Reliance Telecom May Be Penalised For Start-Up Delay

The department of telecommunications (DoT) is likely to invoke the penalty clause on Reliance Telecom, the cellular service arm of Reliance Industries, for delay in starting cellular networks in the circles of Orissa, Bihar, West Bengal (including Sikkim), Assam, Himachal Pradesh, Madhya Pradesh and the North-East. DoT last week sent a note to Reliance seeking clarifications.

The department says the progress of work in the circles, already much behind schedule, is tardy. Under the tender norms, Reliance was to start 10 per cent of its network services in December. DoT may impose Rs 5 lakh a week per circle for five months, which may aggregate to Rs 6 crore in liquidated damages.

 

Earlier this year, Reliance submitted its digital circuit requirement to DoT for the West Bengal circle especially for Siliguri and Durgapur, which have modern exchanges as part of the work in the first phase. DoT has made suitable provisions to provide circuits and connectivity and is waiting for Reliance to pay on a rent-and-guarantee basis.

We are ready with the necessary infrastructure to provide connectivity to Reliances cellular mobile telephone service network, a senior DoT official said.

According to the interconnect agreement, the licensee is responsible for providing the required transmission links to and from DoTs network at permitted points of interconnect during the entire period of the licence. However, in case the licensee requests in writing, DoT may provide such links on payment of charges.

The Reliance cellular network project will be carried out in phases over 10 years. The company will have to apply to the Standing Advisory Committee for Frequency Allocation (Sacfa) for clearance from DoT before starting its network operations. The application to Sacfa is considered an indicator of the status of a telecom project.

The rival cellular licensee of Reliance Telecom in the Orissa and Bihar circles Koshika Telecom of the Usha group started its network in Bhubaneswar last week and is set to start services in Puri and Cuttack soon. Koshikas network was implemented by Alcatel, part of the $32 billion French company Alcatel Alsthom, which earlier started the network in Patna. Koshika thus has a headstart over Reliance Telecom in the two circles.