As per the plan mooted by the company, digital switches with a capacity of 1,00,000 lines each would be installed in each of the four metros (Delhi, Calcutta, Mumbai and Chennai) which in turn will be leased to the basic service providers operating in these cities on commercial terms.

"These switches will be operated through lease agreements with the Department of Telecommunications (DoT), Mahanagar Telephone Nigam Ltd (MTNL) or the other private basic service providers on commercial terms," VSNL sources said.

The project, which is expected to be completed by 2001, is the first of its kind in the country where a company is planning to instal digital switches for leasing the capacity to existing and future basic service providers. This is the first initiative that VSNL istaking to create modern telecom infrastructure for use within the country.

It is understood that the switches will be capable of supporting a number of technologies that are either in use or are in the process of being developed. It is planned that these switches will also support wireless in local loop and ISDN (integrated services digital network) apart from the normal wired telephone.

"The switches will be flexible so that they can be used by the basic service operators irrespective of the technology they use for their services. Besides, the operators will also be able to lease a part of the switch's 1,00,000 lines capacity to suit their needs," said a VSNL source.

This move by VSNL is greatly expected to help the basic service providers as they will be able to expand their network without actually investing in creating infrastructure. In addition, VSNL sources pointed out that by leasing these switches, the basic service providers will be in a position to add subscribers even while they areexpanding their own network.

"As the switches will support a variety of technologies, the basic service providers will be able to provide a host of value-added services to their subscribers," sources added.

INSIGHT: good move

It makes sense for VSNL to diversify its portfolio of services for the following reasons. First, VSNL's monopoly on India's international gateway is set to expire in 2004. This means its margins could be under pressure due to competition from major international players. Second, the new private basic service providers would be able to start their services without any delay by availing VSNL's switching services. Third, in the event of Trai deciding to do away with licences for basic services, VSNL would have an advantage due to its existing infrastructure therein.