In what will boost broadband and Internet penetration in the country, the Telecom Regulatory Authority of India (Trai) has suggested upto 75 per cent cut in domestic leased circuit rates. In a consultation paper released on Tuesday, Trai proposed a downward revision of tariff applicable for domestic leased circuits.
According to a Trai press note, “The proposed revision in tariff in respect of 2 Mbps and 64 Kbps for beyond 500 kms distance would mean a reduction of about 63 per cent and 75 per cent respectively from the existing ceiling tariff in respect of these categories.”
For example, the revised ceiling tariff for capacities of 2 Mbps and 64 Kbps for ’beyond 500 kms distance’ comes to Rs 8.20 lakhs and Rs 24,000 respectively, it added.
Apart from accelerating broadband and Internet growth, the reduction in rates would also help the IT and BPO industry, according to Trai.
“Bandwidth being a crucial input for information technology (IT) and IT enabled services industries, reduction in the cost of bandwidth would go a long way in enhancing the competitiveness of these industries in the global market. Reduction in tariffs will also lead to higher growth, as witnessed in the mobile telephony and consequently much better capacity utilisation of networks and improvement in profits of service providers,” it said.
The regulator said that the methodology of cost estimation adopted in this consultation paper is that of a ’bottom-up approach’. The cost of various operators was taken into account for normating the cost of providing the domestic leased circuit.
The factors necessitating for such an exercise include the need to bring down the cost of bandwidth in the country to make user industries of bandwidth globally competitive and to promote broadband and Internet access, points out the Trai note.
The Authority in its document, “Broadband India: Recommendations of Accelerating Growth of Internet and Broadband Penetration” (released in April this year) has already identified the high prices of domestic leased circuits and international circuits as one of the major hurdles preventing growth of Internet and broadband services. It has already issued a consultation paper on ’Fixation of Ceiling Tariff for IPLC (International Private Leased Circuits)’.
This consultation paper proposing revision of existing tariff for domestic leased circuits is a sequel to the efforts in reducing the cost of bandwidth in the country. The regulator has asked for comments and views on any or all issues raised in this paper on or before 15th July this year.