ISD rates may fall

NEW DELHI, MARCH 11. International call charges are set to decline with the Telecom Regulatory Authority of India (TRAI) ordering 35 per cent to 71 per cent reduction in the rates for international bandwidth from April 1. This is the first time that the TRAI is regulating the rates for international bandwidth.

The TRAI has fixed the ceiling on three commonly used capacities — E1 (speed of 2 megabits per second), DS-3 (speed of 45 mega bits per second) and STM-1 (speed of 156 mega bits per second). There is no ceiling for bandwidth at lower speeds. The rates could be revised later since the TRAI intends using the "forward looking long range incremental costs'' formula to fix the maximum ceiling in future.

Other sectors that will benefit from the maximum ceilings prescribed by TRAI are Internet service providers and IT-enabled service enterprises such as business process outsourcing (BPO). Economically priced bandwidth rates are also fundamental to achieving a higher rate of penetration of broadband, which improves socio-economic opportunities particularly in rural areas.

The reduction is more pronounced in higher capacities that would be more in demand in future. The order covers the country's three operators providing international private leased circuits through under-the-sea cables but excludes international connectivity through satellites since the former is the more dominant mode of delivery. The companies can offer rates lower than the prescribed maximum ceiling.

The TRAI's reasoning for intervening in international bandwidth price was that market forces had failed to drive down prices.

While internationally rates had gone down by 45 per cent, the reduction in India was only 10 per cent.

"It is apparent that this has been due to lack of competition in the Indian market," noted the TRAI, pointing out that as compared to just three companies in India, Korea had 14 companies offering international bandwidth, France 24 and Germany and the U.S. 32 each.