Reliance, Bharti JV on inter-circle connectivity

Telecom operators Bharti and Reliance have petitioned the government to stop any proposed move to allow cellular operators direct connectivity between two circles by-passing the national long distance operators saying this could result in a whopping Rs 1,800 crore loss annually to the two rendering their businesses "unviable".

On the other hand, the Cellular Operators Association of India, minus these two operators, have strongly favoured the direct connectivity between two operators in two circles.

A letter to Communications and Information Technology Minister Dayanidhi Maran, jointly signed by Bharti and Reliance, said "the introduction of such a regime will make the existing national long distance (NLD or STD) licences redundant leading to monumental loss of Rs 6,000 crore spent in creating the world class infrastructure. This will completely shake the investors confidence and will not be in public interest."

By allowing the cellular operators to carry calls between two circles the national long distance operators like Bharti and Reliance would be denied their share of up to Rs 1.10 per minute, sources said.

Moreover, the two operators have paid huge entry fees and bank guarantees along with stringent roll out obligations for the national long distance licence. This will make the playing field tilted against Bharti and Reliance.

Accordingly, any access provider desirous of offering national and international long distance services, should be permitted to provide the same only on ensuring fulfillment of present national long distance licence terms and conditions, they said.

Cellular operators like Hutch, Idea, Spice among others have submitted to the government and the Telecom Regulatory Authority of India (Trai) seeking permission between the two cellular operators of the same group company for cellular-to-cellular inter-circle traffic, in the adjacent telecom circles (states).

Sources also said the cellular operators might take leased lines from the infrastructure providers to carry calls through out the country with mutual revenue share arrangements. In case this was allowed this would be against the existing new telecom policy of 1999, which envisaged establishment of world class infrastructure.

Bharti and Reliance have invested over Rs 6,000 crore to create such infrastructure. Allowing cellular operators to carry calls through leased lines would retard the growth of infrastructure, the two have said.

Sources, however, said Trai was yet to finalise its recommendations on the matter.

Amid serious differences arising among the cellular operators the matter could see an intervention from the government. Bharti spokesperson, however, said that "we operate our carrier business as a different entity than its cellular business. Therefore this is an issue in the context of only carrier operations."