Bandwidth rates in India are among the highest in the world despite boasting of having the world’s cheapest mobile tariffs. The telecom regulator - Telecom Regulatory Authority of India says lack of competition in the international long distance segment is the reason for the high tariffs.

In Japan for example, a 2 Mbps line costs $0.02 million while the cost for same in India is $0.03 million. Likewise, a 45 Mbps line in South Korea can cost $0.1 million while the same costs over $0.23 million in India.

Indian ITeS, BPO and Internet Service Providers have been demanding lower bandwidth tariffs for a long time now. However the Tata controlled Videsh Sanchar Nigam Ltd, which controls nearly 80 percent of the bandwidth market has opposed the move despite dropping the tariff by 70 percent in June, which is nowhere near global standards.

The telecom regulator says tariffs in India can be brought down to the lower levels on par with other countries through regulation until the market matures with competition. In Japan, the operators were subjected to price ceilings, and any tariff changes had to be approved by the regulator before implementation.

VSNL insists that there should be no intervention by the telecom regulator on the grounds that there was enough competition in the Indian bandwidth market to allow free market forces to determine the price.