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New Delhi, April 28

THE Telecom Dispute Settlement Appellate Tribunal (TDSAT) on Thursday quashed the Telecom Regulatory Authority of India's (TRAI) order to reduce international bandwidth tariff by 70 per cent.

The decision comes as a relief to Videsh Sanchar Nigam Ltd (VSNL), which had contested TRAI's order on the grounds that the telecom regulator had not followed appropriate process in fixing the tariffs. On the other hand, the telecom tribunal's order comes as a blow to consumers of international bandwidth, including Internet service providers and business process outsourcing units.

Setting aside TRAI's order, the tribunal asked the regulator to have a re-look at the entire exercise and share the full facts and basis of calculation with VSNL in a transparent manner. "It is difficult to appreciate the argument that TRAI is not required to comply with the principles of natural justice and therefore, not required to disclose the material relied upon or methodology. We, therefore, direct that all the documents and information as asked for by the VSNL, the appellant, be supplied by TRAI. In this view of the matter, we are of the opinion that in the absence of non-disclosure of information to the appellant principles of natural justice have been violated and so also TRAI has breached the mandatory requirement of transparency in its functioning," the TDSAT order said.

VSNL is the largest international bandwidth provider in the country and a reduction in tariffs would have had serious revenue implications for the company. The revised tariff was scheduled to come into effect from April 1. The VSNL counsel said that there was no transparency while arriving at the 70 per cent reduction in bandwidth prices.

They argued that TRAI had followed external consultant Ernst & Young's calculations in arriving at the price reductions, which were not shared with the appellant, leading to denial of natural justice and non-transparency. VSNL said that it would stand to lose 60 per cent of its revenues from selling international bandwidth if the order was implemented. Mr Amitabh Singhal, President, Internet Service Providers Association of India, termed the decision as a setback to the industry. Various industry bodes such as Nasscom had supported TRAI order. Some American trade bodies had also written to the telecom regulator to revise the tariffs on the ground that it was kept artificially high.

(This article was published in the Business Line print edition dated April 29, 2005)
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