FLAG returns to global tribunal

Reliance Communications-owned FLAG Telecom has re-approached an international tribunal seeking damages and determination of reasonable and cost-based access charges from Videsh Sanchar Nigam Ltd (VSNL).

This comes as the two companies failed to reach an agreement on FLAG’s access to the submarine cable landing stations owned by VSNL, within the three months period given by the International Court of Arbitration of International Chamber of Commerce's (ICC).

In a notice to stock exchanges, Reliance Communications said the failure of the negotiations would harm ITeS and BPO companies in the country due to the high bandwidth prices and landing station access charges maintained by VSNL.

FLAG says VSNL is refusing to negotiate landing station access charges in good faith and on basis of costs incurred.

“Since the 90 days period permitted by arbitration award for negotiations is over, FLAG has approached the tribunal for setting a time table for determination of damages due to the unlawful refusal of VSNL to grant access to FLAG from 1998 onwards,” Reliance Flag said.

VSNL on its part said, “VSNL is fully compliant with the tribunal’s award. VSNL believes that its commercial proposals related to access charges are fair and reasonable.”

The access charges on the FLAG system are based on mutually negotiated commercial terms between VSNL and Flag. The ICC Tribunal, in its award, has not found any issues with the access charges as already negotiated between VSNL and Flag, industry sources said.

Earlier, FLAG Telecom had received an order in its favour, with the International Court of Arbitration of ICC asking VSNL to allow access to FLAG Europe Asia (FEA) cable landing station.

The tribunal had also permitted FLAG to upgrade capacity on FEA system at its Mumbai landing station.

DoT for licence fee cut by 3%

The Department of Telecom is considering a proposal to reduce the licence fee and spectrum charges of telecom players to 2-3 per cent from the current six per cent in the Approach Paper of Planning Commision's 11th Five-Year Plan.

The proposal had earlier faced opposition from the Finance Ministry on account of revenue loss.

We may propose reduction in licence fee to 2-3 per cent from the current six per cent to Planning Commission for its Approach Paper. We discussed it in the first meeting held for the purpose last week and another meeting is slated to be held on August 31 to further discuss the same. Nothing has been finalised yet and we are discussing, a senior DoT official said.

The other issue that was discussed for the Approach Paper was setting a target of 650 million phones by the end of 11th Plan (2012).

It was suggested by the Department that a target of 650 million telephone subscribers be set up during the period, mostly led by mobiles. The current telecom subscriber base in the country is 158.59 million. Out of this, 47.3 million are fixed lines and 111.23 million are mobiles.

Planning Commission is currently in the process of preparing an Approach Paper where all ministerial growth targets, challenges and fund requirements are stated before the final Plan document.

Tulip IT Services receives NLD License

Tulip IT Services on Tuesday said it has received the National Long Distance (NLD) license from the Department of Telecom.

The company has received the Letter of Intent for NLD and ILD (International Long Distance) license by the DoT last month, the company informed the Bombay Stock Exchange.

It has been conferred the NLD license based on the new license requirement laid down by the DoT as per which, all IP/VPN service providers were required to migrate to the NLD license, the company said.

With this, Tulip would continue to provide data connectivity services under its new NLD license in the burgeoning VPN (Virtual Private Network) bandwidth market, it said.

BT plans Joint Venture

Global telecom major British Telecom (BT) is mulling a joint venture with Indian companies to foray into virtual private network (VPN) services in the country.

The group is also planning a 150 per cent increase in offshoring business in the country, which will increase its revenues to $250 million(currently from $100 million).

For the VPN initiatives, the company plans to set up a JV in which it will hold a 74 per cent stake, with the operations slated to commence in the next six months. BT is in the process of “getting necessary regulatory clearances,” BT CEO (Global Sevices) Andy Green told reporters here today.

A VPN is a private communications network that is used within a company, or by several different companies, to communicate confidentially over a publicly accessible network.

Green, however, did not reveal the size of the investments planned for India, but said it would be substantial.

The company, getting aggressive and venturing into new sectors, plans a 150 per cent increase in revenues.

“At present, the company’s revenues from India stands at around $100 million and we are planning to grow this to $250 million in the next three year period,” he said.

The company will also look at increasing its employee strength by around 50 per cent. BT has a wholly-owned subsidiary in India and employs over 12,000 personnel.

On the outsourcing front, he said the company was planning to concentrate on big corporate firms. BT Group would be supporting several BPO firms in India and would move some jobs to the country as its business grows in the Indian market.

The company is also planning to set up a research centre in India with a $10 million investment.

