VSNL monopoly on international calls ends

India ended the monopoly on international calls held by state-controlled Videsh Sanchar Nigam Limited on Wednesday, marking the latest step in a sweeping boost to liberalisation in the telecommunications sector.

The monopoly would end in April, 2002, and meets a long-standing demand of private firms itching to enter the market. India was also committed to end the monopoly under World Trade Organisation agreements.

"The Cabinet Committee on Economic Affairs has decided that by April 1, 2002 VSNL's monopoly on long-distance international calls will be withdrawn and the area opened for private participation," Communications Minister Ram Vilas Paswan told reporters after a meeting of the CCEA.

The announcement came ahead of a visit to the United States by Prime Minister Atal Bihari Vajpayee on a tour aimed at boosting economic relations.

It also coincided with the start of an indefinite strike by more than 300,000 workers against moves to turn the state-run telecom services department into a company by creating shares. Unions said workers fear for their job security and pensions.

News of the monopoly's end dragged VSNL's stock down in Bombay.

Move ahead of WTO time-table

Vajpayee was scheduled to leave later on Wednesday. US telecom firms are among the keenest to benefit from the end of a state monopoly on telecommunications.

Last month the government ended state monopoly on domestic long-distance services by permitting an unrestricted entry to private firms.

Foreign investors are permitted to hold up to 49 per cent in domestic long-distance phone service companies.

The detailed conditions for private players in overseas telecommunications will be worked out later, officials said.

Besides having a monopoly on overseas telephony, VSNL is India's first and largest Internet service provider. It now faces competition in both sectors.

The government's announcement was in line with its efforts to boost the country's sagging telecom infrastructure sector to keep pace with rising Internet demands and the booming software sector.

The minister said VSNL would be issued an Internet service provider licence to operate all over the country.

VSNL's monopoly over international voice traffic from India was scheduled to run until 2004 under a World Trade Organisation pact but officials have said the government is under tremendous to end it earlier.

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