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Bandwidth players worried over proposed price cuts

03-September-2004
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Bandwidth players worried over proposed price cuts

International bandwidth service providers like Bharti, VSNL and Reliance have expressed concern over the proposed cut in bandwidth (international and domestic) prices.

These players are among the few bandwidth providers in the country. Reliance will soon offer these services in India. Fearing a price reduction on bandwidth, these players are believed to have made several rounds of the Telecom Regulatory Authority of India’s (Trai) office, lobbying for no change or minimum reduction in the bandwidth prices.

According to official sources, another meeting of these parties is scheduled for early September with Trai on the same issue.

The final decision on the international bandwidth and international private leased circuits (IPLC) is likely to be out in a week or two, according to sources.

Internet service providers (ISPs) and business process outsourcing (BPO) players are the major consumers of bandwidth, both domestic and international.

ISPs alone, consumed approximately 3 giga bits per second (Gbps) in the last fiscal ending March 2004.

The Internet service providers claim that the cost of IPLC is 33 per cent, while bandwidth providers maintain that it is not more than 10-15 per cent.

“We want the regulator to look at all components like reduction in custom duties on equipment, unbundling of last mile connectivity etc., to bring about a broadband revolution.

The reduction in bandwidth cost alone cannot help in bringing the broadband revolution,” Bharti Infotel broadband and data group chief executive officer Rajiv Sharma said.

Reliance and VSNL officials were unavailable for comments.

The tariff proposed by VSNL gives the ratio between E1 (2Mbps), DS3 (45 Mbps) and STM1 (155 Mbps) of 1:19:52. International comparisons show that the corresponding ratio for tariff abroad is considerabaly lower in countries like Japan, Singapore and China.

Trai paper says that ISPAI has suggested a ratio of 1:4:10 and National Association of Software and Service Companies (Nasscom) has suggested 1:7:18.

Trai sources confirmed that international service providers have met them.

According to an official of a leading telecom company, tariffs on international bandwidth should be brought down from Rs 1,250 per month for 256 kbps to Rs 600 per month.

“Only then the international bandwidth will become more affordable and the benefit will be passed on to the end consumers,” the official said.

Meanwhile, many ISPs are hoping that the decision on the bandwidth would at least indicate a reduction of 30-50 per cent.

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