Is India about to become a telephonic Tower of Babel? Are we about to descend into a nightmare turned reality where 10 million mobile phone users won't be able to talk to anyone hooked into the BSNL or MTNL networks? Where customers who've bought limited mobility services from Tata Teleservices or Reliance won't be able to communicate with mobile phone users in different parts of the country?

This isn't just an alarming possibility. It has actually happened in different parts of the country. On Friday evening cellular operators like Hutch were up in arms alleging that MTNL had started selectively blocking their calls in parts of Delhi.  At the same time, BSNL charged that the cellular operators were blocking their calls in three states.

Already in Andhra Pradesh, Tamil Nadu, Karnataka, Gujarat and Maharashtra over 200,000 Tata Teleservices customers have been left holding the receiver because they can't connect with mobile subscribers.

Cross the country to Punjab. Here, HFCL -- a basic service operator with 100,000 subscribers -- found that two mobile operators Bharti and Spice Telecom have been blocking its calls. Says S Ramakrishnan, managing director, Tata Teleservices: "Consumers have been put in the cross-fire.They are the ones who are getting inconvenienced." Adds Mahendra Nahata, chairman, HFCL: "My customers are suffering. How can you arbitrarily block my calls without giving me a adequate warning or having a discussion."

Will the Great Telephony War of 2003 get worse before it gets better? It looks very likely. A week of fast-moving developments was capped on Friday evening when the cellular operators approached the telecom tribunal TDSAT against the Telecom Regulatory Authority of India order to start taking calls from WLL operators.

The TRAI had given the mobile phone operators a 72-hour deadline to explain why they weren't taking calls from WLL operators.

But the disruption could get even worse now that the two telecom giants BSNL and MTNL have joined the scrap. They first shot off letters to the mobile phone operators threatening to stop carrying their calls.

Why are BSNL and MTNL -- which between them control 80 per cent of the

country's telephone users -- getting into the fight? The two companies say that the mobile phone operators have been blocking calls from WLL phones to mobiles that are routed through BSNL and MTNL (these are called transit calls).

Both the companies collect 50 per cent of the revenue from such calls and say they've been hit by the cellular operators' ban.

The war has already taken its toll on some companies' efforts to win new subscribers. In Delhi Tata Teleservices executives say that only about 8,000 customers have signed on for their WLL (wireless in local loop) services launched a month ago. One reason for the lukewarm response: WLL customers can't talk to mobile phone users in the Capital.

Of course, the worst hit could be Reliance Infocomm, which has just launched its WLL services in over 672 cities all across the country. Reliance Infocomm has ambitious plans to sign on 4 million customers in the next 12 months. But that could be a tough proposition as customers play a wait-and-see game. The company doesn't have interconnect agreements with any of the mobile operators yet.

Adding to the chaos is the stiffening stance of both the cellular operators and the TRAI, which is clearly backing the WLL mobile operators. Says Rajeev Chandrasekhar, chairman of BPL's mobile business: "You cannot ask cellular customers to subsidise WLL customers' cheap rates. This is grossly unfair. We have been knocking at their doors but it is of no avail."

What are the ways back from the brink? The cellular operators have suggested several exit routes. Their biggest grouse is over the access charge of Rs 1.20 for every three-minute call made to a fixed line or WLL phone. WLL operators don't pay this fee. The cellular operators say the playing field between them and the WLL operators could be levelled if the TRAI changes the rules and stops charging them the access charge.

Alternatively, they suggest that the playing field could be levelled in another way by asking everyone to pay termination charges for calls that end in their respective network (at the moment fixed line providers pay nothing). Either way it will mean that customers won't get the dream tariffs of 40 paise a minute promised by the WLL operators.

Says a WLL operator: "Of course our costs would go up in both the cases. If we pay termination charges it means loss of revenue to us and will have to be compensated by increased tariffs or rentals. Alternatively, if the cellular companies don't pay Rs 1.20 our revenues will go down."

Trouble could also come from a different direction. The fixed line operators are lobbying for higher local call rates: they want to charge Rs 1.20 for 90 seconds instead of the current three minutes. If TRAI accepts their demands, the cost of WLL calls (which are presently the same as basic call rates) would effectively double.

The uncertainty has now been increased by the possibility of a high profile legal battle. The cellular operators are upping the ante by going to TDSAT against the regulator. On one hand, if they do get a stay it would put the WLL operators in a very tough position because there would be a question mark over their service and this would deter customers from signing on.

What happens if they don't get a stay? They are hoping for a ruling that any decision on interconnect will be with retrospective effect. Says a cellular operator: "If TDSAT gives us an adverse judgement we will go to the higher courts."

At another level, the cellular operators are also taking on the state-owned giants. For instance, Bharti has shot off a letter asking BSNL to withdraw its letter threatening disconnection. Bharti argues that its agreement with BSNL does not allow transit calls from a third party, which is what BSNL has been doing in many circles.'

