The market for domestic long distance traffic or STD calls is estimated to be in the region of Rs 3,500 to Rs 4,000 crore annually. It is an area which would be of interest for several MNCs and large Indian telecom companies. Internationally, telecom companies earn more out of long distance business than from local call traffic.

The MoU will enable both the PSUs to combine their inherent strengths and use this for the era of private participation in domestic long distance telephone calls in the field of communications.The Indian Government is expected to throw open the domestic long distance telephony to private participation in the year 2000.

So far the Department of Telecommunications (DoT) has a monopoly in the field of long distance telephony -- STD calls. However, this monopoly is expected to be dismantled by next year, when this area of telecommunications is likely to be thrown open to private companies. While the Ministry of Communications is still working out the exact route that will be followed when the sector is thrown open, it is expected that there would be bidding for various telecom sectors in the country.

VSNL already has a network between the four metros of Delhi, Mumbai, Chennai and Calcutta for carrying overseas telecommunications traffic. Added to this would be the existing network of the PGCIL which already exists in several parts of the country.

Over the next few years, PGCIL plans to invest up to Rs 1,000 crore in laying an optical fibre network between several cities in the country. Bothcompanies will deploy their synergies for a combined entry in the area of domestic long distance when this area is opened for private participation.

DoT had earlier opposed the entry of the Railways and PGCIL in the area of telecommunications but the new telecom policy 1999 has cleared some of the the ambiguities in the area by allowing these public sector companies to build up telecommunications backbone -- for data and traffic business. How easily DoT will allow this to translate into the area of voice telephony still remains to be seen.