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WLL trapped in regulatory maze

NetScribes/Ganesh Ramamoorthy & T M Arun

Ever since the Telecom Regulatory Authority of India allowed basic service operators to offer limited mobility services as part of their existing licensing agreements, much newsprint has been devoted to the issue of 'limited mobility' using WLL.

And it's not just the cellular operators who are complaining. Even the basic service operators are grumbling.

Despite the GOT-IT giving the nod to basic operators to provide limited mobility using WLL and the Telecom Commission directing the Department of Telecom to go ahead with issuing licences and letters of intent to aspiring 'limited mobility' players, basic operators are not really happy with the way things are unfolding.

The GOT-IT, while upholding limited mobility for basic operators, also slashed basic operators' revenue-share on long-distance calls from WLL phones to 5 per cent (at par with cellular operators) from 60 per cent in a bid to provide level playing field for the cellular operators.

Analysts say GOT-IT's recommendations have only added to the confusion surrounding the service as they neither favour basic service operators nor would they be instrumental in offering any concessions to cellular operators.

"Though it sounds good for cellular operators, it is like a warning bell for basic operators as, under the proposed revenue-sharing arrangement, they would not be in a position to offer limited mobility services at Rs 1.20 for a three-minute call," says a telecom analyst at HSBC Securities.

Secondly, in the long run, the policy favours only players with deep pockets, staying power, and their own long-distance networks that bypass those of BSNL/MTNL.

"Hence, with 147 applications from 18 companies for WLL licence, the interest shown by service providers in the first round may not be sustained in the subsequent rounds," he adds.

Another important factor that will determine the fate of WLL services in the country is the impending verdict of the Telecom Dispute and Settlement Appellate Tribunal on the plea filed by the Cellular Operators' Association of India to treat limited mobility with WLL as a separate licensed service.

The stand-off is also threatening investments in the cellular business, with some leading foreign investors and bankers putting fresh funding on hold.

AT&T, Hong Kong's Hutchison Whampoa, British Telecom, Singapore Telecom and France Telecom are some of the large overseas firms that have invested in India's cellular business.

While the main motive behind the government move to allow limited mobility was to attract investments to the basic telecom services segment, cellular operators fear that the move could hit the funding of the cellular business, which has formed a substantive part of the total investment in the country's telecom sector since it was opened up six years ago.

Almost all large overseas telecom groups are said to have frozen investments following the limited mobility decision.

Foreign investors account for Rs 80 billion ($1.72 billion) of the total Rs 140 billion ($3.87 billion) investments in the cellular business.

Even as the COAI is awaiting the TDSAT's verdict, due on May 9, 2001, basic operators have raised their demand for a level playing field.

The six existing basic service providers - Reliance Telecom, Tata Teleservices, Bharti Telenet, Hughes Tele.com, Shyam Telelink and HFCL Infotel - have demanded parity with all new entrants into their circles of operation.

Basic service providers feel the new entrants (which include many cellular operators) will be paying a pittance compared to what they had to shell out.

The total entry fee of any new entrant into all these circles amounts to Rs 2.5 billion, as against Rs 16.84 billion that the basic providers had to pay.

Moreover, the spat between basic and cellular operators has taken a curious turn with non-resident Indian C Sivasankaran of Sterling Group offering to pay some $545 million for 5 MHz of the 20 MHz spectrum reserved for WLL mobility "to end the limited mobility impasse".

Sivasankaran has been critical of "free" spectrum allocation to basic operators, saying more than $1.5 billion has been paid by cellular operators for similar spectrum for their GSM operations.

Analysts say, instead of half-hearted measures, the only way to resolve this impasse is for the government to issue composite licences for both cellular and basic services with the same terms and conditions governing both.

Adding to the basic operators' woes is the recent proposal from state-run BSNL to hike the interconnect tariffs on long distance calls for private players.

With the Association of Basic Telecom Operators deciding not to agree with the BSNL on the issue even before their scheduled meet, the long list of telecom regulatory muddles only seems to grow.

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