VSNL Price Cut: Too Less Too Soon?

VSNL has recently announced the reduction of tariffs
applicable for fibre-derived Internet leased lines and IPLCs w.e.f. 1 January
2001. The cut is described as being due to reduced tariffs for submarine
cable-based bandwidth capacities world-wide. So, is this a path-breaking act,
coming from a monopoly like VSNL?

One must give some credit to VSNL for bringing the trend of
low floating bandwidth costs to India. World-wide, there has been a flurry of
activity on the submarine cable scene and thereby bandwidth capacity tariffs
have dropped to a record low. The case of bandwidth auctions was not only real;
it had started making appearances in India in the form of bandwidth exchange
companies like Band-X.

However, ISPs are saying that the concession come far too
late and is far too less. ISPs had already gone to TRAI to reduce the high
bandwidth costs – and the regulatory body had even recommended drastic cuts. The
cut, coming just when they had almost lost hope, is still not commensurate to
the levels that bandwidth prices are languishing at globally.

There are reasons to believe that indeed VSNL could have gone
further. One, the new tariff structure mostly affects Mumbai and Cochin (where
international carriers terminate their submarine optical fibre cables at VSNL’s
landing stations). In other places, one has to still connect to VSNL’s
earthstations, the bandwidth acquired out of which still costs approximately the
same as earlier. Though there is an alternate way of leasing an inter-city
circuit to Mumbai or Cochin, this is regarded as a costly option as one has to
dole out additional moolah to VSNL’s sister companies BSNL and MTNL.

Two, there is indeed a major cut in IPLC prices. But, ISPs
say that this being only half circuit, they still have to incur the cost of the international leg and, if not located in Mumbai or Cochin, the
inter-city leased circuits as well as the local leads costs. And three, though
VSNL has reduced tariffs to an extent, it is still not talking of any Service
Level Agreement (SLA). This, ISPs say, would still make them prefer a private
party even if it is the costlier option.

The best part is that this VSNL announcement is shrouded in
another mystery. ISPs say it has come at an opportune time, when a number of
international gateway operators were rearing their heads, some of them promising
better quality bandwidth than the monopoly. This was a perfect way and time to
strike the competition before they even learnt to walk. To gateway players who
had their business case made out for selling bandwidth to ISPs, this development
is bound to have come sooner than expected. Sadly, this is the way VSNL will
move henceforth. “Take it or  leave”. Is TRAI  taking note?

Nareshchandra Laishram

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