The Hindu Business Line : Fixing the mobility

THE PLAN OF the Department of Telecom (DoT) to issue a directive restricting the mobility of fixed lines to customer's premises for the purposes of determining the levy of Access Deficit Charge (ADC) on private operators appears to be an equitable course. The basic service licence does not make a clear distinction between fixed lines and services where the `last-mile' (to the customer point) connectivity is wireless. Till recently, the rules restricted the use of a fixed-line telephone to within a customer's premises and a cordless phone to a radius of 100 metres. But with the march of technology, wireless connectivity can now extend even up to a 50-km radius and it is no surprise that fixed-line telecom service providers are trying to attract customers by offering a mobile telecom service albeit of a limited range.

The conditions were thus ripe for a repeat of the gruelling two-year-long technology tussle between CDMA and GSM mobile services, which was resolved by end-2003. Touting fixed wireless as phones offering "freedom of mobility at landline rates" or "unlimited cordless", some private operators have nearly trebled their subscriber base in the past year. In stark contrast, the conventional fixed-line subscriber base has inched up only marginally. The two operators who promised a quasi-mobile service have nearly 95 per cent of the 4.6 million fixed wireless subscribers.

Clearly, by offering a `near-total' mobile facility, these private players have succeeded in gaining an edge over their rivals offering the plain vanilla fixed-line telecom service. And officially declared to be offering only a fixed-line service they have also been exempt from the ADC — a subsidy paid to fixed-line operators, primarily Bharat Sanchar Nigam (BSNL), to bridge the deficit arising from their tariffs being fixed, for social reasons, below the cost of operating these services. The exemption from ADC has offered these operators an uncompetitive advantage in pricing over the mobile players, as the latter have had to pay 30 paise per minute on local calls. To add insult to injury, as it were, these operators, till recently, were also receiving the ADC from the mobile operators. In early 2005, the Telecom Regulatory Authority of India stopped the flow of this charge to the private fixed-line operators; only BSNL was allowed to get ADC.

In this backdrop, the DoT's proposed directive makes eminent sense. Once the DoT tightens the fixed-line licensing norms, it will level the playing field between fixed wireless and mobile operators. And it will also leave fixed wireless operators with no choice but to either fall in line with the DoT direction or start paying the ADC to BSNL, just as mobile operators do. An early resolution of this niggling issue is crucial as it threatens to once again escalate into a full-blown legal battle that can affect the orderly growth of the telecom sector.

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