Left speechless in a crossfire
Life Insurance tones up service to face rivals

It�s a turf-war that will cost mobile users dear. Two sections of the telecom industry � the guys who offer basic services and the ones who provide cellular connections � are locked in a tussle that will ensure mobiles will remain a high-cost luxury.

At the heart of the dispute is the desire of fixed-line operators to offer mobile service in a limited area, but their unwillingness to shell out the revenue share that cellular service providers pay as licence fee. The Telecom Regulatory Authority of India (Trai), as the referee in the affair, will have to arbitrate in the issue and take a decision that best promotes the interests of customers.

The Confederation of Indian Industry (CII) has also stepped in to resolve the crisis, claiming it wants to do so for the benefit of the users. The apex chamber asked mobile operators to support limited mobility planned by basic fixed-line firms at a meeting held early this month with Cellular Operators Associations of India (COAI). The move came amid signs that the Department of Telecommunications (DoT) would soon allow basic operators to go mobile in a limited way.

�We have asked COAI that in the long-term interest of consumers, they should not object to limited mobility. Any additional burden, such as a higher licence fee or other charges, which the association wants to be included, will defeat the objective of offering mobile phone services at a low cost.�

COAI said there should be an identical level of entry fees for basic operators if they wanted a slice of their pie. Countering the argument, the Association of Basic Telecom Service Operators (ABTO) with the chamber�s telecom sub-group early this week insisted that limited mobility was not a new service, but merely an extension of basic services. Meanwhile, DoT has moved the telecom watchdog for a ruling on whether an additional licence fee can be imposed on fixed-line operators who offer limited mobility.

COAI, on the other hand, has demanded a single licence fee for offering basic and cellular service. �We have asked TRAI to introduce healthy competition and foster a level-playing field among all companies,� COAI chairman Vinay Rai said.

Trai�s job is not easy. It will have to strike a balance between a viable business proposition and consumer interests. It can draw on the experiences of the US-based Federal Communications Commission (FCC) and other regulatory authorities on this, and other issues.

�We are not against telecom operators offering mobile services but those who are allowed should pay the same licence fee and the spectrum charges as we fork out to the Wireless Planning Commission. Just fix a single licence fee and allow cellular and basic operators to offer mobile services,� Rai said. He claimed that if the government reduces the various fees it charges, cellular call rates per minute in Delhi, Calcutta, Chennai and Mumbai can come down from Rs 4 to Re 1.

Currently, cellular operators pay a revenue share of Rs 300 crore (2000-01) as against Rs 2010 crore during 1999-2000. This happened due to the shift from a licence fee regime to revenue share system under National Telecom Policy 1999. The cellular association is of the opinion that with the entry of more players in cellular market will also play a major role to bring down rate of calls made from mobile phones.

However, it would need more spectrum or frequency. COAI suggests formulation of a spectrum policy that will ensure efficient allocation and rationalised pricing of spectrum.

It had objected to �limited mobility� proposed to be provided by fixed line operators to its consumers. COAI claimed it violates the level playing field, and the original licence condition did not allow any mobility to fixed line operators.    

Mumbai, Oct 15: 
Life Insurance Corporation (LIC) is firming up a three-pronged strategy to stay ahead of competition as the insurance business is opened to private competition.

In an interview to The Telegraph, G N Bajpai, chairman of LIC, appeared unfazed by the emerging competition. �Our strategy would be to approach the transformation of the corporation from three angles. Upgrading the service is first priority. Secondly, our endeavour would be to leverage on technology to the maximum and the thirdly, to introduce new insurance products.�

Bajpai ruled out downsizing of the workforce. He said the corporation will, instead, leverage on human capital. �We will redeploy excess staff to generate more revenue.�

Analysts feel that this statement is significant in view of the fact that LIC�s management consultant Booze Allen Hamilton suggested reducing the staff strength to remain competitive.

The domestic insurance monolith is setting up one of the largest wide area networks in the country which will connect the corporation�s offices in the 41 cities in India. Bajpai said that very soon the policy holders affiliated to any LIC office in these cities will be able to access their account on the internet.

As the private players enter the business, LIC might lose a substantial size of its workforce to them. However, Bajpai assures that the LIC brand popularity and the stability factor in the organisation will make employees less susceptible to job offers from the competition. In addition to this, the corporation also has a productivity linked remuneration system in place.

In a recent survey undertaken by ORG-Marg pointed out that LIC has a strong brand name in the domestic insurance market.

LIC has a strong four tier operational structure � a corporate office in Mumbai, seven zonal offices in Delhi, Calcutta, Chennai, Mumbai, Hyderabad, Bhopal and Kanpur, 100 divisional offices and 2,048 branches. Zonal offices, which are primarily input providing offices, will given more powers.

While the healthcare products would be one area which LIC is closely watching, Bajpai said that in future LIC may join hands with one of the General Insurance Corporation�s subsidiaries to promote general insurance products.

Bajpai feels that the domestic insurance industry has a significant potential to add to the country�s gross domestic product. He sighted the example of South Africa where the depth of insurance industry is almost 9 per cent of the total GDP, while in India it is only 1.31 per cent. The insurance pie can only grow exponentially with the entry of private players, he added.

LIC has achieved and maintained 20 per cent compounded growth rate for the past 20 years. BoB plans any branch banking Jaipur, Oct 15 (PTI): The Bank of Baroda (BoB) will introduce a countrywide �any branch banking� (ABB) facility in the next 18 months, its chairman and managing director P S Shenoy announced today. Shenoy told a press conference here that after introducing ABB in Ahmedabad and Chennai, BoB will extend this intra-city banking facility to customers at Bangalore, Hyderabad, Delhi, Bombay and other big cities in a phased manner through a satellite network. A plan to enter into the life insurance sector with a foreign partner was in the offing and BoB was waiting for an RBI clearance.    


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