Reliance-FLAG wins case

Reliance Communications-owned FLAG system has won a case against Tatas-owned Videsh Sanchar Nigam Limited in the International Court of Arbitration, which makes it eligible for upgrading capacity of international bandwidth, a move that could result in lowering of prices.

VSNL, however, claimed that the company has been reducing the prices of international bandwidth constantly and these have come down by almost 90 per cent since 2000 but added that telecom regulator also determies the prices.

FLAG has been allowed to have access to the landing stations at Mumbai, which was till now under the control of VSNL exclusively.

Sources said the development may not have any financial impact on VSNL.

According to sources, access to landing stations would make little difference as it handles a very little portion of inter-national bandwidth at Mumbai landing station.

"The disposition of International Court of Arbitration would mark the end of VSNL's stranglehold on the international bandwidth sources in India which would result in rationalisation of international bandwidth prices," Reliance Communications source said.

VSNL, in a separate communique to the stock exchange, said the international arbitrator had ordered the company to grant Flag access to the Mumbai cable landing stations of the FEA cable system.

The dispute related to the interpretation of certain provisions of the Construction and Maintenance Agreement governing the Flag East Asia cable system, to which Flag and VSNL and other parties were signatories.

On the issue of Flag claiming damages in lieu of loss of revenue/market, VSNL said: "the company, at this stage, is not in a position to estimate the financial consequences of this award, if any, and in what time frame these would become applicable, if at all."

VSNL officials declined to comment on the development. 

Sources said that India has a capacity of 500 gigabits of international bandwidth and permission to grant upgrade capacity and sell it may not have amy significant impact either on the prices or its availability.

 FLAG would be able to upgrade its capacity to 80 gigabits, a Reliance source said.