VSNL lowers bandwidth rates

Videsh Sanchar Nigam Ltd has (VSNL) slashed international bandwidth prices by up to 40 per cent, a move that might reduce broadband tariffs paid by consumers, and substantially cut costs for small and medium-sized BPOs and ITES companies with clients abroad.

VSNL has reduced International Private Leased Circuits (IPLC — which are used by corporates like IT companies) prices by 25 per cent, with effect from September 1, 2006, while it has announced a reduction in Internet Leased Line (ILL) tariffs by up to 40 per cent.

Speaking at the time of the announcement, VSNL head (corporate strategy) Srinivasa Addepalli said: “This will help in providing internet connectivity at reduced prices to mid-size information technology, business process outsourcing (BPO), and knowledge process outsourcing (KPO) companies. This will also help new segments like academicia and research institutes in the country.”

However, opinion is divided on whether the drop will lead broadband and ISP operators to cut tariffs at which broadband is offered to customers.

Deepak Maheshwari, secretary, Internet Service Operators’ Association of India, said, “it is too little and too late.”

A senior executive in MTNL, which leases capacity from VSNL and other companies, said: “We have already dropped broadband rates to a minimum of Rs 199, but we will study and see whether we can reduce them further or not.” Companies like Tata Teleservices that offer landline connections with broadband could reduce their tariffs by 15 to 20 per cent.

VSNL executives said that with bandwidth constituting over 10 to 15 per cent of a small and medium-sized BPO or IT company’s costs, the reduction would make a substantial difference in making them more competitive.

However, for large IT companies in which bandwidth constitutes less than 1 per cent of the cost, it would make no difference.

Competitors are non-committal on whether they will respond to the cuts by VSNL. A Bharti spokesperson said, “We haven’t taken a call; we will study the matter before taking appropriate action.” A telecom analyst said, “This is a long-delayed move. However, this would invite competition to reduce prices.”

VSNL has reduced bandwidth prices by around 85 per cent in the last four years. According to the new tariffs, an IPLC half-circuit will be priced at Rs 7.84 lakh per annum, from the earlier Rs 10.45 lakh per annum.

An STM1 (155 MBPS) connectivity mode will now be priced at Rs 239.20 lakh per annum, a 20 per cent reduction from the earlier Rs 299 lakh per annum.

On the ILL circuit front, an E1 connectivity (2 mbps) will now be priced at Rs 16 lakh, a 20 per cent reduction from the earlier Rs 20 lakh, and an STM1 will be priced at Rs 458 lakh, a 40 per cent slash.

Trai wants premium SMS rates to be reduced

In a veiled threat to the mobile operators, the Telecom Rgulatory Authority of India (Trai) on Monday said that it hoped that operators voluntarily reduce the charges of premium SMS service, or, it may have to intervene.

The hint became apparent when in a major relief to the operators Trai decided to maintain the status quo on the interconnection usage charges (IUC) for SMS service but noted that current charges of premium SMS are on the higher side and bear no relationship with the cost and nature of services rendered.

Trai also stated that henceforth it would closely monitor the SMS trends.

Premium SMS are the ones run by TV channels where consumers are urged to participate in opinion polls or give their views on topical issues. Here, Trai has asked the telecom operators to make necessary arrangements with content providers to make the consumers aware of the tariff of the premium SMS service.

As per the prevailing IUC regulation, termination and carriage charges for SMS have not been specified by the Trai and are forborne.

Trai's subtle hint must be seen in the context of a statement made by communications and IT minister Dayanidhi Maran sometime back when he had said that during his tenure charges would only have to go down and not vice-versa.

The average prevalent SMS charge is Re 1 for a local SMS, Rs 2 for national and Rs 3 to Rs 5 for an international SMS. However, premium SMS rates are generally in the range of Rs 3 to Rs 10. Short messaging services contribute roughly 5-6% of the total revenues of a telecom company.

SMS in India is an emerging market, growing 109% during 2005-06. On an average a mobile subscriber sent 41 SMS per month during fiscal 2005-06 as against 31 in the previous fiscal.

To address some of the representations from service providers, Trai had issued a consultation paper on the issue of IUC charges for SMS.

The main issues raised in consultation paper were IUC for SMS and premium rate SMS.

Reliance to ask Tata Tele to fall in line on 3G

Reliance Communications will soon write a letter to fellow CDMA operator Tata Teleservices asking it to toe the industry's line on the pricing of 3G spectrum.

