The Hindu Business Line : Boost for broadband services; wireless data card to be cheaper

New Delhi, Feb. 29 In a move aimed at enhancing Internet and broadband usage in the country, the Finance Minister, Mr P. Chidambaram, has abolished excise duty on wireless data modem cards. The move is expected to bring down the price of data cards by 16 per cent. Currently, data cards are priced around Rs 2,800 and are sold by all the major telecom players, including Tata Teleservices, Reliance Communication and Bharti Airtel. Instead of paying a duty of 21 per cent, these companies will now have to pay only four per cent customs duty on imported data cards.

“Airtel has always been passing on benefits of any duty cuts to the end-customers. We will continue to do the same by passing on the benefit of duty cut on wireless data cards,” said Mr Manoj Kohli, CEO & President, Bharti Airtel.

Wireless data cards enable consumers to access Internet without having to take a telephone connection. It can be used both for laptops and by desktop PC users. Once third generation services (3G) are introduced by mobile operators, the demand for wireless data cards is expected to increase. According to industry estimates, there are currently, 4 million data card users in the country.

Service tax on Internet telephony has also been removed. Access to next generation convergent services such as Internet Protocol Television, mobile TV and IP-based telephony services will also be cheaper as customs duty on convergence products has been reduced from 10 per cent to 5 per cent. MTNL, BSNL and other telecom operators have been offering IPTV services. Reduction in specified parts of set-top boxes from 7.5 per cent to nil will also reduce cost of cable-based broadband services being provided by companies such as Hathway.

The Finance Minister has also imposed a 1 per cent National Calamity Contingent Duty on mobile handsets. “The price of handset changes almost every day so a one per cent increase in the duty may not result in any increase in the price as the manufacturers may absorb it,” said Mr Pankaj Mohindroo, President, Indian Cellular Association.

The budgetary provisions for setting up data centres and 1 lakh broadband common service centres in rural areas will benefit bandwidth providers such as Sify, Tulip IT and VSNL.

At the macro-level, the Budget has increased the outlay for setting up telephones in villages under the Universal Services Obligation Fund from Rs 1,450 crore in 2007-08 to Rs 2,000 crore for 2008-09. The Government’s collection from licence fee in 2007-08 was Rs 21,533 crore, which is almost double compared to the Budget estimate of Rs 9,902 crore. The increase has been due to the collection from new players.

More Stories on : Broadband | Budget

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page