India's phone firms play dirty

India has a mobile penetration level of only 4.5%

A bitter dispute between India's mobile phone operators and traditional telecoms firms has escalated to the level of blocking calls.

The dispute has turned so serious that all development has come to a halt

P.K. Sandill
industry expert

Tens of thousands of mobile users were cut off from making calls to fixed-line phones over the weekend.

The row was caused after the state regulator ordered the older mobile phone firms to offer low-cost wireless access to new market entrants and state firms.

But the Cellular Operators' Association of India says the regulator is unfairly favouring the new entrants and is refusing to provide them with access.

Cell firms Hutchison Essar and Bharti said they had last week received threats of disconnection from the state-run fixed-line firm MTNL and blamed that firm for the weekend's chaos.

Slashed prices

The long-running dispute over access has bounced between the government and a telecoms tribunal and has also reached India's highest court.

"The dispute has turned so serious that all development has come to a halt," said P.K. Sandill, a leading telecoms industry expert.

Powerful Indian firms, such as Reliance and Tata, have ambitious plans to roll out limited mobile phone services through the local loop.

The increased threat of competition has already caused the existing cell firms to slash prices.

Shiny example gone wrong

Mr Sandill said the root of the problem was the fact that the government had not given one composite licence to all the operators at the outset, with the same terms and conditions.

"It has become a difficult issue and the government has to do something which gives all the operators a feeling of a level playing field," he said.

India's mobile phone industry is growing dramatically and is expected to have 120 million users by 2008.

It has often been held up as an example of the country's determination to press ahead with economic reforms and open up its state firms to competition.