The Hindu Business Line : DoT to allow resellers in international bandwidth

In a move that would make international long distance calls cheaper, the Department of Telecom has decided to allow resellers in the international bandwidth segment.

Resellers do not own the infrastructure but take bandwidth from licensed ILD operators and sell it in the market. They also do not need any licence or pay entry fee.

The DoT move is aimed at increasing the level of competition in the international bandwidth segment, which will bring tariffs down. While countries such as the UK and the US have more than 30 bandwidth providers, India only has four operators with the Tata-managed Videsh Sanchar Nigam Ltd controlling more than 70 per cent of the market.

DoT has also decided to make it mandatory for existing cable landing stations, most of which are owned by VSNL, to give access to all operators in a non-discriminatory manner.

Directive to TRAI

Senior DoT officials told Business Line that the Government had asked the Telecom Regulatory Authority of India (TRAI) to work out the modalities.

"The existing licences do not allow for resellers. Amendments will be made to permit bandwidth reselling, as it will increase the level of competition. Despite opening up the ILD segment in 2002, competition levels have not been enough," said DoT officials.

The DoT move will benefit bandwidth users such as Business Process Outsourcing units, Internet services and international telephone users. In countries such as Germany, there are 27 resellers offering international bandwidth compared to five licensed ILD operators.

Similarly, in the US, of the 32 bandwidth providers, 26 are resellers, making bandwidth available at rock-bottom prices.

The DoT decision is in line with the recommendations of TRAI made in December 2005. VSNL had, however, opposed the entry of resellers on the grounds that it would discourage creation of infrastructure.

Boosting competition

DoT officials said that with a number of under sea cables linking India to the rest of the world, enough infrastructure was already in place and therefore the need was to increase competition by allowing resellers.

Eight submarine cables land in India today, with over 18 terabits of design capacity and over 1 terabit of lit capacity. At least five other cable systems are likely to land in India in the next couple of years.

Bharti had also opposed the move, saying that it would disturb the level playing field since ILD operators have paid an entry fee. However, DoT officials said that the impact of competition as was expected with grant of new ILD licenceshas not happened.

"The scrutiny by TRAI on the methods to bring about greater competition in international telecommunication services sector shows that an effective means used internationally is to permit reselling," said a DoT official.

The decision on equal access to cable landing stations will also benefit bandwidth users since it is considered an essential input for many telecom services needing international connectivity.

Landing station is the physical place where an under sea cable gets connected to the domestic network. VSNL, meanwhile, has already agreed to open up its three landing stations to all operators in a non-discriminatory manner.

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