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DoT policy renders VSAT business unprofitable

The countrywide voice and data network, using VSATs, is now three years old. But for the four main players, other licence holders have opted out of the business, thanks to the lack of DoT's policy initiative.

Explaining the problems confronting the industry, Telstra V-Comm CEO Abu Shafquad said "Initially, there were 13 licence holders in the industry. This could have been a high-growth area. But DoT restrictions are making the industry sick."

Telstra V-Comm, which ranks second after HCL, was the first to get the licence for providing VSAT services. The company is a joint venture among the Australian Telstra Corporation, the Videsh Sanchar Nigam and the Infrastructure Leasing and Financial Services.

The Telstra V-Comm V-Mesh product offers high-quality voice and high-speed data communications. The 13 VSAT service providers included RPG Telecom, Wipro-BT, Shyam Telecom, HFCL, ITI, Natelco, Punwire and Zee TV. The companies now operating include HCL, Telstra V-Comm and Hughes-Escort.

VSAT operators recently formed an association to press their case with DoT and have held discussions with Telecom Commission Chairman A V Gokak.

Customers are unable to access DoT services in the absence of inter-connectivity, making VSAT costly. DoT has advanced the plea that allowing free access will mean revenue losses. The fear led the department to reject a VSAT proposal from Reliance Industries for its internal application. Though the company was willing to cough up DoT's 'potential loss', the department could not evaluate the amount and the proposal was rejected, sources said.

Operators saw no reason why the VSAT industry should go bankrupt in a country with such a large potential. Big public sector companies and banks are considered sure-shot customers. The public sector, though, is yet to take a policy decision on the issue, Shafquad said. Operators have to pay Rs 10 million to DoT as licence fee for VSAT operations.

The full benefit of the service is not reaped because of frequency restrictions. Lack of sufficient customers has meant that no company has reached the takeoff stage so far, Shafquad claimed.

Operators say DoT is unable to optimally use its transponder space. DoT's contention is that it has to first look after its commercial interest before favouring private operators.

Telstra V-Comm has established its digital DAMA net service to support customers with the need for voice and medium volume data transfer at speeds of up to 64 kbps.

- Compiled from the Indian media

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