- The Washington Times - Tuesday, February 11, 2003

CALCUTTA, India, Feb. 11 (UPI) — The rate war that has been raging in India's telecom business over the past few months is now poised to spill beyond its shores: to the United States and even the United Kingdom, the two countries where Indians make about 70 percent of their international calls.

Two upstart Indian telecom companies, Reliance Infocomm and Data Access India — subsidiary of the Hong Kong-based, Richard Li held fixed-line phone giant Pacific Century Cyberworks Ltd — have acquired licenses in the United States to offer international long distance services. They claim that their aim is to substantially reduce the cost of international calls made from the states (and Europe) to India.

"The acquiring of licenses in other countries will help our scheme to bring down the cost of calls not only locally but also in the worldwide market," said the official release from Reliance.

"We expect to match the revenues from India and overseas revenues by year end," said said Siddhartha Ray, managing director, Data Access India adding, "during the year we also expect to acquire seven to eight international long distance licenses in various other countries where there is big business for us."

Reliance has obtained authorization from the United States to operate as a carrier for providing telecommunications services between the states and foreign countries, and has already established two points of presence in New York and Los Angeles. Reliance also plans to set up such points in the United Kingdom shortly, from where it plans a similar distribution traffic to other neighboring countries in European nations.

The license approved by the U.S. Federal Communication Commission enables Data Access to become the first Indian telecom service provider to offer services to the entire American continent, including Caribbean countries, Latin America and Canada. To facilitate operations, Data Access has already set up points of presence in Denver, Jersey City and Los Angeles. This license will also allow Data Access to become a national long distance player in the U.S. market.

Both companies said that their acquisitions of licenses in the United States would enable them to offer calls to India from the states at low prices. Data Access said that it plans to offer call rates of 25 cents per minute whereas Reliance said it can offer at 15 cents. Currently, U.S. carriers charge about 42 cents for calls to India.

Reliance and Data Access are not the only ones that have the ambition of taking offshore the rate war that has been unleashed in India. BPL Mobile, one of the largest mobile phone operators in the country, announced recently that it has entered into a strategic alliance with Data Access to introduce a pre-paid international world phone card in Mumbai. Branded as "Mots," BPL Mobile said that this card too would offer rates matching "the industry's best rates."

A telecom rate war had been simmering in India for the past 18 months before it finally boiled over in the second week of January. The trigger was the newest entrant, the privately-owned basic telephone operator Reliance Infocomm's much-hyped launch of its services. Reliance not only promised to usher in cheaper basic phone services but it also promised mobile services at a price less than one-third of what mobile operators were charging in the country.

Mobile operators said that they couldn't match these prices and retaliated by refusing to allow any calls originating from any basic operator to pass through their networks. That angered the country's two biggest basic telephone operators — the state-owned Bharat Sanchar Nigam and Mahanagar Telephone Nigam — and they struck back by blocking mobile calls to their networks. For a brief while, it looked as if the country's telecom networks would get completely disrupted in the war between operators.

However, a crisis was averted when the government intervened and urged mobile operators to interconnect with basic operators immediately. In return, however, the government had to assure that through the country's telecom regulator, it would announce a policy that would protect the turf of mobile operators.

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