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In a move that could bring down fixed-line broadband tariffs, the Telecom Regulatory Authority of India (TRAI) has reduced the ceiling rates of domestic bandwidth by up to 60 per cent.
A 2-Mbps leased line drawn over 500 km will now cost a maximum of ₹3.4 lakh a year compared with ₹8.5 lakh earlier. A leased line of similar capacity over a 5-km route will cost ₹12,086 a year (₹17,016). Prices have been revised for bandwidth up to 622 Mbps.
Leased lines are used by corporates such as business process outsourcing firms and banks, which connect their various branch offices and ATM machines. They are also used by Internet Service Providers to offer broadband services. Telecom operators such as Airtel, Reliance Communications and BSNL are the major suppliers of leased-line connectivity.
Rural impact expectedThe real impact of this move will be felt in remote areas, where competition levels are not intense. In cities such as Delhi and Mumbai, leased lines come with massive discounts, especially for large-volume customers.
On the routes connecting small cities, remote and hilly areas, where competition is much less, the prevailing tariffs for leased circuits continue to remain near the ceiling tariffs prescribed earlier by TRAI.
The new ceiling will therefore force telecom companies to bring down prices in these areas. There is unlikely to be any revenue impact on private telecom companies as they do not cater to this market in a big way. BSNL, with its 600,000 km optical fibre network, may take a hit.
“This is a good move and will have some impact on Internet services in remote areas. If the regulator wants to bring down bandwidth costs across India, then things such as lower licence fees on ISPs will help,” said Rajesh Chharia, President, Internet Service Providers of India.
Multinational telecom players, which offer connectivity to their customers in India, said that efforts must be made to reduce international-connectivity costs as well including the price for using cable landing stations.
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