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June 3, 1997


Call-back phone services are illegal, charge VSNL, DoT

Irked by increased diversion of international telecom traffic through call-back services, the Videsh Sanchar Nigam Limited (India's overseas telecommunications monolith), and the Department of Telecom have stepped up their attack on the operators and users of these services.

In a joint advertisement published in a leading national daily, the two government run agencies have warned Indian citizens against the use of these services for making international calls.

The advertisement, which is dominated by a large warning sign on it, says both the provision and usage of such services is illegal. 'As a law abiding citizen of India you are re-quested to desist from providing or using call-back service of international telephone calls as it is punishable with imprisonment and/or fine in accordance with Part-IV of the Indian Telegraph Act, 1885,' the advertisement warns.

Call-back services are provided by telecom companies based in countries with lower international tariff rates. Several US-based companies exploit the large difference in internal call rates between the two countries and offer call-back services to customers in developing countries including India by using advanced computerised telecom equipment.

The charge for making an international call from the US to India is almost half of that in the reverse direction (Rs 75 per minute).

Most of these call-back operators are smaller medium-sized companies who buy up telecom capacity in bulk from the larger operators like (AT&T, Sprint and MCI) in their countries.

Users of these services first call up the identity number given by the operators, wait for a few seconds before and then hang up. The computerised equipment at the operator's end then automatically calls back the user and gives him a dial-tone of an US-based exchange. The customer can then dial his desired overseas number for which he is billed at the cheaper rates applicable in the US. Users of such services are billed through the local agents of the call-back operators.

According to VSNL, the country's monopoly carrier of international telecom traffic, call-back services have been cutting into its revenues. "The unfair policies of US carriers to convert potential outgoing traffic from India to various countries into incoming traffic from US to India by way of call-back, third country calling and countering to route outgoing traffic of other countries to India via US, have badly affected the outgoing traffic from India to the US," the company said in a press release issued late last year.

The fact that call-back operators have started to advertise in Indian newspapers (for attracting both customers and local agents) has also irked VSNL. The New Jersey-based New World Telecom, for example, recently issued an advertisement in an Indian financial daily, proclaiming its "incredibly" low international call rates to various countries. The advertisement named a US-based Indian a contact person.

New World and other call-back companies like Kallback Inc. also advertise their services in a major way on the Internet. Incidentally, VSNL is currently the sole provider of commercial Internet access in the country.

VSNL reportedly complained to DoT late last year and asked it to issue a formal complaint about these call-back practices to the US telecom regulator. (The FCC, however, considers call-back services legal). VSNL has also requested DoT to release advertisements to proclaim call-back services as illegal.

According to DoT and VSNL, the provision and use of call-back services is illegal under Part IV of the Indian Telegraph Act 1885 which deals with "Penalties". Section 20 of the Act declares that 'If any person establishes, maintains or works a telegraph within (India) in contravention of Section 4 or otherwise then as permitted under that section, he shall be punished, if the telegraph is a wireless telegraph, with imprisonment which may extend to three years, or with fine or with both, and in any other case, with a fine which may extend to one thousand rupees.'

Section 21, which deals with "use of unauthorised telegraphs", declares that "if any person, knowing or having reason to believe that a telegraph has been established or is maintained or worked in contravention of this Act, transmits or receives any message by such telegraph, or performs any service incidental thereto, or delivers any message for transmission by such telegraph or accepts delivery of any message sent thereby, he shall be punished with fine which may extend to fifty rupees".

Some experts, however, question the prohibition of call-back services by the DoT-VSNL combine - both in legal and moral terms. They question the legality of interpreting the receiving of a dial tone from the US (offered by call-back operators) as an international call.

"It is arguable whether the receipt of a dial tone from the US is the same as receiving a call from there," T H Chowdhary, Director of the Hyderabad-based Centre for Telecom Management and Studies, wrote in a recent newspaper column.

"It is not known how the DoT knows that such a call-back has been made from a particular telephone to enable it to charge. Call on receipt of dial tone from Indian exchanges only are registered for charging purposes and not others," he added.

Chowdhary, himself a former Chairman and Managing Director of VSNL, also feels that VSNL lacks the moral authority on this issue.

"Don't you, as a buyer of goods or services, always look for the best price? Is that criminal or immoral? The DoT-VSNL combine think that you, as a telecom customer, should have no choice and should not look for any cheaper provider," he says.

According to Chowdhary, the average cost of operating an international call is Rs 12 per minute. He feels VSNL, which charges Indian citizens at Rs 75 per minute (for calls to the US), is exploiting its monopoly status to "profiteer". "Is there one private sector utility or non-utility that is allowed to charge like this?" he asks.

VSNL responds to this charge by saying that it is a frequent practice among developing countries to cross-subsidise local calls and infrastructure development by charging higher for international calls.

"It is a fact that high charges for international calls cross subsidise local calls and capital expenditure. This is an inevitable reality not only in India but in most developing countries. Secondly, unlike the US, which has a well developed telecom infrastructure, the Indian telecom infrastructure is still to be developed and needs huge investment. The telecom entities in developing countries including those of India, need to generate internal resources for expansion. Thirdly, in India ISD/STD subsidise local calls to a great extent," says the VSNL press release.

However, VSNL also recently acknowledged the need to progressively lower its rates "to be in line with international trends". "VSNL is in fact in the process of negotiating new revenue sharing principle (with its foreign counterparts) to achieve this goal," the release said.

- Compiled from the Indian media

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