Financial Daily from THE HINDU group of publications
Saturday, Mar 12, 2005
Financial Daily from THE HINDU group of publications Saturday, Mar 12, 2005 |
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Regulatory Bodies & Rulings Info-Tech - Telecommunications TRAI slashes global leased line circuit rates by 70 pc — Bandwidth prices set to fall; BPOs, ITeS to benefit Our Bureau
New Delhi , March 11 INTERNATIONAL bandwidth prices are set to fall with the Telecom Regulatory Authority of India (TRAI) effecting up to 70 per cent reduction in international private leased line circuits (IPLC). TRAI has fixed a ceiling of Rs 2.9 crore per annum for a 155-mega bits per second (mbps) line compared to Rs 10 crore at present. The telecom regulator's move comes as a big relief to business process outsourcing units, IT-enabled services and Internet services providers who consume large amounts of international bandwidth. TRAI has pointed out that bandwidth accounts for almost 40 per cent of BPO's total costs. Industry associations, including Nasscom and Internet Service Providers Association of India (ISPAI), have been demanding a reduction in tariffs. The move was opposed by the country's largest international long distance operator, Videsh Sanchar Nigam Ltd, on grounds that market forces should determine the tariffs and not regulation. TRAI has, however, pointed out that the market forces in international bandwidth segment had failed to influence tariffs, which required regulatory intervention. "The charges for using the services of the international leased circuits were found to be higher in India than in many countries owing to lack of effective competition in the market. In India, there are only three operators who provide this service against 14 operators in Korea, 24 in France and 32 in Germany and the US (New York)," TRAI said in a press statement. As against 45 per cent (CAGR) decline in the IPLC rentals elsewhere in the world, the decline in India was only to the extent of 10 per cent. International bandwidth is the medium of carriage of data and voice services across countries in the world. The service is provided through IPLC on submarine cable systems and through satellite media. The providers of the service are the ILD operators. "The Authority also found that a competitively priced IPLC service is fundamental to achieve a higher rate of penetration of broad band in the country, which provides a basis for fundamentally transferring the socio-economic opportunities, particularly in rural India," TRAI said. The ceiling tariffs prescribed by this Order will take effect from April 1. TRAI has also underlined the need to remove bottlenecks in cable landing facilities and enhance competition in the IPLC market. This assumes significance in the light of the spat between Reliance-owned FLAG submarine cable system and VSNL over landing rights.
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