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Thomas K. Thomas

With more telecom operators planning to jump into the fray it is good news for consumers who can now look forward to a tariff battle in this segment. For ISPs, applying for a long-distance licence is a survival tactic with the DoT imposing a fee on offering Virtual Private Network services.

New Delhi , Feb. 20

COMPETITION is hotting up in the long-distance segment with a dozen companies including Internet service providers Sify, Hughes Escorts Communication, and Net4India making a rush for acquiring a new licence.

The others in the list of companies which have expressed interest in foraying into the long-distance segment include mobile operators Idea Cellular, Essar-Hutch, Spice Telecom, MTNL, Tata Teleservices and utility majors GailTel, RailTel and PowerGrid.

The beeline for a national long-distance (NLD) and international long-distance (ILD) licence comes after the Communications Ministry reduced the entry fee to Rs 2.5 crore. Earlier operators had to pay Rs 100 crore for a NLD licence and Rs 25 crore for an ILD licence. The licence fee was also brought down from 15 per cent to 6 per cent of the annual revenues. The roll-out obligations have also been eased out.

At present, there are only four companies in the NLD and ILD segment. They are Bharat Sanchar Nigam Ltd, Videsh Sanchar Nigam Ltd, Bharti AirTel and Reliance Infocomm. Analysts like Mr Gartner had pointed out that competition in the long-distance segment was low in the country, which was keeping the tariffs of bandwidth very high. In countries such as the US there are more than 20 long-distance operators offering services.

But now with more operators planning to jump into the fray it is good news for consumers who can now look forward to a tariff battle in this segment also, similar to the one happening in the mobile phone sector. While STD tariffs are on its way down, ISD tariffs are still on the higher side.

For the ISPs, applying for a long-distance licence is a survival tactic with the DoT imposing a fee on offering Virtual Private Network services. ISPs have also been taking a battering from large integrated players even in other Internet services like dial up access and broadband.

Acquiring a long-distance licence could give these ISPs some level footing.

Nearly 90 per cent of the over 700 ISP licences issued are defunct. Cheaper long distance licence comes as a breather for the remaining ones.

For utility companies like GailTel, acquiring the licence is a logical extension, since they already have a huge network of optic fibre cable across the country.

These companies have been leasing out capacity to existing NLD players as Infrastructure Provider licence holders.

More Stories on : Telecommunications | ISPs

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