Financial Daily from THE HINDU group of publications
Thursday, Aug 18, 2005
Corporate - Corporate Disputes
FLAG complains to TRAI about VSNL blocking access
Mumbai/New Delhi , Aug. 17
THE dispute between FLAG Telecom and Videsh Sanchar Nigam Ltd (VSNL) seems to be far from over.
FLAG Telecom has written to the Telecom Regulatory Authority of India alleging that VSNL is still delaying carriers in India access to FLAG cable capacity.
"VSNL has consistently put roadblocks in the sale of capacity available on FLAG capacity," said the FLAG letter to TRAI dated August 9, 2005.
"FLAG has not been able to sell the capacity in India to carriers due to its inability to provide any commitment on delivery dates." VSNL owns the sole landing station of FLAG Telecom in India.
VSNL, it may be recalled, was put on the defensive when the United States Trade Representative (USTR) wrote to the Chairman, Telecom Commission, accusing VSNL of high international bandwidth pricing and seeking the intervention of the regulator on what it alleged were VSNL's monopolistic practices.
(VSNL, coincidentally or not, had on Monday reduced its bandwidth prices by around 45 per cent.)
VSNL had responded to say that the USTR when complaining of VSNL's end-to-end bandwidth pricing on the US-India route, was referring to "a single submission to FCC (Federal Communications Commission) in which a small US operator complained that prices were too high. No other US operator voiced a similar complaint, and the FCC did not express any opinion on the validity of this allegation."
VSNL also told TRAI in the same letter that it did once have an issue with FLAG Telecom, but that it was resolved through an agreement on May 4, 2004.
FLAG, having got wind of VSNL's letter to TRAI, has now also written to the regulator. It has alleged, among other things, that VSNL has not exercised its option of 5 STM1s (Synchronous Transfer Module) capacity reserved for it for the last 18 months. "By not exercising the option, VSNL is restricting the capacity available for sale on FLAG cable system.
"VSNL has also not allowed the installation of additional cards at Mumbai landing station which was part of the settlement arrived at with the intervention of TRAI. These cards would allow further 17 STM1s to be made available for sale in India."
A VSNL spokesperson said that VSNL has stuck to the agreement arrived at with FLAG. According to him, when the Reliance Infocomm and group companies acquired FLAG (soon to come under ADA Enterprises), there were 11 parties who claimed to have agreements for the 5 STM1s that were available; and VSNL was obliged to honour those parties before assigning STM1s to Reliance Infocomm.
Later, under the agreement between the disputing parties, there were to be 11 STM1s after augmentation work, six of which were to be directly allotted by FLAG to ITeS and to carriers on an "equitable and proportionate basis." The five remaining STM1s would be acquired by VSNL at the lowest price at which the first six STM1s were allotted.
"Since FLAG does not seem to have found buyers for the earlier ones, we don't have a reference point to go by, to determine the lowest price," said the spokesperson for VSNL.
TRAI sources said that they had received the FLAG letter of complaint and would be looking into it.
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