VSNL plan to enter MTNL’s turf

VSNL’s decision follows a similar announcement by Mahanagar Telephone Nigam Limited (MTNL) a couple of months ago. Put simply, VSNL will enter the domain of MTNL while the latter will get into international telephony currently monopolised by VSNL. With this, MTNL and VSNL will be competing with each in more than just one field. The two public sectorundertakings are already competing in the internet services arena where MTNL has undercut VSNL tariffs by 15 per cent.

"Long distance comes naturally to us," Kumar said. The PSU will only have to invest in additional transmission capacity as most of the infrastructure is already in place. According to estimates, the foray into domestic long distance services will cost VSNL around Rs 200 crore. Plans are to tap this segment through a joint venture with a basic service or cellular operator.

"Since we are in international long distance, we don’t have a direct customer base. The partner will be required for marketing and customers," Kumar explained. The venture is likely to be 50:50 partnership.

A number of operators have already approached VSNL in this connection. However, nothing has been finalised. The company is awaiting guidelines from the Telecom Commission on this. The draft discussion paper on the new telecom policy states national long distance beyond service area to private operators will openedfor competition in January 1, 2000.

Terms, conditions and other modalities are to announced by August 15, 1999, in consultation with the Telecom Regulatory Authority of India. The usage of the backbone network of public and private power transmission companies, railways, Gas Authority of India Limited and Oil and Natural Gas Corporation is to be allowed for national long distance services, among others.

Diversification into other telecom segments is part of VSNL’s strategy for growth. It is already a player in the Global Mobile Personal Communications (GMPCS) segment with stakes in two large consortiums, Iridim and ICO Global.

In preparation for internet telephony it has already conducted prelimnary tests on proprietary technology. Internet telephony or voice over internet costs users only local call charges even for international and long-distance communication. It is especially attractive for users in countries like India where tariff for long-distance calls, especially international calls, isperceived to be exorbitant.