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Govt announces guidelines for private long distance telephony service providers

Government on Sunday announced guidelines for opening up domestic long distance telephony (Subscriber Trunk Dialling) for carrying both inter-circle and intra-circle traffic, with no restriction on the number of players and a one-time entry fee of Rs 1 billion.

The guidelines have been announced a month after Prime Minister Atal Bihari Vajpayee told the state Information Technology Ministers Conference on July 15 that the sector would be opened up for competition by August 15 without any ceiling on the number of players and ending the state monopoly.

Other than Indian companies, an Indian-registered company with a maximum foreign equity of 49 per cent would be eligible to get the licence for National Long Distance Operator. The Department of Telecommunication would be the licensor.

"While NLDOs will have a right to carry inter-circle long distance traffic, they can carry intra-circle long distance traffic by mutual agreement with fixed line service providers in the circle," Communications Minister Ram Vilas Paswan told reporters in New Delhi.

The NLDO licence would be issued for a period of 20 years, extendable by 10 years at one time, for inter-circle long distance operations.

Besides an entry fee, an operator would have to give a bank guarantee of Rs 4 billion that would be refunded in phases on fulfilment of network obligations, including servicing certain remote and low-revenue yielding areas, he said.

In the first phase, the operator would have to cover 15 per cent of the prescribed area in two years, failing which the bank guarantee, worth Rs 1 billion, would be forfeited, Paswan said.

For the long distance sector, a revenue share of 15 per cent has been fixed. This share includes a portion of five per cent to meet Universal Service Obligations, Paswan said.

The bank guarantee of Rs 4 billion has been divided into four parts of Rs 1 billion each and would be refunded at the end of each phase provided an applicant fulfils his obligations. Any shortfall would result in forfeiture of the particular bank guarantee related to that phase.

The Department of Telecom Services, which has been spared from paying the entry fee, would have to give 15 per cent of its revenue to meet USO, he said.

To check the entry of non-serious players, companies interested to participate should have a paid-up capital of Rs 2.5 billion with the total net worth of the promoters pegged at Rs 25 billion.

The infrastructure providers - in dark fibre, right of way and duct space - have been allowed to bring in 100 per cent foreign equity. Although there would be no restriction on the number of entrants and entry fee for end-to-end bandwidth providers, a foreign equity cap at 49 per cent and an annual licence fee (15 per cent of revenue) has been imposed.

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