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In the latest twist to the ongoing fixed wireless phone (FWP) controversy, Bharat Sanchar Nigam Limited (BSNL) has issued a disconnection notice to Tata Teleservices Limited (TTSL) in all its circles. It has done so on grounds of non-payment of access deficit charges (ADC) by TTSL while offering its "Walky" FWP service.

However, the Supreme Court has asked BSNL not to enforce the notice of disconnection till at least mid-November. It has also barred BSNL from encashing the bank guarantee given to it.

Earlier, TTSL had escalated the FWP dispute by challenging the Telecom Disputes Settlement Appellate Tribunal (TDSAT) order in the apex court. TDSAT had classified Walky as a limited mobile service, and hence liable to pay ADC.

The TDSAT order stated: Walky should not be regarded as anything else but WLL(M) because, as per the licensing conditions, fixed wireless services have to be provided within the subscriber premises; wherever it is not, it has to be treated as WLL(M). TDSAT also directed TTSL to pay ADC, which is used to support BSNL's rural telephony rollout.

The Tatas approached the Department of Telecommunications (DoT), seeking three months' time to implement the TDSAT order. This was, however, refused.

For the Tatas, who have been offering the Walky service for more than a year, the ADC amount works out to a hefty Rs 3 billion as the levy would be calculated retrospectively as per the directive issued by DoT in early September, classifying FWP services as limited mobile services.

If the TDSAT order is implemented, TTSL will have no choice but to hike call tariffs to Rs 2.10 for a three-minute call compared to Rs 1.20 now.

TTSL has, of course, not been in favour of paying the ADC amount without exploring other possibilities. It has opposed paying the levy retrospectively, saying that customers who had subscribed to the service prior to the TDSAT judgment should not be considered as WLL(M) subscribers. It is currently awaiting clarification as to whether the existing subscribers would be affected by the TDSAT order or whether only fresh subscribers would be covered by it.

In fact, at the moment, most private FWP service providers including Reliance Infocomm, TTSL, HFCL and Shyam Telelink have indicated that they would contest the DoT order in the Supreme Court.

They contend that the directive not only removes FWP from the ambit of fixed or basic services, but it also means that the operators will have to shell out ADC, which would increase the tariff burden on users by over 80 per cent.

They point to the fact that almost the entire growth in the fixed line business in the past three years has come as a consequence of using WLL technology. Also, the impact of the order would be much higher in rural and geographically remote areas where laying of copper networks is very expensive and FWP may be the only solution. They have asked DoT to clarify whether FWP in rural India is to be recognised as a limited mobile service or not, which is not clear in the DoT directive.

Meanwhile, BSNL and the Cellular Operators Association of India (COAI) have filed a separate caveat in the Supreme Court to ensure they are heard. The COAI was the first to bring up the issue with DoT, stating that services like Walky are mobile services and operators should be made to pay ADC like other mobile service providers.

Going by the prevailing traffic pattern, BSNL officials have pegged the total ADC amount due to it from FWP service providers at about Rs 4.5 billion. BSNL has asked all its circle units to expedite the ADC recovery process from FWP service providers, which also means serving disconnection notices.

TTSL has appealed against such unilateral decisions by BSNL, which would in the long run hurt consumer interest. Also, TTSL officials point out, the notice issued by BSNL is in violation of a matter that is sub judice.

Whichever way the decision finally goes, it is likely to have long-term ramifications on the ongoing ADC dispute between the licensor and the regulator.