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Telecom tussle: the final round?

Surajeet Das Gupta | August 16, 2003

The next big telecom faceoff is on -- and it's about two acronyms that will decide the future of India's cellular services and limited mobile services businesses, namely, MSCs and V5.2.

The focus of the faceoff? Whether basic or fixed line service companies can use a mobile switching centre for offering wireless in local loop limited mobile services within a short distance charging area (SDCA, an area that's limited to a city or a taluka; Delhi, for example, is one SDCA).

The other issue that's involved is V5.2. WLL service providers are required by the government to use V5.2.

Telecom Terms

Mobile switching centre (MSC): The backbone of a fully mobile service, MSCs allow service providers to offer roaming and virtually unlimited mobility.

All fully mobile services have three elements: the mobile phone (at the subscriber end), a tower and the MSC at the exchange. When a subscriber makes a call, it is transmitted to the nearest tower (a city has several towers) and from there to the exchange.

An MSC carries calls, tracks the movements of subscribers from one part of the city to another or to another city or even overseas, seamlessly handing over calls when subscribers are on the move and storing billing information. Without an MSC, mobile services would be very inefficient and limited.

V5.2: A software-cum-hardware interface that restricts mobility to a short distance charging area.

Last mile connectivity: Expensive copper wire is used to connect fixed lines to residences and offices ("the last mile") with the main exchange or junction box. But copper can be replaced by airwaves, leading to huge savings.

Base station controllers: This is akin to a fixed line junction box. But unlike a conventional junction box that uses a copper line to connect to homes and offices, this sends wireless signals to mobile phones and keeps mobile service subscribers connected to the main exchange.

On Monday, the Telecom Dispute Settlement Appellate Tribunal, a quasi judicial body that deals with appeals against the Telecom Regulatory Authority of India, the industry's regulator, issued directions to fully mobile as well as basic operators to present their arguments on MSCs on August 19.

This was in response to a petition filed by the Cellular Operators Association of India, which represents the interests of global systems for mobile, or fully mobile, service companies.

COAI had asked the tribunal to rule that limited mobile service companies could not use MSCs and should use V5.2.

Earlier, in a majority judgement, TDSAT upheld the legality of limited mobile services but directed TRAI to ensure a level playing field and ensure that limited mobile services are truly limited and not fully mobile.

What's at stake here? If TDSAT rules that MSCs can't be used and that V5.2 has to be used, WLL service companies like Reliance Infocomm and Tata Teleservices won't be able to offer subscribers roaming. Indeed, their subscribers will be confined to calling within the SDCA.

The matter is sub judice and so no one is willing to publicly comment on it. But it has once again divided GSM cellular service providers and the fixed line service companies that offer WLL limited mobile services.

As fixed line service companies see it, they're offering cheap mobile services by using CDMA technology.

Their licence clearly states that they have to bring in the latest technology -- and MSCs represent the march of technology, rather than fixed exchanges.

"All put together, we have deployed more than 160 MSCs. They represent the march of technology. So are you saying that we junk them though our licence does not ban their usage," asks one executive at a fixed line service company.

They also underscore the point that their licence does not expressly state that they cannot instal MSCs. What is more, companies like Tata Telservices, HFCL and Shyam Telecom deployed MSCs when they were offering only fixed line services.

But at that time no one protested about this. Even MTNL and BSNL use MSCs. So are these government-owned companies doing something wrong?

All this is hogwash, retort GSM companies. They insist that fixed line service companies are using the backdoor to operate fully mobile services without paying a paise in licence fees.

The whole rumpus arose after the government allowed the use of WLL for last mile connectivity. Predictably, basic service companies started putting up towers and offered subscribers a fixed phone at home with an antenna to pick and transmit signals through the air.

So far so good. But fully mobile service companies say that when the government decided to allow limited mobile services within an SDCA, the only change that was permitted was to replace the instrument: instead of a fixed line phone, a mobile phone could be used. It did not allow fixed line service providers to replace the fixed exchange with a mobile exchange.

Says an executive at a fully mobile services company: "That was the only differentiator. Otherwise the architecture of both GSM and basic service operators was fully mobile, with no difference."

Why do fixed line service companies oppose this interpretation? After all, they can still offer limited mobile services even if they use a fixed exchange.

One reason is that a fixed exchange does not have the hardware for seamlessly handing over calls within a city, leave aside outside a city.

So WLL subscribers will face the problem of frequent "call drops" as they move from one part of the city to another -- and so WLL would have few takers.

Secondly, fixed line service companies will have to deploy more towers and base station controllers thereby spending substantial sums of money.

Reckons a senior executive at a multinational equipment company that provides both CDMA and GSM equipment: "The capital expenditure would have gone up by 30-40 per cent, making limited mobile very unviable."

Adds an executive at a fixed line service company: "Our investments in MSCs will go totally waste. That is a huge cost."

The GSM camp is quick to point out that as early as 2001, TRAI had recommended that limited mobile service companies should not be allowed to use MSCs.

Indeed, former TRAI chairman M S Verma warned in letters to the DOT that the licence issued to fixed line service companies allowing them to offer WLL services was foggy on MSCs.

The recent TDSAT judgment too notes: "…we do not find any express permission to the use of MSC architecture by FSPs in the guidelines issued by the Government on 25th January 2001."

For all this, limited mobile service companies could be banking on the ace they have up their sleeves  -- they've over three million customers who will be left in the lurch if TDSAT rules against WLL service companies.

COAI, however, has told TDSAT that its members are willing to give an undertaking that they will enroll all bona fide WLL customers on the same terms and tariffs as they get now.

As this row proceeds, fixed line service companies and the government are pushing for unified licensing (one licence for all fully mobile, fixed line, national long distance and international long distance services) as a solution to this mess.

But the fully mobile service companies want TRAI to quickly implement the TDSAT majority ruling, which calls for a relook at the level playing field and licence fees for WLL companies.

Says a senior executive at a leading telecom company: "We will first ask TRAI to implement the TDSAT judgment and then wait for the judgement on MSCs. Only then will we talk about unified licensing."

Others in the GSM camp want the government to pay compensation to them for changing the rules of the mobile services game.

"In Singapore, Singtel was compensated for the government prematurely ending its monopoly of the ILD business. The government now is trying to change our contracts. So it must pay compensation."

It's unlikely to do that. What is increasingly clear is that it's not yet time to take a call on which way this telecom battle will go.

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