Financial Daily from THE HINDU group of publications
Saturday, Jul 13, 2002
Info-Tech - Telecommunications
International calls may still stay pricey
NEW DELHI, July 12
VIDESH Sanchar Nigam Ltd (VSNL) proposes to hike bandwidth prices for voice carriage by close to 300 per cent.
According to industry sources, the new tariff structure, which for the first time differentiates between data carriage and voice carriage has been submitted to the Telecom Regulatory Authority of India (TRAI) for its approval.
They pointed out that until now VSNL did not have separate bandwidth rates for data and voice transmission. However, with growing competition in the international long distance (ILD) segment and mushrooming Internet telephony service providers, the company has now decided to segregate the two even as it hikes the tariffs for voice carriage.
When contacted, senior VSNL officials stated that the new tariff structure that had been filed with TRAI "is for a new service for ILD operators who want to lease bandwidth for their operations in future. This, however, will not be applicable to the existing service providers who are utilising the bandwidth services".
They noted that since TRAI was yet to give its approval, the new tariff structure had not yet been implemented. In any case, they said they were not resorting to cartelisation and had no intention of blocking competition.
However, industry sources said, VSNL being the monopoly ILD operator in the country, the Internet Service Providers (ISP) who have ventured into Internet telephony and other ILD operators who seek to lease bandwidth from the company for their operations, offering much cheaper call rates will see their margins being squeezed. They would have no option but to hike their call charges, making their services less attractive.
The sources noted that i2i network, the joint venture between the Bharti group and Singapore Telecom which is the only other private international submarine cable network, has also proposed a steep hike, of up to 250 per cent in the international bandwidth prices for voice carriage.
According to analysts, access to international bandwidth is a bottleneck facility for the new entrant and internationally this fact is well recognised. This price hike by both the operators is timed when the ILD sector is opening up and new operators are gearing up for entry into the ILD market. As such it is a sort of restrictive trade practices aimed towards stopping further competition, they said.
Globally, the price for international bandwidth remains same irrespective of whether it is used for data or voice. However, VSNL now proposes to differentiate between the two.
At a time when overcapacities are forcing down prices in the international bandwidth market, these two operators have decided to hike prices of bottleneck facilities. This could be viewed by the TRAI as "an abuse of dominant position by the incumbent operator'', they said.
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