The letter comes after differences over the 3G pricing led to CDMA operators' body Association of Unified telecom Service Providers of India (AUSPI) skipping the meeting called by Telecom Regulatory Authority of India (Trai) to discuss the issue of 3G pricing.

Sources familiar with the development said the letter would suggest that Tata Teleservices “interconnect” with the industry and participate in the harmonious growth of the telecom sector and national teledensity targets. When contacted, Reliance Communications officials declined to comment.

Reliance Communications is also writing a letter to Trai to reiterate how the economic model it had suggested would help make 3G services affordable and meet the teledensity target of the government.

While Tata Teleservices has suggested a Rs 1,500-crore 3G licence fee for a pan-India rollout, Reliance Communications has suggested a hybrid model and a graded fee structure aggregating to a sum of Rs 300 crore for a national 3G licence.

It says with seven national operators, it would cover the government’s costs of refarming defence spectrum. Differences between the two operators on the bandwidth and pricing of 3G had led to AUSPI pulling out of the Trai meeting.

In another rift, Reliance FLAG has said VSNL was charging exorbitant amounts for its international bandwidth landing station access.

It added that VSNL was not abiding by the letter and spirit of a recent international tribunal award that had asked VSNL to provide FLAG access to the Mumbai landing station and allow it to upgrade its cable. FLAG sources said they would approach appropriate authorities in the matter.

FLAG has already written a letter to the communications ministry on Trai's recommendations to enforce tariff regulations on landing station access charges. The recommendations are pending with the DoT.

Airtel to offer MS Office on mobiles

Bharti Airtel, telecom services provider, has announced a strategic tie-up with Microsoft with the launch of Microsoft’s Windows Mobile 5.0 platform that provides an opportunity to all Airtel customers to access corporate email via direct push technology.

The Microsoft’s Windows Mobile 5.0 platform offers a host of applications. All Airtel users will now have access to MS office (Outlook, Word, Excel, PowerPoint, Internet Explorer), multi-media functionality (camera, MP3, video recording) and Line of Business applications like Sales Force Automation on their mobile phones.
Speaking at the launch of this new service, Bharti Airtel president Manoj Kohli said, “With the launch of this services as part of Airtel’s strategic innovation strategy, we have become the first operator in India to offer this technology to our customers. The service will deliver business applications and multimedia experience to all enterprise and SME customers across India.”

He added, “This tie-up also gives us the opportunity to tap into the estimated four million SME market share in India. The familiar MS Windows user interface would be a big advantage for users. This is a huge opportunity with a large enterprise segment running predominantly on the MS Exchange server.”

Elaborating on Microsoft’s value proposition for customers, Microsoft India chairman Ravi Venkatesan, said, “The launch of Windows Mobile 5.0 is in line with our stated vision of creating People Ready Businesses. Windows Mobile 5.0 is the perfect solution for the global mobile workforce to work in an ‘always on’ environment and better organize their work and personal lives. The alliance with Bharti Airtel reflects the synergy between two industry leaders, both focused at innovating to help individuals realize their true potential. With this association Bharti Airtel thus joins 115 existing mobile operators who currently offer the Windows Mobile solution worldwide.”

Microsoft Windows Mobile 5.0 will be available to Airtel customers on the latest HP I-Paq and I-Mate handsets. The handsets are priced in the range of Rs 16,000 – Rs 65,000. Airtel enterprise customers will also get the benefit of preferential hand-set pricing. There are three price points for accessing the service Rs 399, Rs 599 and Rs 799 depending on the amount of data downloaded. A dedicated after-sales support, owing to the back-to-back SLA with all its partners would also be there to service the customers. The company also announced Infosys as its first enterprise customer for this service.

CDMA operators stay away from TRAI meet

The supposedly joint industry meeting initiated by the Telecom Regulatory Authority of India (TRAI) today turned out to be a one-sided affair, with the CDMA camp staying away from the meeting.

Industry sources said that sharp differences between Tata Teleservices and Reliance Infocomm over spectrum pricing made it difficult for the Association of Unified Telecom Services Providers of India (AUSPI) to present a uniform view in the discussion, and it chose to keep away from the meeting.

Mr S.C. Khanna, General Secretary of AUSPI, was not available for comment.

Sources in Tata Teleservices said that the company has communicated its views to the TRAI separately through a letter.

While the Tatas had proposed an entry fee of Rs 1,500 crore, Reliance has proposed a staggered model where operators pay between Rs 150 crore and Rs 50 crore depending the circle. Differences also arose between the operators after Reliance sought spectrum in both 1900 Mhz and 2.1 Ghz for its GSM operations. The Tatas want spectrum only in the 1900 Mhz.

