Wednesday, August 24, 2005 - Bangladesh Telecom

WorldTel loses legal battle for PSTN monopoly

The Appellate Division of the Supreme Court on Tuesday upheld a High Court verdict cancelling the four-year exclusive rights of the UK- based company WorldTel, permitting the government to allow more private sector landline operators in the central zone.

A full bench of the Appellate Division, comprising the chief justice, Syed JR Mudassir Husain, Justice Mohammad Fazlul Karim and Justice Amirul Kabir Chowdhury, rejected the petition filed by the WorldTel Bangladesh Limited, seeking leave to appeal against the High Court’s verdict.

The High Court on April 23 rejected the WorldTel petition challenging a government move to cancel a clause in the agreement that stopped it from opening up the area to other operators before four years have elapsed.

Welcoming the Supreme Court’s judgement, the officials of the Bangladesh Telecommunications Regulatory Commission (BTRC) said that the verdict has enabled the commission to invite applications for the central zone or Dhaka Multi-Exchange for other private sector operators.

The multi-exchange area covers Dhaka city, Jinjira, Savar, Narayanganj, Gazipur and Tongi, which account for, according to the commission, about 60 per cent of the total telecom demands of Bangladesh.

‘There is demand for around 25 lakh landline phones in the central zone right now,’ said a BTRC official, adding that least 10 companies could easily be given licences to operate in the zone because of the huge demand.

The officials of the commission said that BTRC will start the process to invite applications as soon as possible to meet the huge demand for landline connectivity.

The officials said most of the companies, which obtained licences for other zones, are waiting for Dhaka city to be opened up to private operators as the area is the most lucrative.

The UK-based WorldTel obtained a licence in July 2001 from the government to provide 3,00,000 landlines in Dhaka city at an investment of about $300 million on a build-own-operate basis with a four-year exclusive right.

The commission invited bids for private landline operation on February 17 under the open licence system in four zones, out of the five zones segmented by the commission, and has so far awarded about 35 licences to 19 companies for operation in the north-east, south-east, north-west and south-west zones.

But Dhaka city has been left out of the open licence system as WorldTel issued a legal notice to the Ministry of Posts and Telecommunications in January 2004, preventing any move to open up the area to other operators.

But in May 2004, the BTRC cancelled the exclusive rights of WorldTel, terming the clause anti-competitive and violative of the Telecommunications Act-2001, which stipulated opening up the telecom sector to more private sector operators.

However, following cancellation of the exclusive rights, WorldTel filed a writ in the High Court challenging the BTRC’s decision, which was rejected by the High Court on April 23 this year.

The full bench of the Appellate Division of the Supreme Court on April 27 ruled on a status quo and stayed the High Court’s ruling after WorldTel’s appeal against the High Court’s verdict, and also directed BTRC not to issue licences to any other private operators.

Meanwhile, the WorldTel is likely to begin commercial operation by November to provide about three lakh landline connections in phases.

In April, WorldTel signed a $120 million agreement with Chinese telecom equipment manufacturer, ZTE Corporation, for installation of CDMA technology to operate according to the wireless local loop system.

The commission, earlier, fixed the licence fee for Dhaka at Tk 5 crore and renewal fees at Tk 2 crore.

Private sector PSTN operators, who got licences from the commission for other zones, welcomed the Appellate Division’s verdict.

Quamrul Islam Siddique, managing director of Dhaka Telephone, which got licences for four zones, said that they are happy at the Supreme Court’s verdict and hoped that the commission would soon invite applications to allow private PSTN operators in the lucrative central zone.

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