Madhu Mehta: STD PCO and Indian Telecom: Taking Telecom to the Masses

STD PCO and Indian Telecom: Taking Telecom to the masses
--Dr. Madhu Mehta, Consultant C-DoT and MD, NirmaLabs, Anjaleem
Sept 15, 2009

Madhu and Leena Mehta

C-DoT silver jubilee celebrations in August 2009, provides an opportunity to revisit the exciting times of Indian telecom scene in late 80's and early 90's. No account of that era would be complete without recounting the STD PCO phenomena. Sam Pitroda and C-DOT are considered synonymous to the beginning of a Telecom revolution in India. STD PCO played a very important role in this revolution. Telephone was a richman's tool before. STD PCO changed it all. It helped reach telecom to the masses. Telephone, which was a rare site, suddenly became accessible with the yellow colored STD PCOs cropping up in all nooks and corners of the country. The chosen theme for the silver jubilee celebration is "Using technology to transform India", and STD PCO story also represents a good attempt to use technology to transform Indian telecom with remarkable success.

The Curtain Raiser

As a friend of Sam Pitroda, when we (Sam and I) were at Chicago (early seventies), working for a telecom company (GTE Labs) and sharing weekends through India Forum, I had heard Sam mention many times that we in India should have a "paanwala phone" on every street corner .. (which can be used by everyone in the neighborhood to receive and make calls) and that "what is important to start with is access and not tele density". Most of us listened, felt good and went on to do other things.

Sam's pursuits, now well known, (HBR article 1993), to persist and persevere, to get the "Atlas to shrug" (the Govt. of India) and relent to give mandate to set up C-DoT brought glimmer of hope to many who felt "capable" but "disabled". A new era in telecom began, first with belief in self, then expectations of world class products made in India, and then privatization of equipment manufacture and eventually privatization of providing of telecom services. STD PCO was the first step in privatization of services. It was a big step to make DOT to let go its monopoly even in PCO services. In just few quick years, Sam succeeded to get telecom transited from "a Luxury" to "essential infrastructure" - a very big achievement indeed, and got hundreds of young people energized to do world class R&D in India.

I was a consultant to C-DOT in their early days helping them evolve their software architecture. Feeling the glimmer of hope to bring about changes in telecom and sensing improved chances for a start up in telecom equipment manufacturing led me to found a new company - Anjaleem, in 1986. Anjaleem became a pioneer in designing, manufacturing and distribution of PCOs in India.

Many factors and numerous people have played significant roles in making STD PCO a phenomenal success in India; from Sam Pitroda at the helm of telecom commission by then, companies like Anjaleem active at grass root level, enlightened individuals pro change in DoT and TRC, and tens of thousands of early STD PCO operators - all contributed in their own way to shape the events which then turned into a major change across the nation. It all worked, because it was an idea whose time had come. Thus every little initiative triggered a chain of events resulting in a virtuous cycle so common to successful technology based initiatives.

Before I recap the highlights of STD PCO story let me share a memorable anecdote that captures the spirit of the times. In the minds of officials of the Govt., it was a difficult transition to allow private individuals into a telecom service which has been the monopoly of the Government for so long.

Anjaleem had just built a decent subscriber end call metering device (won an award for best product at Door Sanchar mela at Ahmedabad in 1987) and wanted Vadodara DoT's help to try it out on network as a PCO. Once, when Mr. Mahajan, a director at C-DoT and a very high ranking DoT person on deputation was in town, I requested a word to Shri Dua, local DoT authority to offer help. We all met for lunch. There was an unease in the air. Apprehensions about "how would it look" if government department was seen as helping private sector firm were palpable (in those days government departments were willing to extend great help to other government departments. .. but private sector was a no-no). Mahajan cleared the air by saying "you are interested in improving telecom, I am interested in improving telecom, C-DoT is about improving telecom and Dr. Mehta is trying to improve telecom - We have a community of interest and must help each other and not be afraid to do the right thing. The choice is yours - you can restrict yourself to do only those things which you are allowed", he said, "or stay away from those things that you are explicitly not allowed and use your discretion when it is not spelt out. Progress is possible when we opt to use the discretion for the right cause", he ended. That comment was well received.

