Financial Daily from THE HINDU group of publications
Saturday, May 27, 2006
Financial Daily from THE HINDU group of publications Saturday, May 27, 2006 |
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Broadband Info-Tech - Telecommunications Corporate - Corporate Disputes FLAG Tele wins arbitration case against VSNL Our Bureau
The tribunal ruling FLAG to get access to the FEA cable landing station. The order does not discuss or mention any financial compensation. No monopolistic hold on bandwidth capacity, says VSNL.
Mumbai , May 26 The Reliance Communications Ventures-owned FLAG Telecom group has won an international arbitration case against the Tatas' owned Videsh Sanchar Nigam Ltd with respect to FLAG East Asia's (FEA) cable landing station, which is owned by VSNL. VSNL has been ordered to allow FLAG access to the FEA cable landing station. FLAG can also upgrade the capacity of its FEA system at Mumbai to any level and lease the upgraded capacity to International Telecom Entities. The ruling was a majority decision from the Arbitration Tribunal of the International Chamber of Commerce, International Court of Arbitration and was communicated to the stock exchanges by both VSNL and Reliance Communications on Friday.
The course of the dispute
The dispute between the two telecommunications companies goes back a few years; FLAG accused VSNL of denying it free access to its cable landing station and of therefore having a monopolistic hold on bandwidth prices. It culminated in FLAG referring the matter to the International Court of Arbitration in December 2004. The matter concerned the interpretation of certain provisions of the Construction and Maintenance Agreement (C&MA) governing the FLAG East Asia (FEA) cable system to which FLAG, VSNL and various other parties were signatories. FLAG had not only demanded access to the VSNL-owned cable landing stations, but also claimed damages to compensate it for loss of revenue/or market. According to sources, the order, as it stands right now, does not discuss or mention any financial compensation. But, they said, the current Tribunal award is a partial one, and the Tribunal retains the jurisdiction to determine what momentary relief, if any, is to be awarded to FLAG to compensate it for VSNL's refusal of access to its landing stations. VSNL said it is not in a position, at this stage, to estimate the financial consequences of this award, if any, and in what time frame these would become applicable, if at all. But officials at VSNL maintained that the company does not have a monopolistic hold on bandwidth capacity into and out of the country. With 4 terabit capacity submarine cables landing in India, the company, whose landing stations handle less than 35 per cent of bandwidth capacity to India, cannot have a monopolistic hold on bandwidth availability. Besides, they said, international leased private circuit (IPLC) prices have fallen 70 per cent since 2002. It is believed that FLAG currently has 10 gbps capacity available at its landing station at VSNL, which is planned to be upgraded to 80 gbps.
More Stories on : Broadband | Telecommunications | Corporate Disputes | Videsh Sanchar Nigam Ltd
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