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Private operators cry foul over ISPs' plea — TRAI may not allow domestic Net telephony

12-January-2004
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Private operators cry foul over ISPs' plea — TRAI may not allow domestic Net telephony

The Telecom Regulatory Authority of India is unlikely to accept the plea by Internet service providers (ISPs) to allow them to offer Internet telephony services for national long-distance calls, following the objections raised by private telecom operators.

ISPs can currently offer Internet telephony services for transmitting voice only from PC to PC both within the country and outside. PC-to-telephone voice transmission is allowed only for calls outside the country.

The ISP Service Providers Association of India recently wrote to the authority seeking permission to offer unrestricted Internet telephony services within the country and even offered to pay five per cent of aggregate gross revenues as licence fee.

According to official sources, the private telecom operators opposed this move stating that it would distort the level playing field that has been brought about as a result of the universal access service licence regime (UASL).

They contended that this proposal should not be accepted since they had paid huge entry fees to offer national long-distance services while the ISPs have only paid a token one-rupee entry fee.

Also, Internet telephony is a service wherein there are no settlement rates or mechanisms. It works on a concept of `sender keeps all' and its bypass of traditional settlement systems is its greatest cost advantage. Therefore, Internet telephony works out cheaper than public switched networks.

Those operators who have paid high entry fees and revenue share to offer the same services would be affected and it will disincentivise infrastructure growth. IP telephony will not achieve Internet penetration as envisaged, since it will only be a cheaper replacement of long-distance voice business, they said.

The private operators have said that in most markets where Internet telephony is popular, the domestic telecommunications industry is competitive and mature with high tele-densities and sustained average revenue per user.

Internet telephony is another revenue stream for ISPs, which is still is not slated to overtake the current Internet business or its potential, and, therefore, is hardly a revenue stream that is going to subsidise Internet penetration, let alone grow it.

Unrestricted Internet telephony will only create an arbitrage opportunity in the telecom space, which will leverage on an unbalanced growth model in the telecom sector.

The ISPs will only focus on category A circles and metros, since operating in these areas is cost-feasible in the light of bulk revenue, they added.

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