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Trai slashes bandwidth rates by 71%

12-March-2005
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Trai slashes bandwidth rates by 71%

Trai to revise leased circuit tariff structure for domestic bandwidth in a week.

The Telecom Regulatory Authority of India (Trai) today set in motion further cuts in Internet, broadband and international call rates by slashing international bandwidth tariffs by up to 70 per cent.

Today’s move is expected to have a limited impact on service providers and consumers, but Trai Chairman Pradip Baijal said the regulator would announce a revised leased circuit tariff structure for domestic bandwidth within a week.

Operators said the combination of lower international and domestic broadband tariffs would help consumers get cheaper services as long-distance telecom service providers, BPO units and Internet service providers would be able to pass on the gains.

Trai today reduced the tariff on the three most commonly used speeds for international private leased circuits, the medium for carriage of voice and data traffic provided largely through submarine cables in India.

In addition, the three Indian leased circuit service providers — Bharat Sanchar Nigam Ltd, Videsh Sanchar Nigam Ltd and Reliance — are free to go below the floor tariff.

From April 1, the tariff for E1 (the slowest lane at 2 mega bits per second) will be 35 per cent lower at Rs 13 lakh a year, while the tariffs for 45 MBPS and 155 MBPS will be 70 per cent less at Rs 1.04 crore and Rs 2.99 crore, respectively. For speeds below 2 MBPS, the regulator has left the rates to the market.

Baijal said leased circuit service providers did not stand to lose revenue as more capacity would be used due to falling tariffs.

"It is bound to have commercial implications, but it is too early to comment," said a Reliance executive. Reliance and VSNL refused to divulge plans.

BSNL, however, said the order would have a small impact on international call rates. "Bandwidth is just one of the issues. Carriage costs and termination charges also need to be addressed," BSNL Director (Finance) SD Saxena said.

Users like BPO firms said today's Trai tariffs were the same as those released in a consultation paper last April. "International tariffs have fallen and India still does not compare with the global tariff structure," said an executive with a BPO firm.

"There is scope for 90 per cent reduction (of tariffs) for some speed lanes," said Internet Service Providers Association of India President Amitabh Singhal.

The move would see increased bandwidth use, leading to lower Internet charges, higher quality and increased Internet use, Singhal added.

Trai also said it would seek the industry's view on easing cable landing facilities and making the international private leased circuits market more competitive. The regulator said it had been forced to intervene because of inadequate competition.

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