The divisions are so sharp that the operators are now questioning the need for the AUSPI.

This is the third instance of a split in the CDMA camp in recent months after the Tatas took a different position on subscriber verification and on the issue of royalty being charged by Qualcomm.

On the other hand, Mr T.V. Ramachandran, Director-General of the Cellular Operators Association of India (COAI), representing the interests of the GSM operators, and officers from the Defence forces attended the meeting.

During the meeting, which lasted for 90 minutes, the COAI tried to impress upon the TRAI that allocating spectrum in the 1900 Mhz to CDMA operators would create interference in GSM cellular services.

The COAI also said that the entry fee for 3G services should be kept at a minimal level, as it should not pinch the consumers in terms of cost of service.

Sources, however, said that the TRAI is likely to go ahead with its plan to ask CDMA technology vendors to demonstrate that there would not be any interference in case 1900 Mhz is given to CDMA operators for offering 3G services.

Entry fee and allocation of spectrum in the 1900 Mhz are the two main issues of contention that have divided the industry.

The GSM operators have so far been saying that no entry fee should be charged, but most operators privately say that they will agree to pay an entry fee of around Rs 300 crore.

The Department of Telecom is also looking at an entry fee of Rs 300-400 crore, though the Finance Ministry wants it to be above Rs 600 crore.

Tatas not to trust Reliance

A serious fall-out between CDMA biggies Reliance Communications and Tata Teleservices Ltd (TTSL) on the allocation and pricing of 3G spectrum has weakened the CDMA lobby in their representation before the Telecom Regulatory Authority of India (Trai) on the issue.

As a result of the discord, the CDMA industry body Association of Unified Service Providers of India had to opt out of the joint meeting convened by Trai with GSM body COAI on Friday. The row now threatens the future of Auspi.

The spat intensified late Friday as TTSL independently wrote to Trai reiterating that CDMA operators be allotted 3G spectrum in the 1900 Mhz band. It also sought that an entry fee be charged from the operators for the spectrum. In the past, Tata group chairman has suggested that the 3G entry fee should be Rs 1,500 crore.

Sources close to Reliance said Tatas have been taking totally different stand on major issues, be it 3G spectrum allocation and pricing, or subscriber verification, leading to their “complete isolation from the industry”. Industry sources said that Auspi backed out of the meeting at around noon when the Tatas and Reliance stuck to their respective stand on allocation and pricing, making it difficult for Auspi to project a unified stance.

Sources said TTSL has little trust in Reliance’s stance because the latter has applied for GSM spectrum and is straddling multiple technologies. “There appears to be some dissonance in the CDMA lobby with Reliance seeking to commence GSM operations also,” an industry source said.

Reliance’s stand on 3G spectrum pricing has been that the government should charge Rs 150 crore for all A circles put together, Rs 100 crore for all B circles and Rs 50 crore for C circles. In addition, it has advocated revenue share as per the present structure.

Reliance’s position is quite similar to COAI’s, which maintains the industry should be made to pay only the amount required for reclaiming of spectrum from defence forces. COAI believes high entry fee would make the 3G services unaffordable for the masses, which would be against the objectives of the government.

Aircel to enter Mumbai Circle

After Idea Cellular, it’s the turn of Aircel to enter the lucrative Mumbai circle. Just a few days after clearing Idea’s application for a Mumbai foray, the department of telecommunications (DoT) is learnt to have given a nod to Aircel as well.

Besides Mumbai, Aircel will be permitted to go to Delhi, Maharashtra, Karnataka, Rajasthan, Gujarat and Andhra Pradesh, according to a source. DoT has given an in-principle approval to Aircel’s entry into these seven circles.

In a statement at its recent annual general meeting in Kuala Lumpur, Maxis Communications, which is a Malaysian mobile operator with a majority stake in its Indian joint venture Aircel, said, “as part of its strategy to be a pan-Indian player, Aircel has applied for mobile licenses in the remaining 11 circles.”

Interestingly, even Idea put in its applications to DoT recently for a pan-India presence.

Aircel is the leading mobile operator in Tamil Nadu. It also operates in West Bengal, Orissa, Assam, North-East, and Jammu & Kashmir. The company is also planning to roll out services in Bihar, Himachal Pradesh, Madhya Pradesh and Uttar Pradesh.

