The Telegraph
Since 1st March, 1999
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Advani move for telecom peace

New Delhi, Oct. 6: Deputy Prime Minister L.K. Advani today met communications minister Pramod Mahajan to try and broker peace between state-run Bharat Sanchar Nigam Ltd and Tata-run global telephone gateway firm Videsh Sanchar Nigam Ltd over their stand-off on interconnect rates, but the meeting remained inconclusive.

Sources said the meeting, held without aides, was meant to give Mahajan an opportunity to explain his stand in the dispute, which is right now being heard by the Telephone Regulatory Authority of India (Trai). Another round of meetings is scheduled for later this week and industrialist Ratan Tata may, in the meantime, try to explain his point of view to Advani, they added.

Mahajan, who has been miffed over the way the Tata group has tried to transfer reserves from VSNL, in which the government has a substantial stake, to another Tata venture, has been insisting that VSNL drop its interconnect rates for BSNL and the other state-run telephone company, MTNL, to match those offered by other gateway firms such as Bharti and Data Access.

Advani has been trying to broker peace after Ratan Tataís attempt to break the logjam by meeting Mahajan failed. However, many feel it is unseemly for Advani to interfere in a case that is being heard by a quasi-judicial authority.

The Tatas filed a case before Trai on August 24, challenging BSNLís demands that it reduce interconnect rates, but later wrote a letter to Mahajanís office seeking to enter into fresh talks to resolve the problem.

The Tata group feels if the interconnection agreement as proposed by BSNL and MTNL were implemented, VSNLís revenue will drop by more than half. VSNL has already suffered a decline of Rs 736 crore in call revenues during 2001-02. The existing pact allows VSNL to earn Rs 8 per minute of telephone call time from BSNL and MTNL for carrying both incoming and outgoing calls.

However, according to the new agreement being proposed by Mahajanís office, VSNL, which till recently was also a state-run entity till it was sold off to the Tatas, will get only between Rs 2 and Rs 4 per minute depending on its agreement with different international carriers.

The communication ministry says BSNL has concluded similar deals with VSNLís rival carriers, Bharti and Data Access.

The Tatas argue that VSNL cannot afford such rates because of high overhead costs. Besides, the selloff deal called for status quo in relations between the global carrier and the two state-run telephone majors.

The communication ministry argues that the interconnect deal BSNL has offered to VSNL is based on Trai guidelines.

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