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Long distance telephony opened to pvt parties

Our Bureau

NEW DELHI, Aug. 13

KEEPING its promise of opening up national long-distance (NLD) telephony (popularly known as STD services) by August 15, the Government today announced unrestricted private participation by companies having a combined promoters' networth of Rs. 2,500 cro res and proposing to invest minimum Rs. 250 crores as equity into the project.

Networth of any partner having less than 10 per cent shareholding in the applicant company will not be counted while calculating the combined networth. Additionally, prior experience in the telecom sector is a must for a partner holding minimum 30 per ce nt of the paid-up capital.

The NLD operator can also carry intra-circle long distance traffic on mutual agreement with fixed service providers (FSPs). Subscribers will have a free choice of selecting their domestic long distance carrier, official sources said.

``An Indian registered company with a maximum foreign equity of 49 per cent is eligible for an NLD licence, which will be non-exclusive and valid for a period of 20 years extendible by 10 years at one time for inter-circle,'' the Union Communications Min ister, Mr. Ram Vilas Paswan, said at a press conference.

The applicant company has to pay one-time entry fee of Rs. 100 crores before the signing of the licence, and a bank guarantee (BG) of Rs. 400 crores (4 x Rs. 100 crores), to be released in four phases on fulfillment of network roll-out obligations, plann ed and committed in advance to the Government.

In addition to entry fee, the company has to pay licence fee in the form of 10 per cent revenue share along with a prescribed contribution towards universal service obligation (USO) fund, with a total cap of 15 per cent.

The Department of Telecommunications (DoT) officials said that the pre-conditions of networth, equity investment, entry fee and bank guarantees have been designed to discourage non-serious players. The network roll-out obligation includes remote and unec onomic areas so as to ensure that the benefit of opening of this sector is available throughout the country, they added.

Any shortfall of below the percentage network coverage -- Phase I, II, II and IV -- will result in encashment and forfeiture of the particular bank guarantee relatable to that phase. There will be no carry forward of the unfulfilled network obligation fr om one phase to another.

The applicant company has to submit financial bank guarantee (FBG) of Rs. 20 crores one year after the date of signing of the licence agreement or before the commencement of service, whichever is earlier. Initially, the FBG will be valid for a period of six months and will be renewed from time-to-time for such amount as may be directed by the Centre.

In order to promote faster growth of the sector, two categories of infrastructure providers have been recognised. One will provide dark fibre (IP-I) and the other can provide end-to-end bandwidth (IP-II). IP-I will neither require licence nor entry fee, and there is no ceiling on foreign equity. IP-II category will require a licence with revenue sharing on the lines of NLDO and will have unrestricted entry without any entry fee. A performance bank guarantee (PBG) of Rs. 100 crores will have to be paid b y the IP-II.

Pic.: The Union Minister of Communications, Mr. Ram Vilas Paswan, and the Telecom Commission Chairman and the DoT Secretary, Mr. Shyamal Ghosh, addressing a press conference in the Capital on Sunday.