Report on Meeting with American Telephone and Telegraph

Garry Jacobs
June 28, 1984

The Ministry of Communications is drawing up plans for a massive Rs.12,000 crore investment in telecommunications during the Seventh Plan including a sizable allocation for expansion of the rural phone network. According to the International Telecommunications Union, India is the first country to fully recognize the vital role which telecommunications play in development and to make a substantial commitment to rapid expansion of its telecommunications network. It is not often realized that the present problems India faces in this sector were shared by industrialized nations quite recently. Ten years ago in France there was a 7 to 10 year waiting list for new phone connections and 50% of phone calls did not go through because of overloading, a situation similar to that of Bombay today.

It is uncertain whether the final allocation for telecommunications in the Seventh Plan will come up to the Ministry’s proposed level. But what is certain is that even if Rs.12,000 crores is invested over the next five years, the immediate demand for expansion of the system will not be fully met and the developmental impact of growth in this sector will be only partially achieved.

The density of India’s telephone system is at the level reached in the US in 1894. From 1894 to 1900 the US system expanded four-fold and from 1900 to 1910 it grew another fourfold. India is poised for a similar expansion today. This sector is also an important source of revenue. It is the most profitable undertaking of the Government of India, returning a 29% profit on total revenues compared with an average of only 9% in the USA.

There are three essential ingredients required for growth of the telecommunications network:

(1)                                      a wide range of new technologies which can improve performance, reduce costs, and speed up expansion;

(2)                                      enormous financial resources for investment of existing facilities and introduction of new ones;

(3)                                      sophisticated management systems to ensure high performance and maximum efficiency of the network.

Over the last 100 years, American Telephone and Telegraph Company has developed and operated the largest and most efficiently run telecommunications network in the world. AT&T’s subsidiary, Western Electric, is the largest manufacturer of telephone equipment in the world. AT&T’s research wing, Bell laboratories, is recognized as the world’s leading research institute in the data processing communications field and has been awarded 8 or 9 Nobel prizes for its work over the last half century.

With these facts in view, The Mother’s Service Society approached AT&T to examine the possible scope for their participation in development of the Indian telecommunications network through direct investment in India, supply of new technology, and transfer of the most advanced management systems. Mr.Garry Jacobs, Assistant Secretary of the Society, had a lengthy phone conversation with the Executive Vice-President of AT&T International, who expressed interest in exploring the possibility of collaboration and deputed two senior company officers to discuss the subject in detail.

During the meeting which took place, the representatives of AT&T expressed surprise at the extent of India’s commitment to this sector. They indicated that AT&T would like to examine the scope for them to contribute significantly to India’s development in this area. They did not rule out the possibility of direct investment, if it were welcomed by the India Government. They also suggested that through introduction of new management systems, enormous savings and improvements could be achieved in operation of the network, an area in which they have a very high level of expertise and long experience. In conclusion they proposed to discuss the matter with the top level company executives and draw up a preliminary paper outlining areas for exploration. They expressed the desire to meet representatives of the Indian Government and to consult the Society again on further steps to be taken.

The Society concludes from this meeting that an initiative by the Government of India would be well received and productive.