The Hindu Business Line : TRAI proposes lower duties for broadband push

INDIA can achieve 20-million broadband and 40-million Internet subscribers by 2010 if the Government steps in with reduced duties and takes major e-governance initiatives, according to the recommendations on broadband presented by the Telecom Regulatory Authority of India (TRAI) to the Government.

In its report released on Thursday, the telecom regulator has defined broadband as "an always on connection that is able to support various interactive services and has the capability of a minimum download speed of 256 Kbps (kilobits per second)".

TRAI believes that the broadband penetration can be increased to 1.7 per cent from the present 0.02 per cent by enabling the use of existing copper wire infrastructure of incumbent fixed-line operators such as Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL).

A large part of the regulator's recommendations relate to the unbundling of the "last-mile" link of the incumbent telecom operators.

TRAI feels that the incumbents should be given five years to extract returns from their investments. This, it has recommended, can be through shared unbundling where the local loop is shared and the DSL (digital subscriber line) is installed by others or through bit-stream access, where the incumbent itself installs DSL and then leases out the connectivity.

Mr Pradip Baijal

"We see no reason why BSNL will not respond favourably to this suggestion. As of now, they are earning about Rs 200 as rental, which can be nearly doubled by unbundling and that too, without any major investments," the TRAI Chairman, Mr Pradip Baijal, said.

Other means of spreading broadband which include cable television, satellite (direct-to-home or DTH television and VSAT), terrestrial wireless and fibre-to-the-home, building or community, also need to be further streamlined, he said.

"Each of these access path technologies must co-exist without artificial hurdles. Within each technology, consumers should be able to choose from multiple service providers," Mr Baijal said.

Stating that broadband was set to be the next telecom revolution, Mr Baijal said that prices of high-speed Internet of 256 Kbps should be brought down to about Rs 400 per month from the existing level Rs 1,600.

Elaborating further to bring home the point, the TRAI chief compared the prices of broadband in Korea, where 25 per cent of the population had access to high-speed Internet, with that prevalent in India. While the monthly charges for a 100 Kbps line in Korea stood at just $0.25 per month, he said an Indian subscriber has to shell out $15.63 per month. Based on affordability on the basis of per capita gross domestic product (GDP), an Indian broadband subscriber has to fork out 1,200 times more money than his Korean counterpart, Mr Baijal said.

On its part, the Government, Mr Baijal said, should "slaughter" the current duty structure from 33 per cent to 5 per cent and give a five-year tax holiday on service tax for Internet service providers (ISPs). "It may lead to a revenue loss of Rs 150-200 crore, which we feel, is insignificant. Moreover, the loss will be more than made up in the long run through service tax, once it is implemented after five years," he said.

Central and State Governments should enact legislations to waive sales tax on e-commerce transactions for five years and waive entertainment tax on broadband subscriptions and services.

Among other fiscal measures, TRAI has recommended allowing 100 per cent depreciation on computers, easier norms for donation and recycling of computers and removal of anti-dumping duties on refurbished hardware. "Even if computers get dumped in India, it will lead to greater PC penetration and help the sector," the telecom regulator said.

"Very few subscribers want to use broadband just to watch pictures. The Government has to push e-governance so that more facilities are available on the Net and the sector gets a boost. For the purpose, we have recommended setting up of a Secretary-level post (of a Project Director) for e-governance and form a Group of Ministers of key Ministries," Mr Baijal said.

Finally, TRAI has also suggested that both domestic and foreign players should be encouraged to host their Web sites within the country. "The situation where most of our traffic travels to the US and back should be avoided," he said, and added, "it would encourage broadband penetration".

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TRAI proposes lower duties for broadband push