TRAI to reduce domestic leased line tariffs

By agencies   |   Thursday, 21 April 2005, 07:00 Hrs
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NEW DELHI: In a move that is expected to benefit high bandwidth users like call centers, broadband service providers, internet service providers and companies that rely on virtual private network for communication, the Telecom Regulatory Authority of India (TRAI) is all set to announce steep reduction in domestic leased line tariffs.

The tariffs are likely to come down by more than 70 percent.

"Rapid technological advances have sharply reduced the unit cost of long-haul bandwidth. It is also observed that there is a significant decline in the cost of transmission equipment including optical fiber cable, which is the main component for setting up of leased circuit. Reflecting these realities, worldwide, the transmission circuit prices have fallen by about 90 percent since 1999. It is, therefore, appropriate that the tariff for leased line in India come down accordingly," a TRAI official said.

The authority had recently affected a similar cut in international leased line tariffs by imposing a ceiling fee. A cut in domestic leased line prices may also have a bearing on national long distance calls.

Consumer organizations and IT enabled services industries had approached TRAI to review leased circuit tariff to make it consistent with tariff reductions witnessed in other segments of telecom. IT body Nasscom and Internet Service Providers Association had also requested to make price of bandwidth more affordable.

The reduction in tariffs may have a negative impact on the revenues earned by Bharat Sanchar Nigam Ltd, which is the largest provider of domestic leased line circuit in the country.

TRAI had earlier issued a consultation paper in this regard whereby it had suggested an annual rental of 8.2 lakh for a 2 Mbps circuit over 500 km distance.

At present it cost 22 lakh to rent out a line of similar capacity.

For higher capacity bandwidth of 64 kbps, TRAI had suggested a tariff of 29,000 per annum compared to 96,000 per annum at present.

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