Trouble for Tata Tele, Reliance Communications as oil companies go for VSAT connection
The move will likely give a blow to Tata Teleservices and Reliance Communications, which offer over 3,000 already working connections on CDMA mobile technology.
Indian oil marketing companies will use satellite internet connections for around 10,000 petrol pumps facilities like credit card machines, connecting to loyalty programme databases, and other inventory management applications.
The move will likely give a blow to Tata TeleservicesBSE -19.74 % and Reliance Communications, which offer over 3,000 already working connections on CDMA mobile technology.
"CDMA is cheaper but it is not continuous and requires the system to get a new IP (internet) address every time, which is not safe," said a person in charge, asking not to be named. Connection through satellite would entail a single internet address and can be secured more easily. "Plus the performance is patchy, we tried VSAT on some other pumps and it is much more reliable."
Bharat Petroleum, which is the consortium leader, is spearheading the move. Hindustan PetroleumBSE 0.38 % and Indian Oil, the other two in the group, are jointly going to issue a tender for satellite connections for these petrol pumps soon, the person said. The connectivity contract is worth around Rs 100 crore annually.
A mail to Bharat PetroleumBSE 0.96 % and Tata Teleservices went unanswered. Reliance CommunicationsBSE 2.45 % declined to comment.
Unconfirmed sources said that Reliance Communications services around 360 pump connection while Tata Teleservices has 3,500 BPCLBSE 0.96 % pumps and 850 HPCL.
The issue with satellite communication, which prompted oil companies to try CDMA, is the high capital expenditure to set up the dish and box to link up connectivity, much like the dish and box required for Direct-To-Home television services.
The state-run oil marketing companies have called for pre-bid presentations from Hughes Communications India, Bharti AirtelBSE -0.22 %, Nelco ( Tatanet) and HCL Comnet. The vendors are so far planning to offer incurring the capital expenditure themselves, and allow the oil companies to pay it over time.
Bharat Petroleum already has around 700 pumps that are using satellite connections for data services. The rental cost of the technology is about 20% higher than CDMA technology, but it comes with a service level guarantee like in the case of ATMs for banks, said the person quoted earlier. The average monthly spend on the CDMA network is around Rs 400, but, it comes with no commitment.
Source : http://money.rediff.com; ET Bureau