Currently, there are six mobile players in Mumbai, led by Hutchison Essar with over 2 million users. BPL Mobile, which was meant to be merged with Hutch Essar but is now caught in a legal battle, has around 1.3 million subscribers. Bharti Airtel has 1.3 million and Mahanagar Telephone Nigam Ltd (MTNL) 1 million mobile users. CDMA players Reliance Communications with around 1.7 million and Tata Teleservices with 0.4 million mobile users are the other two players in the city.

Bharti Airtel is the only telecom player to be present in all 23 circles in the country. Bharat Sanchar Nigam Ltd is present in all circles except Delhi and Mumbai, which are the territory of its sibling MTNL. Among other significant players, Hutch Essar operates in 16 circles, Reliance Communications in 21, and Tata Teleservices in 20.

BPL Mobile to invest Rs100 crore

BPL Mobile has announced fresh investment plans involving over Rs100 crore to upgrade and strengthen its network. The planned investment, `Project Rapid Growth' is aimed at ramping up network infrastructure, launching new value added services, upgradation of the call centre and rejuvenation of the brand in Mumbai.

As part of the programme to strengthen its network, the company will add a fourth state-of-the-art main switching centre (MSC) and set up 300 new cell sites. Of this, close to 100 new sites will operational by the end of September. This will ensure additional coverage and capacity across the city and the new IBS (in building solution) will address in-building coverage across offices, major malls and entertainment arcades.

On the technology front, BPL Mobile plans to rollout the latest value added services, enhance data capability by making the whole network EDGE enabled and also implement the latest version of intelligent network (IN) platform with Camel Phase III for its pre-paid product. These features are expected to be in place before the end of 2006. This will enable the company to offer new product features and service flexibility and enhance customer experience, BPL said in a release.

"With a revitalized management team, we plan to double our network capacity by December end. Going forward, we will differentiate our brand and drive preference through our network superiority, latest value added products, reliable customer service and fair pricing that consumers have come to expect of us, " said S. Subramaniam, CEO of BPL Mobile.

Apart from network and technology, BPL Mobile has earmarked funds to significantly upgrade the current call centre interface and subscribers will witness a perceptible difference in their overall service experience. The company also plans to increase its retail presence across Mumbai.

BPL Mobile has over 1.3 million subscribers in Mumbai and claimsto be India's best service offering world-class technology and services and a network that gives greater clarity. BPL Mobile is rated amongst the top admired and trusted telecom brands in the country.

Tata Teleservices appoints Ratan Tata as Chairman

Telecommunication and internet services provider, Tata Teleservices Maharashtra Ltd, today said Ratan N Tata, has been elected as the chairman of the company.

The shareholders at the AGM yesterday, elected Ratan Tata as the Director of the company and subsequently the board of directors elected Tata as the Chairman of the board with effect from August 10, the company informed the Bombay Stock Exchange.

The company said S Ramadorai and Arunkumar R Gandhi were also appointed as Directors of the Company liable to retire by rotation.

R Gopalakrishnan and Kishor A Chaukar, Directors of the company, who retired by rotation yesterday did not offer themselves for re-election and consequently ceased to be Directors from the said date.

Tata Teleservices Maharashtra Ltd (TTML) is the listed subsidiary of Tata Teleservices Ltd.

Airtel Announces the Youth Card

Airtel has introduced its "Youth Card" for prepaid customers in Delhi. The company says this initiative seeks to provide youngsters with affordable tariffs and attractive add-ons.

The Airtel Youth Card, priced at Rs 149, comes with special offerings like night calling tariff at 10 paise per minute, local SMS at 25 paise, plus 3,000 free local Airtel-to-Airtel SMS that are valid for the first three months only.

The card offers attractive day tariff that is 50 percent lower than the regular tariff offered by Airtel. Youth card customers can also avail A R Rehman's Airtel signature tune as a free Hello Tune in the first month.

Announcing this initiative, Christopher Tobit, chief executive officer - mobility Delhi circle, Bharti Airtel, said that the introduction of the Youth Card is based on extensive research as to what young people in Delhi want. Tobit said the company is confident this offering will open-up new segments in the market.

The Youth Card is available at all leading Airtel outlets, and can be purchased by students after providing the necessary documents.

In a separate announcement, Airtel has launched its fixed wireless phone (FWP) service, "Airtel Mega," in Tamil Nadu. Reportedly, the service will be rolled-out progressively across 10,000 villages in the state. The FWP tariffs are call-centric, with calls to local and intra-circle mobiles charged at Rs 1.20 per three minutes. This particular product is available in prepaid and postpaid, and has value-added services such as hello tunes, SMS, and caller ID.