The Hindu Business Line : TRAI mulls 63-75 pc cut in leased line tariffs

IN a bid to make bandwidth cheaper, the Telecom Regulatory Authority of India (TRAI) has proposed a 63-75 per cent reduction in domestic leased line tariffs.

As per the TRAI proposal made in its consultation paper for revising the domestic leased line tariffs, a 2 mbps connection over a 50 km distance would cost Rs 87,407 as compared to the existing tariff of Rs 3,48,642. A 64 mbps line over a 500 km distance would cost Rs 24,000 as compared to Rs 96,000, at present.

A similar cut has been proposed by the TRAI for 2 mps and 64 mps connection across all distance slabs.

The TRAI move is expected to benefit large bandwidth consumers such as business process outsourcing (BPO) units, corporates and IT-enabled services companies.

"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.

Bandwidth being a crucial input for information technology (IT) and IT-enabled industries such as BPO, etc, a 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," the TRAI has said in the consultation paper issued on Tuesday.

The telecom regulator has invited comments from telecom players before finalising the tariffs.

Highlighting the rationale for such a reduction, the TRAI has said that technological advances have reduced the cost of providing bandwidth.

"It is observed that there is a significant decline in the cost of transmission equipment including OF cable, which is the main component for setting up of leased circuit. Reflecting these realities, worldwide, the transmission circuit prices have fallen by about 90 per cent since 1999. It is, therefore, appropriate that the tariff fixed as ceiling based on cost is reviewed in the light of the fact that costs of setting up capacities have come down."

The TRAI has also pointed out that Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) were enjoying near monopoly status in the leased line segment and they are already offering discounts to the tune of 74 per cent for certain capacities to their customers. This was opposed by private long distance operators on grounds that BSNL was adopting discriminatory tactics. The TRAI move is aimed at improving the level of competition in this sector and may force BSNL to bring down the tariffs across the board.

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