TDSAT asks Trai to defer VSNL order

In a setback to the Telecom Regulatory Authority of India (Trai), the Telecom Disputes Appellate Tribunal (TDSAT) has accepted Videsh Sanchar Nigam Ltd's (VSNL) plea on international private leasedline circuit (IPLC) pricing issue against the regulator.

The tribunal asked Trai to defer the bandwidth pricing order till a judgement is rendered. The tribunal is to hear to the dispute on October 3.

A two-bench jury had accepted VSNL's plea and set aside Trai's ruling of September 8, which stated that a tariff regulation in bandwidth market was necessary, as the market was not adequately competitive.

The regulator had also stated that prices in India were higher than the global level, with E-1 circuits priced higher by 29 per cent, DS-3 by 64 per cent and STM-1s higher by 59 per cent compared with prevailing prices on the Atlantic route.

On Monday, VNSL challenged the regulator's assessment of cost and methodology on IPLC prices in India, stating that the calculation was conducted without giving it an "opportunity to react". The Tata company also blamed Trai for "artificial fixing of bandwidth prices" that will give resellers an undue advantage.

Meanwhile, speaking on the sidelines of VSNL's 19th AGM here today, chairman Subodh Bhargava said there were "risks of sickness of Indian enterprises and possible job losses" if the regulator specifies ceilings which force the international bandwidth providers to sell IPLCs at losses.

"We share the vision of lower tariffs for customers. In fact, VSNL has led several tariff reductions in all our business segments. However, any regulation or market competition driven initiatives that reduce tariffs to a level, making services unviable, has to be avoided," Bhargava said.

The comparison between prices prevailing in trans-Atlantic and trans-Pacific routes with the Indian market as unfair, as almost every cable asset in those routes have undergone bankruptcy protection under Chapter 11. Most of the bandwidth providers were later sold at "dirt cheap prices to new owners".

"There is a risk of job losses and the potential sickness of Indian enterprises, making them easy pick for foreign companies", he said, adding cable assets in trans-Atlantic and trans-Pacific routes were sold at 5 per cent of the total costs used to build these systems.