Telecom: high on service, low on quality

India has made big improvements in the international and domestic long-distance services in 2004 despite a complex regulatory environment, an uneven playing field and limited competition. This finding is based on a health check on telecom services that Gartner has done for large enterprises with extensive networking requirements.

"The biggest improvement was in voice services. Prices have dropped dramatically to a point where India is competitively compared with developed markets. Service quality, a major problem in the past, has also improved significantly, but it is not consistent enough for large companies," says Kobita Desai, Principal Analyst, Telecom.

Overall, big progress has been made in India in pricing, and this should continue with increased competition. However, service quality continues to lag vis-à-vis many other countries, including some developing markets.

This problem is particularly evident in data services, whose service quality has been diminished by problems in the last mile. India needs to address this problem quickly, because reliability is more important than low prices, especially for foreign companies outsourcing their IT operations to India.

"Voice, leased lines and IP-VPN services have already made significant progress. The focus now should be on improving provisioning and service quality, which are needed to support India's aim to become an IT and outsourcing hub," says Desai.

In the area of data services, major progress was made in leased lines. There is a bigger choice of service providers and prices dropped significantly as a result of more fibre capacity and competition. Although IP-VPN services came in late, it is quickly picking up speed as more carriers roll out the service for domestic and international use. Competition is setting in, which is driving down prices to more acceptable levels. IP VPN is likely to emerge as the main alternative to leased lines in the future.