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[February 13, 2006]

PCOs need to innovate or perish

(The Times of India Via Thomson Dialog NewsEdge)BANGALORE: Francis has been running a government telephone booth off Bangalore's MG Road for the last 15 years.

He knows the repercussions of Dayanidhi Maran's OneIndia scheme which takes STD call tariffs to a mere Re 1 per minute.

He is clueless about other options as this is his only way to earn a living.

The change is so severe for Francis and thousands like him across the country that it could see a major rehaul in a segment which prided itself of generating profitable entrepreneurs on the double.

The PCO revolution caught the nation's imagination in mid-80s through late-90s. By then most of the towns and around six lakh villages had atleast a PCO to boast of.

BSNL has about 12 lakh PCOs and pays about Rs 1700 crore to them in commissions every year. MTNL has 65,000 STD PCOs, (2 lakh local) in Delhi and Mumbai and pays 25 per cent commission.

So, we are talking of a total economy in the range of Rs 2000 to Rs 2500 crore per annum which can be set on a 'innovate of perish' mode.

However, things are brighter than we think. Take a peek into your neighbourhood PCO which has now transformed into a one-stop-shop for everything to do with communication. "Gaming and Internet is our main area of business.

I have the telephone booth as an additional source of income, although it hardly contributes to my overall profit.

With the introduction of OneIndia plan, I think I can look at a cordless phone, which can be used by customers whenever they need it.

International calls too work out much cheaper through a computer," explains Vivek JS, CEO of Zeus Inc.

If PCO owners are innovating, telecom service providers are not sitting back. "The birth of OneIndia plan will not signal death of PCO market.

We are firming up plans to retail mobile, landline, and broadband connections through PCO booth.

Since we have a long-standing relationship with PCO owners, we will soon work out a process in which they will earn a substantial commission by selling various products," says RL Dube, business development director, BSNL.

"As voice revenue minimises, PCO owners will start investing in Internet to earn revenue," adds Kobita Desai, principal analyst, Gartner.

Just as Sify's I-Way and Reliance Infocomm's Web World are established as complete communication centres, PCOs too are expected to look at converting into communication kiosks, replete with video conferencing, broadband and gaming with basic telecom services.


For many, these projections and exuberance sound irrational. These are the pureplay PCO owners. The bold entrepreneurs but now caught in the maneuvers of marketplace.

To make matters worse, government telephone booths are run by the physically challenged and this is their only source of income.

Says a PCO owner, "We received the first jolt when private parties were allowed to set up STD/PCO booths. That diverted a lot of our income. Now, with this plan, we are clueless about what lies in store for us."

With cost of calls tumbling, commissions too will take a dip. Ask Harish Bijoor, a marketing consultant and previously CEO of Zip Telecom, where he tried setting up private PCOs for two years.

Bijoor is not taken aback with recent developments. "The PCO business was never viable. We saw the writing on the wall nearly 4-5 years ago. This was one business with an expiry date," he says.

He feels these developments would trigger automation, which is 'just round the corner'. "In many countries we don't have people manning telephones. It's done through purchase of calling cards. We can look forward to such a scenario," he adds.

Bharti Infotel's ED K Krishnan says, "Although there is a perception that almost everyone in India has a mobile phone, our penetration is just 8 per cent, and less than 40% of the country comes under the mobile umbrella.

India still has a huge rural population, and a large migrant population in the urban areas, these people greatly depend on PCO to make calls home."

(Inputs by Sanjay Anand in New Delhi)

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