The Hindu Business Line : VSNL challenges TRAI move to drop bandwidth tariff

THE Tata-managed Videsh Sanchar Nigam Ltd has filed an appeal with the Telecom Dispute Settlement Appellate Tribunal (TDSAT) challenging the telecom regulator's decision to reduce international bandwidth tariffs. TRAI had announced 65 per cent reduction in bandwidth charges to bring them at par with global levels. Indian tariffs are among the highest in the world and the telecom regulator has blamed it on VSNL's dominance in this segment.

VSNL has however said that Indian international bandwidth was highly competitive and VSNL's current cumulative market share was 60 per cent, which was one of the sharpest drops in market share for the incumbent anywhere in the world in just three years of opening of the international long-distance market.

"TRAI has changed the methodology of cost calculation without giving VSNL an opportunity to react to it. In addition, TRAI has excluded some cost components, leading to VSNL's costs being under-represented," said a VSNL official. According to industry estimates, the company stands to lose nearly Rs 350 crore if the TRAI-sponsored tariff cut is implemented. This is the second time that VSNL has objected to a tariff cut in international bandwidth. Earlier the TDSAT had upheld the objections raised by VSNL and directed TRAI to make the process and calculations transparent.

VSNL said TRAI had selectively used data provided by its own consultant, which shows VSNL and the Indian IPLC market in a relatively poor state. "TRAI has not provided any logical explanation for artificially fixing the price ratios for higher bandwidths. Artificial fixing of prices will mean that resellers will have an advantage over facility-based operators like VSNL by obtaining IPLCs at significantly lower prices," said a VSNL source.

TRAI had justified its decision to regulate the bandwidth tariff on the grounds that the market was not mature enough. Heavy bandwidth users like IT enabled services, business process outsourcing units and Internet service providers have supported the TRAI decision.

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