MTNL, DTS entry in cell services may be stalled again

MTNL, DTS entry in cell services may be stalled again
NAVIKA KUMAR

NEW DELHI, MAY 31: If you thought that three years after public sector MTNL had first announced its intention of getting into cellular services to provide cheap cell phone services, consumers would finally have these services this summer, you could be mistaken. Private cellphone companies who would have to compete with MTNL and the Department of Telecom Services' (DTS) which is also planning cellphone services in several states, have sent a list of fresh objections to the entry of these corporations in cellular services.

And all this even before the ink dried on the new migration package specially prepared for private telecom operators from a high licence fee regime to a more benevolent revenue sharing formula. The Cellular Operators Association of India (COAI) has once again raked up objections pertaining to MTNL's entry into cellphone services to the new Telecom Regulatory Authority of India (TRAI) last week.

The New Telecom Policy 1999 which allowed private telecom companies to move to a revenue sharing scheme had clearly specified that while the government had allowed the migration package for private companies, it had also cleared the way for entry of MTNL in cellphone services in Delhi and Mumbai, and DTS in the rest of the country as the fourth operator.

What is curious about the COAI letter to the TRAI is the fact that it is written in almost legal language, with the letter ending in a ``prayer'' to the TRAI which is a language used in courts. The language in the COAI's letter has led to doubts about a fresh legal battle ensuing on the issue which may halt entry of the government-owned corporates - MTNL and DTS in the field of cellphone services.

While the DTS entry in cellphone services may take a while before it becomes a reality, telecom analysts feel that the fresh objections by COAI are especially directed to stall the MTNL entry slated for next month.

While some of the concerns about the COAI may be genuine, especially those related to a level playing field for fair competition, what is surprising is that cellular operators who had lapped the part of the NTP 1999 which allowed migration to a revenue sharing package instead of the high licence fee, are now finding faults with the same NTP. The COAI letter to the TRAI, objects to the government's intention to reimburse the DTS any money that it pays towards licence fees so that its obligations for setting up a rural network does not suffer owing to lack of funds.

What is more surprising is that the COAI has demanded that the MTNL may be asked to pay an entry fee before being allowed to launch cellular services. While this may be a valid demand so far as fees for the state circles is concerned where private companies have paid huge fees in the first three years, it is an absurd demand for the metros as operators in Delhi and Mumbai have paid a ridiculously low licence fee up to now - in the region of Rs 12 to Rs 14 crore for the three years that they have been running cellphone services.

It is a known fact that the four metros have a subscriber base of 50 per cent, 60 per cent countrywide and get a 70 per cent share from the revenues of all cellphone services.

The COAI has voiced some concerns even regarding preferential access charge rates for MTNL and DTS and cross subsidisation between various services already being provided by them unless the TRAI makes it mandatory for them to have a separate accounting procedure for their cellphone services.