The Telegraph
Since 1st March, 1999
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Mahajan shrugs off BSNL rate row
- CellOne tariffs not to wean away private firms’ customers

New Delhi, Oct. 22: Communications minister Pramod Mahajan isn’t fazed by criticism over the telecom rate war that has been unleashed by the state-owned Bharat Sanchar Nigam Limited (BSNL) with the launch of its CellOne cellular service late last week.

“This is open competition and everyone, be it private or public sector, will use its power to grab market share,” said Mahajan while rubbishing the charge that the telecom PSU was resorting to predatory pricing.

“The Telecom Regulatory Authority of India (Trai) has approved BSNL's tariffs. This was cleared after BSNL sent replies to a number of clarifications sought by the regulator and after five days of discussions,” he added.

The minister said even the Telecom Dispute Settlement and Appellate Tribunal (TDSAT) had stayed Trai’s order asking BSNL to get its cellular tariffs approved before launching its nation-wide cellular services.

A visibly upset Mahajan said: “Going by their (private cellular operators’) talk, BSNL ought to have got its tariff plans approved by them and not the regulator.”

However, Mahajan admitted that pricing wasn’t everything and said the state-owned telecom companies would have to ensure a quality of service that matched the best that the private sector players offered if they were serious about retaining customers.

Urging state-owned telecom companies to guard against complacency, he asked them to tone up their service and marketing departments.

Last week, Cellular Operators’ Association of India (COAI) had objected to a couple of components in BSNL’s cellular pricing like free incoming calls from its own fixed-line network and a lower security deposit.

Mahajan also reiterated that the government would not allow an inter-connect agreement with Videsh Sanchar Nigam that would result in a revenue loss to state-owned fixed-line telephony majors Bharat Sanchar Nigam and Mahanagar Telephone Nigam (MTNL).

While appreciating the efforts taken by VSNL to resolve this contentious issue, Mahajan said the market has shown that the revenue share demanded by the two public sector telecom companies was justified.

BSNL has demanded a revenue share of less than Rs 4 for all calls terminating at its end against the Rs 8 initially proposed by VSNL, which it has since scaled back to Rs 6.

Neither BSNL nor MTNL is ready to accept this discrepancy: for all calls terminating at the BSNL/MTNL network and then carried onward to the subscriber’s premises, BSNL will stand to get Rs 4 per call; but for overseas calls originating from the BSNL/MTNL network and routed through the VSNL network, the Tata-run entity is demanding Rs 6 per call. BSNL and MTNL are miffed by this because Bharti’s IndiaOne is offering about Rs 3.30 each way as the revenue share.

Speaking to reporters on the sidelines after launching the ‘World Computer Literacy Day 2002’ organised by NIIT, Mahajan said: “Competition has led to a fall in prices of VSNL and that will certainly impact its market value. When MTNL/BSNL are signing the interconnect agreement, their concerns should also be taken care of. That is what the government as the major shareholder is demanding. I do not see anything wrong in it.”

Earlier, MTNL, the cellular operator in Delhi and Mumbai, promised a Diwali gift to all its subscribers. While refusing to elaborate on the proposed new tariff plan, chairman and managing director Narinder Sharma said: “The cellular market is highly competitive in nature and it is difficult for any company to say how it will position itself in the future. We are coming out with different tariff plans.”

“It is not just the cost of line that determines the cellular tariff. This is just one of the factors. It is the market that determines it,” Sharma told reporters after presenting a dividend cheque to Mahajan.

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