STD PCOs: Some historic facts

Anjaleem's "Subscriber end Metering" telecom product Intellitrac was first commercially exhibited at Door Sanchar Mela in May 1987 at Ahmedabad and was awarded the "Best Technical Product"
Baroda, Ahmedabad and Bombay Department of Telecommunication installed Intellitrac-log in the DOT manned STD PCO's to be able to provide call charge receipts to customers and correlate their collections with exchange meter reading. This was the birth of the concept of manned STD PCO's using subscriber end metering product with printed receipts. Intellitrac was being used to replace mechanical counter meters at PCO's which provided only 'meter charge'. Intellitrac provided, a printed receipt giving date and time of call, dialed number, duration, call charges and provision for service charges.
Intellitrac gave DOT manned PCO's credibility and generated customer goodwill. MTNL Bombay further permitted the use of this product in the premises of heavy STD users for subscribers to keep Track of their calls.
Anjaleem was the first Company to get type approval by DOT for subscriber end call metering product in 1988
Soon, other companies followed and various STD Metering options emerged.- Customers had to be educated about billing - calculation of call charges for long distance calls.
Coin operated / Card operated pay phones for an interim period were given higher rate of commission. Manned STD PCO's were at last, after strong representations by PCO owners were given the same commission rate as others, effective June 1991.
STD PCO's soon started proliferating and new models were launched.

Growth of PCOs

The chart below gives the story of the dramatic growth of PCOs in India. The chart represents PCOs growth data (1988 to 2009) from Mumbai telephones (MTNL) and that is a good sample of India. There was rapid raise, which was checked only when the mobile penetration started became serious. India wide, planning commission data shows that PCOs reached 197,000 by 1994 and grew to a peak of 2.38 Million by 2006.

Progress on many fronts

Progress on many fronts has made this innovation succeed. Let us review them to get a better overall picture. (I have excerpted this from an article, I wrote in 1992).

Expansion of DOT STD/ISD network

In 1985 approximately 300 stations were connected by STD network and direct dialing to international lines was mostly not available. By 1990 over 850 cities were connected by STD network and each of these cities provided access to over 160 countries. (Although much less compared to to-day, it was a great improvement then!).

Improved call completion rates

It is one thing to be 'ON' the STD/ISD network. It is altogether another thing to be able to get through to anywhere. It is to the credit to the Department of Telecommunication (DOT) that not only the network was expanded a great deal, it was possible to get through in 2/3 trials at least in the non-peak hours (and that was good in 1992 !).

It was believed that call completion has better odds from a STD PCO in peak times, and so many people used to call from PCO even though they had STD lines. (Also it was cheaper - calls from STD PCO had a flat rate per unit whereas the per unit charges increased after a certain minimum since telephone was treated as a luxury !!).

Time of Day tariff

To gain extra revenue and to distribute the traffic more evenly the Department has introduced quarter rate tariff (to use the availability of unused network capacity at those times), during the late night hours (10 p.m. to 6 a.m.), - when ISD rate was Rs 60/min .. quarter rate meant a lot !.

Need to improve access

With the rapid economic expansion in the 80's, the wait list of people wanting telephone was increasing rapidly. The department started stressing that the need was not for a private telephone as much "easy telephone access". Thus more lines were allocated for STD PCO's.

Increased revenue from STD/ISD traffic

Even in the early days, the Department recognised that long distance telephone calls were a good revenue earner and a major source of profit. Thus expanding of STD/ISD network brought in considerably more revenue if improved telephone access was available. The PCO lines brought in far higher revenue per line than any other lines in the network. The Time of day tariff brought increased night time revenue with no extra capital of operational costs.