Simultaneously, the cellular operators are also leveraging on the uncertainty in the customers's minds. They are getting ready to offer better rates than ever before. On the anvil are new schemes, which will probably be announced next week. Under these customers will get free incoming cell to cell calls across all GSM networks. The only question left is when it will be announced. Also on the anvil are cuts in international long distance tariffs from Rs 24 to Rs 11.99.

At the same there's also a push for political intervention. One key cellular player has asked for a meeting with Prime Minster Atal Bihari Vajpayee. A well known south-based chartered accountant has been roped in by some cellular operators and asked to take up the issue with deputy Prime Minister L K Advani. In fact, insiders say that the cellular operators want to create a crisis situation and force the government to intervene.

At the same time the cellular companies are  keeping the doors open for negotiation. The cellular operators say they'll offer interconnection to WLL players as long as both sides pay the same tariffs. Bharti shot off a letter on Thursday to Reliance Infocomm saying it was ready to pay Rs 1.20 as access charge provided Reliance paid the same amount as termination charges for their calls.

But basic service operators are also digging deep into their arsenals. Astonishingly, the crisis has brought the Reliance Group and the Tatas together on the same side. That's quite an event because it's an open secret in the corporate world that there's little love lost between the two sides. The two sides are meeting over the weekend and may hold a joint press conference under the aegis of the Association of Basic Telecom Operators.

Says S C Khanna, secretary general, ABTO: "Yes all our key members are talking to each other to see whether we should make our position clear in public. We will take a decision soon."

There are, of course, difficulties in bringing all ABTO members together. That's because many members -- like Bharti --are also cellular operators. Says an ABTO member: "That's why some of our members are shying away."

A host of unknown consumer groups, which support WLL are also poised to get into the battle. One group has already released a series of ads in leading newspaper and that could be a prelude to a legal challenge.

The basic service operators are also planning to approach TRAI to expedite the reference interconnect agreement which is expected by January end. The reference agreement should outline a way of settling interconnection disputes.

What's the way out of the imbroglio? There's a faint possibility of an interim agreement. Tata Teleservices has already offered to meet the cellular operators half way -- it is ready to pay a 60 paise termination charge if the cellular companies pay the same charges.

Says Ramakrishnan: "We have offered that we will go half way and even offered to securitise the disputed amount which the cellular operators have been asking for as part of the interconnectivity agreement."

But a settlement won't be easy as both sides flex their muscles. And while the telecom operators fight, customers may have to wait for a while before they make any choices.

Static on the line

It is a golden rule followed by Indian businessmen: don't take on the government. In more recent times there's been a new golden rule: don't take on the industry regulator.

So, the cellular companies are breaking all the rules by taking on the government and the industry regulator? The cellular operators say there's no cost difference between GSM and CDMA technology used by WLL operators. But the WLL operators offer cheaper calls because the government has favoured them on access charges and licence fees.

Take a look at access charges. Cellular customers pay Rs 1.20 for three minutes every time they call a fixed line number or a WLL customer. This money is paid to the fixed line or WLL operator. But it doesn't work the same way in reverse. This, naturally, helps WLL operators to offer rock-bottom rates.

Says Virat Bhatia, managing director, AT&T: "Each GSM customer pays over Rs 1,600 extra every year as access charge. It is this money that helps fixed line and WLL operators to keep their calls at 40 paisa a minute and give incoming free. Give us similar terms and we will also give you the same."

Then, there's licence fees. The cellular operators have paid over Rs 9,000 crore (Rs 90 billion) for licences. By contrast, their competitors paid nothing to operate WLL services. Says Vikas Saraf, CEO, Essar Teleholdings:  "The licence fee constitutes more than 40 per cent to 50 per cent of my capital investment. How can I offer the same tariffs."

The cellular operators also accuse the regulator of double standards. It responded rapidly when Tata Teleservices complained that its WLL calls were being blocked by the cellular operators. But it dilly-dallied for nine months when Bharti had an interconnection dispute with BSNL.

Naturally, the basic operators have a different viewpoint. They point to the obligation to rollout and operate in rural areas and that they can't charge airtime and aren't allowed roaming. Says an ABTO member: "Basic service operators were allowed WLL as otherwise no one would have found it viable.  These licences cannot be equated."

Instead, the basic operators argue that cellular operators should pay the access charge from the airtime they earn.

The basic operators also argue that their licences cost almost Rs 2,500 crore (Rs 25 billion). That's against a bank guarantee of Rs 3,000 crore (compared to only Rs 250 crore paid by GSM operators without any roll out obligation).

The basic operators also accuse the cellular firms of selective discrimination. The cellular firms have signed interconnect agreements with BSNL and MTNL, which both offer WLL. But they are refusing to sign with the less powerful private operators.