The Hindu Business Line : FLAG withdraws plaint against VSNL's US foray

FLAG Telecom has withdrawn its complaint to the Federal Communications Commission (FCC) against Videsh Sanchar Nigam Ltd's proposed entry into the US telecom services market.

The US-based company, which was recently acquired by Reliance, had objected to the Tata-controlled VSNL's entry into the US market on grounds that it posed a risk to local competition.

FLAG's decision to withdraw the complaint is an indication of thawing of relations between the Tatas and Reliance, which had hit a real low after a dispute broke out between the two sides over capacity allocation on VSNL's landing station in Mumbai.

While the Reliance-owned FLAG had charged VSNL of flouting an agreement by not releasing additional capacity, VSNL stood its ground, saying there was no commitment made to FLAG for more capacity. The issue was resolved after the Telecom Regulatory Authority of India intervened and got the two sides to sign a deal whereby VSNL agreed to release 2.5-gbps bandwidth to FLAG.

However, though the TRAI-sponsored deal was struck in March, the two sides could still not resolve the differences prompting FLAG to lodge a complaint with the FCC in June. FLAG had asked the US regulator to stop VSNL's entry into the American telecom market on grounds that the Indian major was involved in monopolistic practices and had kept the bandwidth prices artificially high. It accused VSNL of not negotiating in good faith.

"While the activation of an additional 17 STM1s resolves certain of the short-term issues, it does not resolve the underlying issue of VSNL's market power and anti-competitive behaviour," the FLAG letter to FCC written in June said. VSNL had responded to FCC by saying FLAG's allegations were baseless.

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