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Our Bureau

New Delhi , April 21

THE Telecom Regulatory Authority of India (TRAI) on Thursday announced up to 70 per cent reduction in domestic leased line tariffs.

The decision will benefit Internet service providers and the IT and IT-enabled service sectors such as business process outsourcing units and telecom service providers.. On the other hand, State-owned Bharat Sanchar Nigam Ltd (BSNL), the largest leased line provider in the country, has raised objections to the reductions and has requested the telecom regulator to review the decision.

Giving the rationale for the tariff cut, TRAI said, "The authority found that competition was not fully effective in the provision of leased lines, despite the increase in the number of players in the market.

"Further, rapid technological advances have sharply reduced the unit cost of long haul bandwidth, but the reduction witnessed in the leased line tariffs is not commensurate with the reduction witnessed in the cost of providing the services."

Internet dial-up access and long distance telephone tariffs may also become cheaper as a result of the decision.

As per the revised tariffs, a 64-kbps line over 500 km will cost a maximum of Rs 44,000 a year compared to the existing market rate of Rs 96,000. A leased line with 2 mbps capacity will cost a maximum of Rs 8.50 lakh compared to the current market rate of Rs 8.80 lakh.

TRAI has fixed a ceiling of Rs 165 lakh for a 155-mbps line, which costs Rs 554 lakh at present. It has fixed the ceiling for various capacities across different distance slabs.

The tariff cut will also boost the broadband rollout, which is dependent on leased line capacity. Responding to the objections raised by BSNL, the telecom regulator said that the revenues from selling leased lines accounted for a maximum of 2 per cent of the total income and therefore, the impact due to the tariff cut is not huge. TRAI added that the increase in volumes would also compensate for the marginal drop in revenues.

Mr Amitabh Singhal, President, Internet Service Providers Association of India (ISPAI), said, "We are delighted and convinced at this juncture that all members of ISPAI will be the passing the benefits of reduced tariffs, which will be felt by the enterprise as well as the end-customer. The high bandwidth cost is one of the worst detriments to the widespread use of communication facilities and exacerbates the problem of digital divide."

To increase competition in the leased line market, TRAI will initiate another consultation process shortly. It is also considering making recommendations to Government on the issues of providing direct support from the USO Fund to bandwidth providers in rural/remote areas.

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