End of Billing Fears

One of the chronic problem preventing wide spread use of STD/ISD networks was the lack of availability of itemised calls details of STD / ISD calls from the department. People were so afraid of getting hit with large telephone bills that 25% of the people got their STD / ISD access cut off by paying a special charge. Most of the businesses, which in fact could be extensive users of STD/ISD network, got STD / ISD "cut" on their line for the fear of wide spread internal abuse. Calling from STD PCO took care of these fears by giving a printed receipt.

Privatisation of Subscriber End Market

Until 1975 manufacturing of telecom equipment was confined to the public sector. When subscriber end market was opened to private sector, it was natural to expect that innovative applications of technology will bring in new products to meet demands of the market place.

Privatisation of services

In addition to privatisation of manufacture of subscriber end products, privatisation of providing of STD/ISD services was a big step in the mid 80s. This created new opportunities for self employment, and also improved the services by bringing about a competitive environment. Eventually this laid the platform for privatization of telecom services as a whole.

Generation of jobs

PCOs offered a job generation potential. Ex service men, handicapped others were given preference in allotting PCOs. Politicians liked the social benefits to people and were very supportive to the whole concept.

STD PCO: Early Entrepreneurial Moments

The history of Indian telecom equipment manufacturing was till then full of heavy technology licensing/technical collaborations deals. This trend continued even with the private sector. Early experiment of privatisation with telephone's, EPABX's etc. - with common technology procurement by department of electronics and Telecom - were collaboration based and capital intensive.

Even in payphones, early equipment manufacturing was with technical collaboration (coin type - Omnitel) with significant front end payments. But advent of microprocessors, and an air of liberalisation and privatisation of subscriber end market, encouraged companies like Anjaleem to venture out with indigenous innovative solutions for the STD PCO market.

Approval delays: When we first approached TRC (Telecommunication Research Centre) for approval, they said we should have a proven product working on 1,00,000 lines (since all products till then were based on imported technology)!! We said if we have indigenous product, we must have a way to try out the products. TRC then created a policy of limited approvals.

Further at that time there was payphone service provided by coin type machine (Omnitel) so we asked that we want to apply for payphone approval. I was told that what I have is not a pay phone. Payphone must have a chute for money and should be having a wall mount "black box" with corded phone and cradle etc. I said - to me a pay phone is where you pay and make a phone call. I learnt that they had to create a new category of devices titled "call charge indicators", create a specification and a test procedure, and then permit its use for newly created STD PCO service to even entertain our request!! It took more than a year's grind for us (with only limited approval saving grace for small cash flow - we had software export and some C-DoT development work to sustain us though). Finally, we got our approval in Oct. 1988 and around the same time STD PCO policy also got framed. That triggered the next round of rapid expansion.

Ready to jump in: Anjaleem was trying to meet increasing demands and create a nationwide network of dealers. At such boom times people follow herd mentality and jump in. Here is one anecdote that is illustrative.

I had a habit of going early to our office. One day when I entered I overheard our marketing executive (Akshay) talk to a person in traditional Saurashtrian dress (paghri and all) mentioning mortgaging his wife's ornaments to buy a STD PCO to set up such a service. I went into my office and called Akshay to caution him not to go overboard to sell .. I said be careful .. the device is new, we do not have yet many trained service people, town is far away and the fellow is mortgaging family jewels .. he may be acting out of an impulse to make money .. but would create a bad case if he encounters difficulty with department etc. Akshay assured me he would try to dissuade. Later Akshay said he was sure and not deterred. I said if he comes back with problems, return full amount .. and take the equipment back without questions.

Six months later I see, similar person sitting in the waiting room. Worried I ask Akshay, if he is the same person. He said yes. So I repeated, give him his money back if needed. Akshay said, the fellow is here to get another STD PCO equipment, he has made enough money in six months. When asked what about his wife's jewellery, he said that can wait, this opportunity would not!!

