A Tsunami Builds Up

As the Indian telecom landscape changes with the emergence of CDMA as a

viable technology for the masses, there is a lot of activity in this space and

one of the burning issues at present is that of interconnectivity. In a classic

end to the interconnectivity drama in AP, Bharti has restored its service to

TTSL subscribers. As of now the tussle between Bharti Mobile Ltd and Tata

Teleservices appears to have been resolved with Bharti Mobile restoring the

interconnection in the Andhra Pradesh circle. Bharti had terminated the

interconnectivity, over the issue of quantum of payment by TTSL. "We have

decided to restore the interconnectivity as it is harming the customers. We have

now referred the matter to the Telecom Regulatory Authority of India (TRAI). The

ball is in the regulator’s court now," said, Sunil Bharti Mittal,

chairman, and MD, Bharti group.

"We plan to restore interconnectivity soon, to help out our customers..." Sunil B Mittal, chairman and MD, Bharti Group

TTSL has a total subscriber base of 2.4 lakh, out of which there are about

92,000 subscribers for the limited mobility service.

Traffic between AirTel and TTSL is about 36,000 calls a day, of which one

fourth belongs to limited mobility. TTSL already has disputes in its other

circles–Delhi, Gujarat, Tamil Nadu, Karnataka, and Mahara-shtra–on the

interconnec-tivity issue.

Describing the inter-connectivity as a "regulatory issue", Mittal

said that Bharti had resorted to terminating interconnectivity with TTSL because

the regulator was sleeping and finding a solution to this problem was difficult.

"Now we hear that TRAI is noticing the developments and we expect that a

solution will emerge by the end of January," he said. "We are

demanding termination charges from the wireless in local loop (WLL) service

providers, similar to what we are paying them for calls originating from our

networks," he added. According to Mittal, if the interconnect revenues

improve, GSM services’ tariffs would be only 15 % to 20 % higher than the CDMA

services with additional benefits for the subscribers like SMS and roaming.

"The recent reduction in STD rates by cellular operators to Rs 2.99 per

minute plus airtime is expected to cause a revenue loss of Rs 5,000 crore to Rs

6,000 crore to BSNL," he added.However, it is immature to say that the

tussle between the GSM operators and the basic service providers over the

interconnect issue is over as it may again come up if TRAI does not act quickly.

When contacted sources close to the Tatas claimed that TRAI guidelines say that

in case of any dispute, instead of terminating the interconnectivity agreement,

either both or one of the parties should approach the authority in the event

that a mutual agreement is not arrived at within 30 days.

Under Section 27.5 of the TRAI Act, it is mandatory for cellular service

providers to provide interconnection to all eligible telecom service providers

so that subscribers have a free choice to make inter-circle or international

long distance calls through a national long distance service provider. Cellular

operators are getting ready to fight for a level-playing field so that WLL

mobile operators do not have any inherent advantage as far as the license terms

are concerned. A senior executive of a cellular company claims, "The

Supreme Court judgment has clearly asked the Telecom Dispute Settlement

Appellate Tribunal (TDSAT) to address the issue of a level-playing field. If

that is ensured, we can fight the battle equally because there is hardly any

cost difference between implementing a CDMA and a GSM network."

So, what is the cellular operators’ battle-plan? One key area is access

charges. A GSM customer has to pay Rs 1.20 for a three-minute call to a fixed

line or a WLL number. The GSM operator collects the money and hands it over to

the fixed-line operator as access charge. This is besides what the customer pays

as airtime charges. However, a WLL limited mobile phone customer does not have

to pay an access charge, which makes his total outgo much lower. A senior

official of a mobile company says: "It is absolutely unfair. Basic service

operators can make incoming calls free under wireless in local loop because they

earn from access charges. Offer us the same terms and even we will make incoming

calls free." The Cellular Operators’ Association of India (COAI) has

already taken up the matter with TRAI and will go to court if necessary.

