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National long distance sector -- DoT keen on competition

Partha Ghosh

NEW DELHI, July 12

THE Department of Telecommunications (DoT) proposes to allow consumers a choice of pre-selection of a national long-distance operator (NLDO) through carrier access codes (CACs).

However, the VSNL's monopoly of carrying the international leg of a long-distance call will remain unchanged, once the sector is opened up to private operators, according to sources. With the present state of technology and number of digits dialled, it i s not technically feasible to have pre-selection of NLDO as well as international long-distance operator by CACs, the DoT has observed in a report.

The pre-selection of the NLDO operator has essentially been mooted to foster competition in the NLD sector. The Government has decided to allow four private players apart from the incumbent DTS/MTNL to bid for NLD services. The proposals relating to open ing up of the NLD sector is slated to be considered by the full Telecom Commission at its meeting on Thursday.

The Commission will consider other modalities for private sector entry into the sector, including an upfront one-time entry fee payment comprising 10 per cent share of pre-determined revenue and a universal service obligation (USO) levy to be fixed by th e TRAI.

Among the several steps that is aimed at discouraging non-serious players from bidding for service licences, the Government has proposed that the amount of entry fee of the highest bidder will have to be matched by the other three bidders. The bidding on entry fee will be the non-refundable portion of the entry fee. The refundable portion of Rs. 400 crores will remain the same for all the bidders and will be refunded in a phase manner on completion of the roll-out plan.

The Government is also planning to demand a higher amount of earnest money (to be decided by the Commission) in the form of bank draft from the prospective bidders. It is also proposed that amount of earnest money and the bid may originally remain valid for a period of 120 days from the date of submission of bids.

Among the proposals for which the Telecom Commission's approval has been sought, is fixing the number of private service providers at four (i.e., DTS plus four other players) who have a certain experience in the telecom sector. The Commission had earlier proposed that no experience clause be included. However, it has changed its mind on the insistence of the TRAI, sources told Business Line.

The proposal to allow four private players apart from DTS was also taken following a reconsidered recommendation of the regulator, which has a provision for review of the number of operators at the end of five years from the date of issue of the licences . As there cannot be ban on mergers and acquisitions, a provision is likely to be incorporated in the bid document or licence agreement that in case M&As lead to a situation of duopoly (one DTS and one private operator) in the NLD market, the licensor wi ll have the right to decide about the opening up of the market for unlimited players even before the end of the five-year period.

On the issue of licence fee that has to be paid by the incumbent monopoly, the Department of Telecom Services (DTS), the Commission has proposed to assign an independent agency such as NCEAR or Planning Commission for devising a scheme in which the DTS a s an incumbent is compensated in an appropriate manner even if it had share revenue with the Government similar to other players.