India's Phone System Needs A Watchdog

Making a phone call in India has always been a nightmare. People used to put their names on nine-year-long waiting lists just for a phone line, and even then service was ghastly with frequent disruptions and constant static.

It appeared that things were getting better two years ago when the government of P.V. Narasimha Rao started privatizing India's state-owned telecom monopoly, and big players such as U S West, AT&T, France Telecom, and Telstra Communications of Australia bid their way into the market with billions of dollars of investments.

Now, a massive corruption scandal, involving a former government official allegedly on the take, has put everything on hold. The big telecom providers are worried that their contracts will be reassessed by the government and that the whole messy bidding process will have to be repeated.

The Indian government needs to act now to shore up investor confidence. A pledge by the current telecommunications minister that only contracts of bribery-tainted companies will be reviewed doesn't go far enough.

The whole process of privatization has been encumbered by a lack of regulation. India has no U.S.-style Federal Communications Commission to protect consumers. That policing role currently goes to the Indian telecom monopoly, which, in a conflict of interest, also competes with private investors. The government needs to create an independent regulatory body. And it needs to honor existing contracts if it wants to keep telecom reform on track. Tens of millions of Indians await better service.