VSNL waves red flag to FLAG proposal

NEW DELHI, JULY 27: While most internet providers across the country are under the impression, following media reports on the Prime Minist...

NEW DELHI, JULY 27: While most internet providers across the country are under the impression, following media reports on the Prime Minister8217;s announcement at an infotech ministers meet recently, that VSNL no longer has the monopoly over international bandwidth, they have another think coming. It also appears that, deliberately or otherwise, certain words were put into the Prime Minister8217;s speech or in the press briefing thereafter to create this impression, while this was not passed by the ministry of telecom.

At the heart of the confusion is whether FLAG, an overseas under-sea telecom cable consortium, will be allowed to commercially sell bandwidth to private operators from India, or whether this will continue to be sold only through the state-owned VSNL. At the IT ministers8217; meeting in Delhi on July 15th, press reports based on an official briefing said that the PM said that VSNL8217;s exclusive monopoly had been broken, and FLAG could deal directly with private players. Nothing of the sort, however, happened.

High level sources in the VSNL today said that the company had not received any instructions from either the Communications Ministry or the Prime Minister8217;s Office PMO to change the commercial agreement between FLAG and VSNL which makes VSNL the sole distributor of FLAG8217;s bandwidth in India.

VSNL officials stated that their agreement with FLAG dated back to 1995, on the basis of which VSNL invested 37 million Rs 160 crore in the project. 8220;This agreement was for an indefinite period and we are not likely to change it in a way that it hurts our company, 8221; an official pointed out.

On the meet of the 15th, the PM announced the opening up of domestic long distance traffic to the private sector, breaking up the monopoly of the Department of Telecom. He was also supposed to have announced the breaking up of VSNL8217;s bandwidth monopoly here, but top ministry officials deny that this second part was in the text of the PM8217;s speech. 8220;The authorised copy of the PM8217;s speech has been sent to the VSNL by our ministry which has no specific reference to FLAG or the need for VSNL to change its commercial arrangement with the FLAG,8221; said a top official. 8220;There is no formal communication or instructions for the VSNL on this issue and hence we continue to operate under the same arrangements,8221; he stated.

The sentiment was echoed by top sources in the Communications Ministry. These sources said that 8220;a day before the PM8217;s announcement, the text of his speech was vetted by our top officials and though the FLAG reference was there in the draft copy, it was deleted at our instance. It was not considered proper, and in any case, the PM8217;s speech cannot have individual references to companies.8221;

This top official said 8220;how the reference emerged in media reports, continues to surprise us in the ministry.8221;

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While VSNL has ruled out any compromise in the exclusivity of its contract with FLAG, it is holding discussions with the company to find out a mutually beneficial route to allow competitive sale of bandwidth within the existing framework of the agreement. Starting tomorrow, discussions will be on between FLAG and VSNL officials to devise a new route.

8220;What we cannot allow is selling of bandwidth at differential prices to different customers. We will have to find a way of synchronising our commercial arrangements to suit each other. But one thig is clear, after developing the market through times when there was no return on our investment to a time when there is an opportunity to reap the fruits of our earlier investments, we cannot allow FLAG to walk away with our advantage,8221; the official explained.