The Hindu Business Line : Bandwidth prices set to crash

If all the three operators decide not to resort to any revision in the near future, TRAI may step in and revise downwards the existing ceiling on the tariffs being charged for international leased bandwidth.

New Delhi , April 4

WITH BSNL triggering a downward revision in ISD call charges, it is now the turn of international data tariffs to come tumbling down.

According to industry sources, international long-distance operators (ILD), in particular Reliance, VSNL and Bharti, are likely to reduce the tariffs for international bandwidth by over 50 per cent soon.

It is expected that the first salvo will be fired by Reliance, whose subsidiary, FLAG Telecom Ltd, has been allotted additional bandwidth capacity by VSNL.

Reliance had earlier complained to the Telecom Regulatory Authority of India that FLAG, which owns and manages an extensive undersea optical fibre network, was being prevented by VSNL from selling international bandwidth at competitive rates to IT-enabled services in the country.

Following the authority's intervention, both sides reached an agreement whereby an additional capacity of about 2.65 gbps is to be available from this week.

Sources said that during the height of the dispute between both the groups, Reliance had announced that that it was willing to reduce prices of international bandwidth by up to 70 per cent if the access to bottleneck facilities (landing station), currently with VSNL was opened up for competition at fair market prices.

The prices could be down to $1 million per synchronous transport module (STM) of 155 mbps international bandwidth from the existing $5 million, it had stated.

There has been a downward pressure on bandwidth prices ever since the commissioning of the Bharti group's i2i submarine cable network from Chennai to Singapore.

Now, with FLAG ready to offer even lower rates there is bound to be severe competition by all the players to capture the market.

This would benefit IT-enabled services, in particular the BPO industry, which has been facing competition from other Asian countries, by virtue of the cheaper bandwidth prices being offered by them, the sources said.

In any case, if all the three operators decide not to resort to any revision in the near future, TRAI may step in and revise downwards the existing ceiling on the tariffs being charged for international leased bandwidth.

The authority has received complaints from various quarters that the international bandwidth rates, including Internet-leased circuits, are on the higher side despite the fact that there is large unutilised capacity.

Since there is open competition in the sector, ideally the market should determine the tariffs that can be charged from subscribers, but unlike in cellular and landline tariffs, there has not been much of a change, TRAI sources said.

A revised ceiling on the tariffs could therefore be considered.