of the Delhi Vidyut Board (DVB) was privatised in 2002 and three private sector companies""one of them promoted by the Tatas and two by Reliance Energy""lost little time in bringing down energy losses and improved customer service. There were complaints about the manner in which customers were being encouraged to go in for new electronic meters to measure their power consumption more accurately. But those were redressed over time to the satisfaction of customers. Now it seems the initial hitches are over and the three private power distribution companies have settled down in their new businesses.

There is another lesson to be learnt from the way MTNL reacted to competition, Indian Airlines managed to give a good fight to Jet Airways at least in the initial days and how the privatised power distribution companies brought about a sea change in customer service in such a short time. It does not require great management insight or enterprise to respond to competition and grow revenue. The ownership pattern can be a handicap. But being a PSU or a state-owned utility does not prevent it from initiating a variety of management steps needed to grow the business. MTNL showed that it could take on competition. Indian Airlines showed that it could protect its market share if its management remained keen on its business goals. And the DVB showed that all that the privatised distribution entities achieved in a relatively short time was not at all beyond the reach of the state-owned board.

E Sreedharan of Delhi Metro Corporation also established beyond dispute how working within the constraints imposed by the public sector set-up, a world-class mass transportation service can be offered and maintained. The obvious question, therefore, is why the government cannot create similar outfits to run world-class bus transport services in major cities across the country, or taxi services of international class. All the government needs is to put in place a competent management team to run these services. It is perhaps time our city administrators worried less about the problems arising out of ownership structures. These are long-term problems. In the short run, it will make more sense to get hold of managers with a proven track record and allow them to run services that make a difference to the lives of people.

akb@business-standard.com