India Roundup: Partnerships & Politics

It's another action-packed week in India's bustling telecom space, with everything from contract awards and M&A activity to political changes and a war of words between mobile operators and ISPs.

Dig in to this roundup of spicy snippets from the last few days:

  • Nokia Networks said Thursday it's bagged a $500 million contract from mobile operator Idea Cellular Ltd. The two-year agreement will see it provide network equipment and managed services to India's fifth-largest mobile operator in six regions of the country as part of IDEA Cellular's push to double its network capacity and extend coverage to new users. IDEA, which has 14.56 million customers, operates in 11 of India’s 23 regions. The carrier awarded a three-year deal to Ericsson AB (Nasdaq: ERIC) in February to manage the other 5 regions. (See Ericsson Wins in India.)

  • Nokia Siemens yesterday announced a global partnership with Bangalore-based OnMobile , a value-added services startup. Nokia will integrate and market OnMobile's ringback tone product into its Music to You (M2Y) download platform. (See NSN Integrates OnMobile.)

  • India's Economic Times reports that U.K.-based mobile virtual network operator (MVNO) Virgin Mobile Telecoms Ltd. is forming a 50:50 joint venture with Tata Teleservices Ltd. The newspaper notes that MVNOs are not yet permitted in India, so Virgin will license its brand and value-added services to Tata. Tata will remain focused on the mobile market as a whole, while Virgin-branded services and handsets will be marketed to India's fast-growing youth market.

  • The Times also reports that the U.K.'s Cable and Wireless plc (NYSE: CWP) has received approval from the Foreign Investment Promotion Board (FIPB) to offer long-distance services in India. C&W will be the third international carrier to receive a license after BT Group plc (NYSE: BT; London: BTA) and AT&T Inc. (NYSE: T) and, like those companies, will need to find a joint venture partner to comply with regulations. Verizon Communications Inc. (NYSE: VZ) has reportedly formed a joint venture with Videocon Group to enter the long-distance market but is yet to gain approval.

  • YOU Telecom , a cable broadband provider formerly owned by utility British Gas, has acquired regional ISP IceNet Ltd. for its corporate and VOIP services. (See YOU Telecom Buys IceNet.) In a statement, the company claimed recent recommendations on broadband and ISPs from the Telecom Regulatory Authority of India (TRAI) touched off a consolidation among ISPs, as national service providers look to beef up their operations and add new service offerings. The operator indicated the acquisition of IceNet and its experience in providing VOIP services will "further help YOU Telecom’s triple play ambitions."

  • The regulator's recommendations have also sparked a war of words between the Cellular Operators Association of India , an industry body representing GSM operators, and the ISP Association of India (ISPAI) over VOIP. In essence, mobile operators object to ISPs entering their turf and offering voice services, because they pay lower license fees, while the ISPAI is complaining that the recommendations don't go far enough -- ISPs would still not be permitted to terminate VOIP calls on landlines or mobiles.

    On its Website, the ISPAI claims the "TRAI recommendations on Internet Services are shocking to say the least and are against the interests of the Internet Industry and the consumer." It also highlights in bold font (for that extra bit of emphasis) a comment from ISPAI president Rajesh Charia: "all telecom operators have been permitted to provide unrestricted internet telephony from April 2006, but not a single player offers this service. When they deprive Indian citizens of cheap and highly economical telephony, they have no authority to make such narrow minded statements."

  • Continuing the theme of government-related spats, Dayanidhi Maran, India's IT and communications minister, was pushed to resign Monday, a casualty of internal party politics that have nothing to do with telecom but have made waves across the industry. Maran has been credited with promoting key initiatives that have contributed to the industry's rapid growth, such as attracting foreign equipment vendors to invest in India, reducing bandwidth, broadband, and call charges, and kicking off 3G policy.

    All eyes in the IT and telecom sectors are now on his successor, Andimuthu Raja, to see how much of Maran's agenda will continue. It's clear some of his policies -- like a measure to slash roaming fees as of June 3 -- will at least be delayed. In his first press briefing Wednesday, Raja focused on rural coverage and attracting foreign investment, steering clear of the more controversial issues of spectrum allocation and 3G.

    — Nicole Willing, Reporter, Light Reading

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