There were many such satisfying and rewarding moments. I used to go to STD PCO's in the night to see what people are saying. I have heard people coming from abroad (NRI) commenting that this is "one thing India got right".

Expanding opportunities: As a practice all our booth displays had Anjaleem telephone number, to enable anybody to complain (one has to be angry enough to pay for that call though). I had received calls from happy customers too saying they liked the whole idea. One such call got us to develop a PC based call metering solution for Saudi Arabia and Middle East markets which earned us lots of exports and an export award.

Soon a new small scale industry headed by technocrats making call charge indicator type devices for attended STD PCO use, sprang up. The product was indigenously developed, required minimal foreign exchange (only for the components), proved to be reliable and dependable, was less costly and was very convenient to operate. On top of that it gave a printed receipt spelling out every detail to win customer credibility. Every one just loved the development.

Gaining credibility on billing: no small task!

What created this major growth was that Anjaleem's pioneering efforts had created a device where you can trust the call charges.

Those days Punjab had lots of unrest. And gun trotting people with money, used STD PCO's to make phone calls. Our Julundhar dealer narrated a story that such people would come with a timer and a gun, put them alongside the phone in the booth and say that if they find the billing correct they will use the wallet, if not the gun was there for use !! Seeing that the PCO billing came through, the PCO owners would heave a sigh of relief. Such a performance won us (and the concept) confidence in the market place.

Perhaps the magnitude of the task may not be obvious. In those days we did not have accurate 16 khz metering pulses (due to line conditions). So all STD PCO's were working on interval timing starting with call reversal on answer. So we had to feed pulse rates of every dialable station from every city (the database was on EPROM and hence EPROM was unique for each originating city/town). Building and managing and field upgrading such databases in ever widening network with more and more direct dial was a major task. I used to tell our programmers - do not give me statistical error rates like so many mistakes in 1 million calls - to the caller if you get his/her call wrong .. your machine is just not working!!

In gaining credibility, Anjaleem's efforts of stressing ethical practices also played a role. STD PCO was a funny business in that your efforts to protect the end user were at odds with the buyer's interests. Lure of making more money fast rather than accepting only due commissions, made many buyers ask if we can "increase" the bill somehow (e.g faster clock increasing the duration) and were willing to pay premium for such "extra features". Anjaleem had trying times to carry the dealers group, that sticking to ethical practices and establishing credibility is "good business". Fortunately, majority of them supported our norms.

Anjaleem had 90 plus % market share initially, so what we did, affected every one. We designed the printed receipt with details of date/time/destination/ pulse rate/duration/units chargeable/amount which then became industry standard. We also encouraged our dealers to explain how call charges are computed. Printed receipt from the STD PCO helped further in resolving the disputes; such attempts helped gain the credibility. That we played a major role in getting billing credibility established, was source of satisfaction for us.

In Summary

C-DoT silver jubilee celebration committee has suggested the theme of "Using Technology to Transform India" to mark the celebrations.

Sam Pitroda and C-DoT played a major role in transforming fundamental notions about telecom, indigenous development and what Indian R&D teams are capable of and can aspire to do.

Story of STD PCO (and Anjaleem's own role), in a way exemplifies how technology can be used to transform the country in a major way. It showed how indigenous technology based products can be perfected and how the markets for such products can be developed. It also showed how it contributes in transformation by direct and indirect consequences. Availability of a new service to make calls anywhere in the country was a direct result. But the resulting economic impact of such availability contributes to indirect gains and transformation. As a result, the life styles changed, more people preferred to call and talk to family members than be content with writing letters, and more enterprising people discovered how they can do business more efficiently using the access that was now around the corner.

Incidentally, it also helped demonstrate how public private partnership creating a value chain involving entrepreneurial energies of many, could do wonders for the economy.

So next time you see friends getting together .. dreaming about how it could be .. don't just consider it to be an idle talk .. it may have seeds of something big .. like STD PCO's - the humble looking box in yellow signed small rooms across the nation, transforming Indian telecom in a few fast years.