Financial Daily from THE HINDU group of publications
Monday, Dec 01, 2003
Financial Daily from THE HINDU group of publications Monday, Dec 01, 2003 |
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Regulatory Bodies & Rulings Info-Tech - Telecommunications TRAI may lower cap on global bandwidth rates G. Rambabu
New Delhi , Nov. 30 THE Telecom Regulatory Authority of India (TRAI) is likely to revise downwards the ceiling on the tariffs being charged for international leased bandwidth. This move is likely to benefit stand-alone Internet service providers (ISPs) and big corporate houses. At the same time, it may draw the ire of Videsh Sanchar Nigam Ltd (VSNL), Bharti, Reliance and Data Access Ltd, According to official sources, 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. A revised ceiling on the tariffs is, therefore, being considered. More so, given the fact that many global companies are shifting to other low-cost countries in Asia for their IT-enabled services like outsourcing and call centres, they said. Currently, the tariffs for basic and cellular calls are not regulated by TRAI and the operators are free to charge whatever they want. While the authority has gradually stopped interfering in the tariff setting for local, STD and ISD rates, it has decided to continue regulating international bandwidth. The ceilings that are in force, based on the capacity and distance, are prescribed in the Telecommunication Tariff Order, 1999. The international long-distance operators have, however, indicated that they would oppose any move at revising bandwidth prices. They pointed out that the bandwidth scenario in the country is completely different from that prevailing in other geographies across the globe. There are mainly five submarine cable networks that are being utilised for this purpose. They are SEA-ME-WE-2, SEA-ME-WE-3, SAFE, FLAG (which Reliance intends to take over) and i2i (joint venture between Bharti and SingTel). All of above have limited capacities and are running on reasonable loads, they noted. On the other hand, there is a tremendous overcapacity in the trans-Atlantic and trans-Pacific. The overcapacities in those regions have resulted in a massive under pricing of bandwidth, which has lead to bankruptcy of many undersea cables. Over 10 undersea cable companies operating trans-Atlantic and trans-Pacific have filed for bankruptcy in the last two years. Many international bandwidth providers are in the red due to below-cost pricing and distress sale of bandwidth. "It is a known fact that the huge over capacities that came up between the developed economies in late 1990's resulted in a sharp fall in bandwidth pricing. Bandwidth to and from India was limited till i2i came up in 2002. Last year, the bandwidth prices in India came down from Rs 45 lakh per E1 (2Mbps) to Rs. 26 lakh. These prices are equivalent or lower than the cost-based prices prevailing in developed economies", they noted.
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