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Tuesday, Aug 17, 2004

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Delhi Metro to foray into telecom — Applies to DoT for infrasturcture provider-II licence

Thomas K. Thomas
Anil Sasi

New Delhi , Aug. 16

DELHI Metro Rail Corporation could soon be plying in a new sector.

In a bid to cash in on the booming telecom market Delhi Metro has jumped into the fray to offer bandwidth infrastructure and has applied to the Department of Telecom (DoT) for an infrastructure provider category II licence.

If it gets the licence, Delhi Metro would be joining the likes of GailTel, RailTel, Power Grid Corporation, Tata Power and Hughes Escorts Communication. Infrastructure Provider - II licence holders cannot sell bandwidth to the end consumer but can only lease it to other telecom companies.

So far, DoT has given licences to six companies under this category.

"To start off with, the bandwidth would be used for interlinking with existing telecom service operators to provide connectivity to commuters in the underground metro corridors as well as for internal communications," a DMRC executive said.

DoT has already issued a letter of intent to the Delhi Metro Rail Corporation for the licence. Another company Comsat Max Ltd is also in line for taking an IP-II licence. With high-speed data services such as broadband gaining momentum, the demand for bandwidth is expected to be on the rise. While large telecom operators such as Reliance, Bharti and Tata Teleservices have put up their own infrastructure, in areas where the costs are high they prefer leasing out capacity from IP-II licence holders.

On the other hand for companies such as RailTel and GailTel, becoming a `carriers carrier' does not involve high costs since they already have infrastructure in the form of rail lines or gas pipelines running across various parts of the country.

Delhi Metro, like Gailtel, Power Grid Corporation and Railtel, already has the advantage of having the right of way along its metro corridors in Delhi, which can be used to lay the optical fibre cables, according to industry sources. That apart, these companies benefit from the additional revenues by selling bandwidth

The Government had recently made policy announcements to make IP-II category licences more attractive. In June, the Communications Ministry had announced a cut in the licence fees from 15 per cent to 6 per cent of the annual revenue apart from reducing the bank guarantee from Rs 100 crore to Rs 5 crore.

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