INDIA'S PHONE MONOPOLY PULLS THE PLUG ON NET TELEPHONY (int'l edition)
VSNL is trying to block cut-rate overseas Net calls
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Talk may be cheap, but not in India. The state-owned phone company, Videsh
Sanchar Nigam Ltd., or VSNL, currently charges $2.20 per minute to call the
U.S.--more than double AT&T's business rate of $1.03 the other way around. In
addition to holding the monopoly on overseas calls, VSNL also is India's sole
provider of access to the Internet. So when foreign companies began offering
Indians rates as low as 10 cents a minute to make calls via the Net, VSNL got
nervous.
India's telephone monopoly is so nervous, in fact, that it has started blocking Web
sites that offer Internet calling. On top of that, it has threatened to cancel users'
Internet accounts if they make calls or send faxes through the Internet. The
restrictions have incensed Web users and sparked a debate about free speech,
unfettered access to information, India's business competitiveness, and access to
India's telecom markets. ''VSNL is not empowered to censor the Internet,''
complains New Delhi cyber-rights activist Arun Mehta. He petitioned the
Telecom Regulatory Authority of India demanding that VSNL stop blocking the
Web sites. Justice S.S. Sodhi says the authority is looking into taking action.
''UNSCRUPULOUS ELEMENTS.'' But VSNL claims the right to take action
against Net telephony. Operations Director Amitabh Kumar says VSNL is ''not
obligated to provide access to those sites.'' And Chairman B.K. Syngal says
Internet telephony ''clutters the Internet'' and would disrupt India's Internet service
if allowed to go on unchecked. Still, he admits that VSNL may soon get in on the
action itself with its own Internet telephone service--for an additional price.
''People should learn to pay for additional service,'' says Syngal, calling those who
complain of blocked Web sites ''unscrupulous elements.''
In addition to blocking the sites, VSNL sent E-mail messages to its 50,000
subscribers earlier this year, warning them against making Internet calls, which the
company deems illegal. VSNL officials said that any customer found making
Internet calls would be cut off from all future use of Internet services. It looks like
a bluff, however. So far, no one has had an Internet account canceled, and
techies in India say it is virtually impossible for VSNL to monitor such traffic.
The victims of the VSNL attacks are up in arms. Israel-based VocalTec
Communications found its Web site and E-mail from its domain addresses
blocked in January. It responded by frequently moving sites to keep one step
ahead of VSNL. But its executives are frustrated. ''It reminds us of things that
happened before the Berlin Wall fell,'' says Ohad Finkelstein, a VocalTec
vice-president. He says the Indians are fighting a losing battle, since ''technically,
there's nothing you can do to stop it.'' Indeed, Indian techies have been able to
keep up, finding ways to hack around VSNL's efforts to block access. New
Jersey-based IDT Corp. reports that business from India has grown 20% to 25%
per month this year despite the restrictions.
TEAM OF SLEUTHS. India's latest roadblock to foreign telephone service
comes after years of battling against callback services. The services, such as
Seattle-based Kallback, enable those with access to foreign currency to make
international calls through U.S. carriers and be billed at the half-price U.S. rates.
VSNL estimates that it loses about 10% of outgoing calls that way. That meant
lost revenues of about $41 million last year for VSNL's parent, the
Telecommunications Dept. VSNL has spent five years trying to squelch the
callbacks by blocking access to the telephone numbers for the services. But local
agents for half a dozen such companies have been using unpublished numbers to
register new customers. So VSNL has a team dedicated to searching for new
callback ads and blocking those numbers, too.
Plenty of other people simply use the more old-fashioned ''call-me-back'' routine.
In fact, according to the U.S. Federal Communications Commission, high VSNL
rates have caused the volume of phone traffic from the U.S. to India to be 10
times greater than the volume from India to the States. While U.S. phone
companies get higher revenue and volume, they are forced to pay the Indian
government to connect all the calls. U.S. officials grumble that the towering
interconnect charges added $300 million to the U.S. trade deficit. That prompted
the U.S. to hold ongoing high-level talks urging VSNL to drop their
prices--something no one expects anytime soon.
In an effort to bring down costs of doing business, most industrial nations have
started deregulating their telephone markets rather than wage a war against new
technology. In India, things clearly are different. VSNL seems ready to use every
weapon to protect its monopoly profits.
By Amy Louise Kazmin in New Delhi, with Sheri Prasso in New York
Updated Apr. 30, 1998 by bwwebmaster
Copyright 1998, by The McGraw-Hill Companies Inc. All rights reserved.
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