Cell firms plan SPV to manage shared network

Global standard for mobiles-based cellular service providers are getting their act together in the face of strong competition from the cheaper code division multiple access-based wireless in local loop limited mobile telephony offered by Reliance Infocomm, Tata Telecom and Bharat Sanchar Nigam Ltd.

The cellular firms are working on a proposal to create a common nationwide network, which will bring down their costs drastically.

Cellular operators, under the aegis of the GSM Association, will pool their resources into a special purpose vehicle, which will manage the common network, including switching equipment and towers.

Essentially, competitors Bharti, Hutch or Idea will have common towers and switches, instead of exclusive networks as they do now.

The special purpose vehicle will act as a holding company, owned and managed by the operators. The common network will be similar to the one in the US, where 85 per cent of the mobile telephony is carried over a shared network.

The Cellular Operators Association of India, the conclave of GSM operators, had given a go-ahead to the proposal and details were being worked out, said COAI director-general T V Ramachandran.

He said all the cellular operators, including Bharti Telecom, Idea Cellular, Hutch and Spice Telecom, had given their consent to the proposal.

Ramachandran said the move would bring down costs drastically, though a cost analysis had not yet been done.

Merchant banking sources close to the project said cellular rates might become as cheap as CDMA-based mobile telephony rates while long-distance calls might become even cheaper.

Incoming calls may become free across the country between two GSM networks. Currently, only a few operators have made incoming calls from their own service network free.

Ramachandran said, as of now, COAI was working on the project without the help of any consultant.

However, industry sources said a few consultants were in the fray, thanks to the interest shown by telecommunication companies that own and operate such networks for GSM service players in the US.

In the US, there are companies that only build and manage the common networks, which are shared by more than one cellular service provider.

These companies feel they have an opportunity in India, where the impending competition from behemoths like Reliance and BSNL have threatened the survival of the GSM operators because of low tariffs.

Reliance, BSNL and Tata Telecom have announced plans to offer CDMA-based mobile telephony at less than one-third the GSM rates along with free incoming calls across the network.