The second area of contention is the huge license fee GSM operators have to

pay. GSM operators have forked out an average of more than Rs 3,000 crore in

each round of bidding for offering mobile services. In comparison, WLL licenses

for the entire country were available for only Rs 496 crore. Cellular operators

are pushing for two alternatives: WLL operators should also buy a mobile license

similar to theirs or the government should return them the extra cash they paid.

Third, GSM operators allege that interconnect policies of limited mobile

operators grossly violate the regulatory norms.

WLL operators charge calls between two short distance charging areas (SDCA)

in the same city as local calls, while GSM operators charge calls between two

cities as local calls. However, a GSM mobile phone company official says,

"Under the fixed-line license of WLL operators, these calls are charged as

STD. Therefore, how can they take a fixed license but offer tariffs provided by

mobile operators. It is against the regulatory norms." GSM operators would

fight the battle on another plane too–push the regulator to clearly define how

limited is limited mobile. The COAI has already taken up the matter with the

tribunal, which is conducting hearings on this issue. The other key issue is

whether WLL operators can circumvent the policy by offering roaming or short

messaging services, which they are not allowed to offer in limited mobile

services. There is also difference of opinion among cellular and WLL operators

on whether SMS should be allowed on limited mobile phones.

But WLL operators have already applied to TRAI for permission to offer SMS.

Reliance is also a victim in this continuing tussle. The company’s talks

with GSM cellular service providers on interconnectivity seem to be caught in a

wrangle over the "termination charge" that its rivals in the cellular

service market propose to charge WLL operators. The differences could eventually

head for TRAI if they are not resolved. If that happens, Reliance Infocomm’s

limited mobile service subscribers would not be able to access the over 10 mn

GSM mobile service subscribers in India for quite some time. Any dispute that is

referred to TRAI can take months to resolve. GSM operators also have the option

of appealing to the TDSAT if TRAI rules against them. Tata Teleservices

executives were unavailable for comment, but sources close to the company said

that Tata Teleservices was "in a fix" in Andhra Pradesh because the

fixed-line and WLL service provider had not been able to clinch an

interconnectivity agreement with GSM cellular service companies.

Sources close to Reliance Infocomm claim that the company submitted a

proposal to GSM operators and they have not "reverted with any

feedback". Several GSM mobile service providers, however, say that while

they have not made any formal proposal, informal talks with Reliance Infocomm

are on. The sources also mentioned that Reliance Infocomm had arrived at an

interconnectivity agreement with the state-owned Bharat Sanchar Nigam Ltd (BSNL).

In a quest for another revenue stream, India’s cellular service providers are

proposing to levy charges for calls that end on their networks. This means that

calls originating from a WLL phone to a GSM phone would attract a termination

charge, which the WLL service provider would have to bear. Any agreement on this

would work both ways: if a call emanates from a GSM service provider’s network

to a WLL network, the GSM phone service operator would pay the termination

charge. GSM mobile service providers are also talking to one another on making

the arrangement applicable to calls among their networks. WLL service providers,

who have leaped into the limited mobile market by virtue of their fixed

telephone line licenses, want GSM mobile service companies to pay them an

"access charge" of Rs 1.20 for three minutes. GSM mobile service

providers are required by government regulations to pay the access charge to

fixed-line service providers; WLL service providers are extending this to demand

an access payment by GSM service companies. GSM service companies, on the other

hand, point out that Reliance Infocomm proposes to charge 20 paise a minute or

60 paise for three minutes. If GSM operators are to compete, they will have to

cut their tariff to 60 paise for three minutes. How, then, can they pay an

access charge of Rs 1.20 a minute and make losses, they ask. The emerging

dispute has to be seen in the context of the larger battle between GSM mobile

service providers and WLL service companies. Some GSM mobile service providers

privately advocate stalling the provision of interconnectivity to Reliance

Infocomm as a solution!

Zia Askari



CNS