Bharti And Reliance Petition Govt Over Nld

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Reliance, Bharti JV on inter-circle connectivity

Press Trust Of India / New Delhi August 2, 2004

Business Standard

Telecom operators Bharti and Reliance have petitioned the government to stop any proposed move to allow cellular operators direct connectivity between two circles by-passing the national long distance operators saying this could result in a whopping Rs 1,800 crore loss annually to the two rendering their businesses “unviable”.

A letter to Communications and Information Technology Minister Dayanidhi Maran, jointly signed by Bharti and Reliance, said “the introduction of such a regime will make the existing national long distance (NLD or STD) licences redundant leading to monumental loss of Rs 6,000 crore spent in creating the world class infrastructure. This will completely shake the investors confidence and will not be in public interest.”

By allowing the cellular operators to carry calls between two circles the national long distance operators like Bharti and Reliance would be denied their share of up to Rs 1.10 per minute, sources said.

Moreover, the two operators have paid huge entry fees and bank guarantees along with stringent roll out obligations for the national long distance licence. This will make the playing field tilted against Bharti and Reliance.

Accordingly, any access provider desirous of offering national and international long distance services, should be permitted to provide the same only on ensuring fulfillment of present national long distance licence terms and conditions, they said.

Bharti spokesperson, however, said that “we operate our carrier business as a different entity than its cellular business. Therefore this is an issue in the context of only carrier operations.”

Edited August 3, 2004 by Chirag

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This appeared in The Economic Times today

RIP, National Long Distance

TIMES NEWS NETWORK [TUESDAY, AUGUST 03, 2004 04:00:59 AM]

Economic Times

An emphatic No should be the government’s answer to the petition filed by Reliance and Bharti seeking to stop direct inter-circle connectivity between cellular operators.

The demand is not only blatantly anti-consumer, but also disruptive since it seeks to alter the natural progression of the telecom industry.

Telecom companies must accept obsolescence of technology as well as of commercial practice as a genuine business risk. Direct connectivity between circles, without necessarily going through a National Long Distance (NLD) licensee, is the logical evolution of the present, stunted, unified access licensing regime to a true unified licence, under which a licensee can offer any communication service once allotted the right to use a portion of the frequency spectrum, the only finite resource in telecom.

Reliance was happy to argue for changing the regulatory regime in tune with technical change till it secured unified access licensing and became a mobile operator on par with the original mobile licensees. Reliance and Tata now oppose a true unified licensing regime. And Bharti, which earlier opposed Reliance becoming a mobile operator, now has joined hands with it to protect the National Long Distance (NLD) turf. Companies are entitled to play games but not those that fleece the consumer.

It is unreasonable to expect cellular operators spanning several circles to route their inter-circle traffic through a specified NLD provider when they could use their own

infrastructure. Cellular operators should be free to hand over calls to one another under appropriate inter-connect agreements. The argument that the routing of cellular operators’ calls through leased lines would retard growth of infrastructure too is untenable.

All it means is that the present distinction between infrastructure providers, whose leased lines cellular players use, and NLD operators would disappear. Why should consumers shed any tears and shell out money for an artificial segment of telecom rendered obsolete? It is true that NLD service providers paid licence fees — Rs 100 crore — along with bank guarantees.

The government could consider refunding a part of the fee. It also makes sense to scrap the access deficit charge tagged on to call charges and fund access deficit out of the universal service obligation fund.

Edited August 3, 2004 by Chirag