WiLL causes controversy in India

20 Jan 2003

A fierce battle has ensued between India’s cellular operators over the introduction of low cost wireless in the local loop (WiLL) services by Reliance Communications [RELI.BO] and the Tata Group [TTTL.BO]. The new WiLL offerings, which enable limited communication within towns and cities at a much lower price than cellular telephony, led domestic mobile providers to slash call charges. Some operators subsequently blocked their networks to prevent interconnection with the WiLL providers in an attempt to curb expansion. India’s state-owned fixed line giants, which appear to be siding with Reliance and Tata, are believed to have retaliated by stopping thousands of mobile users from making calls to fixed networks. The Cellular Operators Association of India (COAI) has accused the country’s regulatory bodies of favouring the WiLL operators, adding that the cellcos are unable to match WiLL rates because of the call termination charges they are required to pay fixed line providers. The state has ordered cellular operators to interconnect with the WiLL firms, although they have thus far failed to comply and have instead lodged a complaint with a telecoms tribunal. Industry watchers have blamed the government for the situation, stating that all operators should have been granted licences with the same terms and conditions.

Although the dispute is currently threatening the stability of India’s mobile sector, local operators appear to be flourishing regardless. Market leader Bharti Televentures [BRTI.BO] has published strong third quarter financials, with losses narrowing to INR70.7 million (USD1.47 million) for the three months to 31 December 2002, from INR417.5 million a year earlier; sales for the period doubled to INR8.47 billion. The launch of 16 new projects, as well as considerable subscriber growth, fuelled the positive performance; Bharti ended the year with 2.77 million mobile customers, up from 1.11 million a year earlier and an increase of 21% quarter-on-quarter. Fixed line customers numbered 317,220, with the company having added 56,246 in the third quarter alone.