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India's state telegram service comes to the end of the line

India Dispatch: The state telegraph service's popularity prevailed for well over a century. But heavy losses and the surge in mobile phone and internet use have finally rendered it redundant.

A telegram assistant processes a hand-written telegram at a computer as the customer stands at the counter at the BSNL Central Telegraph Office, Eastern Court, New Delhi, India. SIMON DE TREY-WHITE
A telegram assistant processes a hand-written telegram at a computer as the customer stands at the counter at the BSNL Central Telegraph Office, Eastern Court, New Delhi, India. SIMON DE TREY-WHITE

Today, after 163 years, India's state telegraph service - once one of the country's most important means of communication - will be silenced, killed by the rise of faster, cheaper and smarter communications solutions.

The move comes as telegrams have been left redundant following the surge in mobile phone and internet use of recent years.

The Indian state-owned telecoms company Bharat Sanchar Nigamdecided to stop offering telegrams after incurring heavy losses on the service.

"If the telegram was profitable they would have carried on," says Sonam Udasi, the senior vice president and head of research, institutional equities, for IDBI Capital Market Services.

"It has a legacy and an old world charm to it but new technologies have come in and people don't know how to use telegram services any more. There's voice messaging, SMS, WhatsApp, Facebook, so it lost its relevance long back."

Last week, a telegram of up to 50 words cost 27 rupees (Dh1.67) and could take up to two days to be delivered, compared with as little as 10 paise (100 paise = 1 rupee) to send an SMS, received almost instantaneously.

Shameem Akhtar, the senior general manager at the Central Telegraph Office in New Delhi, says the telegraph service nationwide generated revenues of 130 million rupees last year, but "the expenditure is about 1.5 billion rupees per year".

Since 2006, the state-owned telecoms company has lost more than Dh90m on its telegraph services, he says.

The service first arrived in India in 1850 and its popularity prevailed for well over a century, with demand surging in the 1970s and 1980s.

"Once upon a time, we saw everything in code," says RP Gaur, the chief superintendent of India's telegraph services.

"Transfers, arrivals, births, deaths, weather, war."

Mobile phone use in India has grown exponentially over the past decade.

"India is one of the best-performing markets in terms of the penetration and the way it has grown for mobile telecoms," says Mr Udasi. "In fact, since 2002 onwards, the penetration level for India has gone up from 14 to 15 per cent to about 67 per cent."

The number of telephone subscribers in India as of the end of April was 897 million, with the vast majority of these having wireless connections, according to data from the telecom regulatory authority of India.

"That is led by two reasons," says Mr Udasi. "The cost of operating a mobile handset became extremely cheap in India. At one time, when the mobiles were introduced, not only did the consumer have to pay 15 rupees per minute, they also needed to pay an incoming charge.

"There was a time until recently where competitors were fighting to give you per-second billing. Now even the guys who are not in the upper segment can afford to own a mobile and use it, pay-per-use."

Smartphone use in India is also surging. But there has been a shift recently. Following years of strong growth, mobile operators are finding it difficult to keep the momentum in subscriber increase going.

"Growth is already down to 6 million subscribers per month, compared to 3 million a week two years ago," according to a recent report by PricewaterhouseCoopers.

"With rural network expansion still slow and disconnections increasing due to operators ridding their bases of dormant accounts, we expect a real slowdown in overall subscriber growth."

That means profit growth is not what it was.

"There was a phase in telecoms where the leaders were extremely profitable and the operating margins were in excess of 30, 35 per cent," says Mr Udasi.

"Seeing that, a lot of established names came in, which were traditionally brick-and-mortar conglomerates, like the Tatas, Birlas. Then it became competitive and the government started to raise spectrum prices and the cost of operations of running networks - while it was cheaper for the earlier entrants - it became expensive for the later guys.

"It's a mixed bag. Leaders are making profit but they're not growing in profit.

"There was a phase when the subscribers addition was humongous but that pace of the addition of subscribers has slowed down. Also penetration has reached a level from where, while it will grow, it will not be the kind of growth it saw in the earlier days," Mr Udasi says.

The lack of subscriber growth means operators have to generate more revenues through higher prices and data use amid the rise in the popularity of smartphones.

"Now a level of consolidation is taking place," says Mr Udasi. "While earlier the focus was on getting more subscribers by cutting tariffs, now the industry is more sanguine. Rajan Mathews, the director general of the Cellular Operators Association of India, agrees data will be the next big revenue stream for operators.

"With the launch of 4G services and progressive uptake of 3G, the market is slated to plunge into the next level of data revolution," says Mr Mathews.

The market has moved on substantially since Samuel Morse sent the first telegram from the Supreme Court in the Capitol in Washington to the B&O Railroad Depot in Baltimore in 1844.

One company, International Telegram, however, claims telegrams are not dead yet. It says they can still be sent through its website to 200 countries, including India. However, Indians will no longer be able to send telegrams through post offices.

"Does this mean the end of telegrams in India? Or, as some news outlets have reported, the end of telegrams everywhere? No," the company says.

"We are pleased to announce that International Telegram will launch private telegram services in India [this month], and international telegrams can continue to be sent to addresses in India."

 

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* Additional reporting by Suryatapa Bhattacharya