ILD: Open Format

DQW Bureau
New Update


TRAI has formally announced the consultation process on ILD services through the consultation paper released a couple of month's back. This is to focus on a number of issues that are the key determinants of the policy regime for the ILD sector. As part of that, we spoke to a number of people mostly, customers and service providers. One of the key issues raised was the terms and conditions of license. The feedback started with an omniscient observation. "One of the strangest things happening in India is the opening up of ILD services for competition at the end and opening up of basic telephony competition first.

Elsewhere in the world, for very good reasons, international and domestic long distance were opened for competition first", says Dr TH Chowdary, director, Center for Telecom Management and Studies, Hyderabad. Nonetheless, we, at least, have the opportunity to make a good beginning to enter an era of convergence, briskly.


"We are opening international telecommunications to compete when profound changes have already affected the traditional telecommunications to transform them into an information infrastructure, comprising of terrestrial- and satellite-based microwave radio highways and optical fiber photonic highways, on which information could be transported. So on one hand, we have an electronic-photonic transport system as infrastructure, and various services, which ride on this transportation system, on the other. There could be competition in the provision of infrastructure and much more competition in the provision of services", adds Chowdary. True, there is a scenario where a lot of intelligence is coming into communication devices, and there will be hardly any distinction among the various services.

Another feature that needs to be considered is the current dynamics in the industry. "There has been a lot of maturity among the various service providers and kinds of service providers", says S Ramakrishnan, managing director, Tata Teleservices Ltd.

He further adds, "There is a feeling to work in collaboration at the backbone and infrastructure level, where ever possible rather than duplicating it and move to other areas where infrastructure is not available, and concentrate there on build-up".


This augurs good for both the consumer and the operator, too. The feeling is that there is no meaning in creating an artificial distinction between mobile and immobile services; local, intra-state, inter-state, and international services; packet-switched and non-packet information services. In other words, remove the obstacles, the rest will fall in place. And the experts prevail that these backdrops need to be considered while ILD services policy is derived.

The most important question is about the terms and conditions. The consultation paper identifies this issue as an important one to decide what the license should allow i.e. should it specify a set of services which the licensee can offer under the license or should it be a license that enables the licensee to offer carriage services, since ILD is essentially a carriage service. Other issues being the time-period of the license, principles for tariff fixation and interconnection charges or revenue-sharing, especially if the kind of technologies allowed for ILD involve major differences in transporting telecom traffic, whether to give different licenses for voice and data services, whether to allow various tele and bearer services.

Observers opine that distinction between telephone and bearer service is pure fallacy. Another point that is being talked about is making a distinction between serious and non-serious players. Points out Ramakrishna, "Today, we are already seeing the automatic sifting of serious versus the non-serious. The market will determine who is serious and who is not". The point can be demonstrated either with the conditions under which the basic telephony as well mobile telephony or with the conditions under which the ISP licenses were ordered. The feeling is the that there should be no distinction of one from the other as today, the market as well as the service providers understand the implications. And the number of competitors can be best determined by the players themselves. Another reason cited is that if the competition is intense then the customer has the choice to decide what is best-suited for him, be it on the basis of quality of service or the end benefits.


Says Chowdary, "The general conditions should be very simple. An entry fee to cover costs of licensing and the ongoing superintendence. Revenue share should not to be put into the bottomless well of deficits of the government, but to constitute a universal access or service funds, to be used to reimburse deficits on the obligatory establishment of the socially-beneficial services like telephones and Internet in villages on a community basis, in schools and colleges, in public libraries and primary health centers. When document couriers do not share revenue with post offices, why should telecom companies share their revenue with the government of India? The public good and purpose is served by the companies giving a share of their revenue to the universal access or service fund, which would be used for investing in rural areas and in the institutions like schools, libraries and primary health centers. The government will share the prosperity of companies, by establishing universal access or service fund, and by the service-tax on all telephone and other bills".

Another important discussion is about the selection criteria. Should the entry be allowed through an entry fee subject to bidding, to only those with a proven track record, or to the ones with a strong financial background, etc? The feeling is that the eligibility criteria should be transparent and unbiased. The objective should be to promote quick rollout of services. In such a scenario, it maybe beneficial for service providers to lease transmission and switching capacities. This is seen as an explanation to have lower capital investment. Also there should be no obligations on the rollout. The reason being that there is already an incumbent offering ILD services, so a company should be allowed its own way to rollout its operations.

Experience as parameter also does not hold good. The simple reason being no one except VSNL has prior experience in the country, the rest of the service providers have only the circle-level or the cellular level experience and that does not mean that some weightage for the same should be extended in the ILD sector. The point is to allow an organization to invest the money at its own risk. Another important question has been the length of the license period. The general perception is that it should not be for less than twenty years. This most feel that is an accepted and a tested frame, and will hold good.


The entry fee, suggests Chowdary, "should be related to the territory or population for covering the license that is required or given. Supposing the license seeker is willing to provide international service only in Mumbai then the entrance fee should be related to the total revenue that the Mumbai subscribers, of all companies, incur on international service. This is easily ascertainable for each area from BSNL or VSNL. A proportion of it, say one or two percent, could be the entrance fee. Since the licensing will be open if another license is to start after five years, the licensor can ascertain the international revenue in the previous accounting year, and prescribe two percent of them as entrance fee". Others too, opine that an entry fee should be such that it covers cost of licensing, etc.

Further, the observation is that the service provider is allowed to choose the technology and it need not be regulated by any one. The choice is a matter of technology, related economics, and the right architecture. So as the choice of gateways-be it single or multiple. Moreover, the deployment options be allowed to be decided by ILDO, by a mutual agreement with the NLDOs or access providers. Customers should be given a choice as to whether they want call-by-call selection or pre-selection. There could be one-time charge by the operator who is providing the access for each type of carrier selection, whenever a change in choice is availed of. Further, billing should be left to the operator. Clearly, the bottomline is that the consumer needs to benefit. The liberalization of the ILD sector should accommodate policies, including tariff re-balancing and more detailed interconnection regime, and have to be very relevant due to aspects such as call-back, bypass and the fact that not all revenue is generated domestically.

Ch Srinivas Rao