Financial Daily from THE HINDU group of publications
Thursday, May 09, 2002
Info-Tech - ISPs
Cheap rates come calling on Net -- US, Europe turn economical destinations
NEW DELHI, May 8
WITH Internet telephony now legal in the country, a host of Internet service providers (ISPs) are ready with their offers of much cheaper connectivity to anywhere around the world. However, in the process, they have also turned the existing tariff structure of international calls topsy-turvy.
Until now distance has always played a key element while framing the cost structure of international calls. Typically, calls to the US and the American continent have been the most expensive, followed by the Europe, Oceania, South-East Asia and the SAARC countries in that order.
However, the ISPs offering Internet telephony - Satyam Infoway, Net4India, Data Infosys and Zybertalk to name a few, have inverted the pyramid so to say.
An international call on the Internet to the US and Europe is being offered at dirt cheap rates, while those to the neighbouring countries such as Pakistan, Afghanistan and Sri Lanka turn out to be prohibitive.
The shorter the distance, the more expensive is the call, it would seem.
Take the case of Zybertalk, the Internet telephony service being launched across the country by iServe India Solutions Private Ltd, an Escorts group company.
As per the company's call rates, a one minute call to Afghanistan will put you back by Rs 77.52, to Bangladesh by Rs 31.04, Pakistan Rs 30.47 and Sri Lanka Rs 30. On the other hand, a one-minute call on its network to the US, Canada and UK will cost just about Rs 5. A call to China costs only Rs 8 per minute. Mr Kushal S. Banerjee, CEO, iServe India, has an explanation.
According to him, our neighbouring countries are where India was, say 10 years back in terms of telecom reforms. As a result, they continue to have more rigid telecom policies, which do not allow much leeway in terms of lower pricing.
So ISPs who want to establish connection with these countries have to shell out larger settlement rates. On the other hand, the telecom sector in the developed countries have more flexible pricing, which allows for greater leeway in the negotiations for settlement rates.
Hence, the tariff that the ISPs or ILD operators offer to their subscribers is constrained by the settlement rates that they have to pay to the foreign carriers.
According to Mr Banerjee, this type of tariff structure may seem funny, since no one will make a call on his network to the neighbouring areas. In any case, the international traffic to these countries is quite minuscule. So for the ISPs who are offering Internet telephony services, it would not make much of a difference. He, however, admitted that the high tariff rates to the Gulf region may prove a problem for Zybertalk, which has just launched its services in Kerala. With the State accounting for higher percentage of expats to the Gulf region, the company is working on ways to get around this problem.
The company had already launched its services in Uttar Pradesh and would be rolling out its distributors outlet in other parts of the country soon. Over time, the company should be able to offer much cheaper tariffs to even the neighbouring countries, he said.
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