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June 30, 1997


New basic phone service license to be finalised soon

A new license agreement is expected to be formalised soon to kick off private participation in basic telephone services, telecom authorities say.

The contentious issues raised by prospective operators during a year of hard bargaining with the Department of Telecommunications have almost been resolved, the authorities claim.

The issues pertained to assignability of license, interconnect charges, arbitration procedure, payment of advance deposit to DoT against bills, external commercial borrowings and force majeure conditions on the role of DoT visa-a-vis private operators during natural calamities.

During a mid-May press meeting, Telecom Commission Chairman A V Gokak had said DoT would arrange a decisive meeting with private operators in June to work out all details of the assignability clause of the license agreement.

The authorities say after a meeting last weekned, representatives of telephone companies had picked up a new draft of the tripartite assignability accord which spells out details of arrangement for transfer of basic services license to a second licensee in the event of default by the original contractor.

The operators are scheduled to return on July 1 with their response to the accord to be signed by the licensor, the licensee and the financial institution funding setting up of a private operator's network.

The authorities insist there are no ambiguities left in the assignability clause. Corporate negotiating skills would be the deciding factor in writing the modalities of a bipartite agreement with the lending institution, they say.

The interoconnect charges for linking up of a private network with the DoT's have been fixed at Rs 54,100 annually for the first three years in a third downward revision from the original Rs 136,000 for every pulse code modulation. It has been agreed that any long-term view on the issue can be taken late by the regulatory body.

On the basis of three rounds of tendering, eight joint venture companies were cleared for authorisation to provide fixed phone services in 12 of the 21 telecom circles.

Bharti Telenet and Reliance Telecom are the only two companies which have signed documents for providing the service in Madhya Pradesh and Gujarat circles, respectively, and have together paid Rs 1.16 billion in the first year's fee for the 15-year license.

The Himachal Futuristic Communications Limited, Basic Teleservices Limited, Essar Commvision, and Techno Telecom have gone to court against the DoT decision to encash their earnest money bank guarantee. But three of them, with the exception of HFCL, have shown their willingness to implement their projects in the states of Tamil Nadu, Punjab and Bihar in the event of an out of court settlement.

Tata Teleservices, holding authorisation for Andhra Pradesh and Hughes ISPAT for Maharashtra and Karnataka are yet to give a written consent and pay license fee.

The offer submitted by Telelink Network India Limited for Rajasthan circle is still under study and the authorities say any decision on this would have to be cleared by the cabinet committee on economic affairs.


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