VSNL contests Trai order, moves TDSAT

Videsh Sanchar Nigam Ltd (VSNL) has challenged the Telecom Regulatory Authority of India's (TRAI) assessment of cost and methodology on International Private Leasedline Circuit (IPLC) prices in India, stating that the calculation was conducted without giving the company an "opportunity to react".

The Tata company in a letter on Monday to Telecom Disputes Settlement and Appellate Tribunal (TDSAT) also blamed TRAI for "artificial fixing of bandwidth prices" that will give resellers an undue advantage.

TRAI has embarked on an artificial fixing of bandwidth prices that will help resellers have an advantage over facility-based operators like VSNL by obtaining IPLCs at significantly lower prices.

VSNL has also lashed out at the regulator, stating that it had selectively used the data of its consultant Ernst & Young (E&Y), which depicted the company and Indian IPLC market in "a relatively poor state".

There are specific instances in E&Y report that show there are other geographies and regions where prices on year-on-year drop much lower than that happens in the country, it alleged.

The letter also said TRAI stated that there has been a market failure and VSNL enjoys an unduly high marketshare. It also alleged that the regulator has excluded certain cost components, which will lead to VSNL's costs being "under-represented".

The company's contention is that Indian IPLC market is highly-competitive and its current cumulative marketshare is 60 per cent. This is one of the sharpest drops for the incumbent anywhere in the world in just three years, after the opening up of International Long Distance (ILD) market.

On the price of half circuit IPLC and ratios of E1, DS-3 and STM-1s (different bandwidth connectivity modes), TRAI has not provided any logical explanation for artificially fixing the price ratios for higher bandwidths.

Earlier on September 8, TRAI said tariff regulation in bandwidth market was necessary, as the market was not adequately competitive, and said its price in India was much higher than the global level.

"VSNL had raised a number of issues in the matter of pricing of IPLC, and TRAI considered these submissions on the need of regulation of tariffs for IPLC and the level at which tariffs are fixed. The authority has concluded that tariff regulation in IPLC market is necessary," TRAI said in a statement.