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By Dr. Abhishek Puri Local regulators are mandating that international bandwidth providers cut their prices, especially VSNL, the incumbent with virtual monopoly. This has unleashed a legal battle, but in the end the real winners of the price declines could be big bandwidth buyers – the […]

By Dr. Abhishek Puri

Local regulators are mandating that international bandwidth providers cut their prices, especially VSNL, the incumbent with virtual monopoly. This has unleashed a legal battle, but in the end the real winners of the price declines could be big bandwidth buyers – the outsourcing companies.

The costs of international bandwidth are finally going to decline in India. The local regulator Telecom Regulatory Authority of India(TRAI) recently passed a telecom order drastically reducing the rates for International bandwidth. The order of the price cuts ranged from 35-70% on the various International line circuits.

Research group, Telegeography has predicted that the Intra-Asian Internet traffic will grow over 200% but still account for less than 10% of all international traffic. Long-haul bandwidth prices will decline by over 50% on newly competitive routes into Asia and the Middle East. This puts India right in the mix of things. The TRAI order seems to tie in with the ruling

Significantly, Videsh Sanchar Nigam Limited(VSNL), now owned by Tata’s was most hit by the order. Thus far, VSNL had a virtual monopoly over International bandwidth, and was said to be over charging customers. Tata’s also recently picked up bankrupt Tyco Networks for a song, and tried to milk this cash cow for all its worth. The other players Bharti and Reliance had not made any significant moves despite have access to terabit scale networks.

As expected VSNL legal department is appealing the order, arguing that price cuts would only benefit BSNL in it’s broadband roll out. How, we don’t understand, since international prices being a small part of the component for providing “affordable broadband.” TRAI is pushing very aggressively for reduction in local bandwidth prices as well. VSNL has managed to postpone the price cuts for at least a month, by filing an appeal in Telecom Dispute Settlement Appelatte Tribunal(TDSAT.)

The move is going to help the burgeoning outsourcing sector which has been starved for bandwidth despite being premium buyers. The reduction in the rates was welcomed by NASSCOM- the apex body of the IT service providers in India. If the prices decline in accordance with TRAI wishes you can expect a nice fiscal surprise from the BPO behemoths like InfoSys and Wipro who spend most of their dollars buying up bandwidth. (VSNL owns the gateways and most of the ISP’s and BPO’s lease their circuits from them.)

What’s most surprising is that the other biggies Bharti and Reliance are keeping mum about it. Would these players sink in their differences and form a cartel? This is my apprehension.

  1. The weekly blogside review of the Indian economy (10)

    The weekly attempt to size up the Elephant as perceived by bloggers — this edition features all new bloggers appearing for the first time in this series…

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  2. The perfect IT storm in India. Low cost PCs coupled with a drop in broadband price. The result would be an immediate and sustained explosive growth in internet use there. The growth would be further explosive/sustained as soon as video and images are made more available, thereby negating the impact of illiteracy. VoIP would be another huge adoption driver.

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  3. I don’t think low cost pcs are anywhere in the picture as yet. its the only problem right now when it comes to broadband explosion in India.

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  4. heard about an interesting program in Brazil– the “virtual PC.” Users are given a CD with their personal preferences/set-up on it. So when they go to a public PC, the load the CD and voila… the PC is now personalized to their preferences.

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  5. The government initiatives in Brazil to subsidise the PC and move towards Open Source( read Linux) is the right mix of technology. I am rooting for AMD’s low cost chip which would run usual applications with ease. Would this happen in India?
    The excitement is lot over what can happen and not over what is happening! Wait and watch as I try to track it.

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  6. broadband connection prices are comming down for sure and they will come down furthur with more competition which is developing day by day and as far as cost of a pc is concerned you can get a locally assembled pc with an average config with a crt monitor at about 15000rs all in which is not more then us $350 whihc is i think as low as it can get but this cost i have mentioned will include pirated software from operating system to antivirus everything pirated but the systems run fine i had one of thos types 5 years back costed my 55000rs that time now the same shit comes for about 15-17000rs so cost of pc isint a problem its the fucking costly software which is a bit of trouble
    my dad has for a 64kbps connection in delhi and he pays about 500rs a month which is $12 a month aprox which isint bad atall but the prices are comming down with time and things will continue to get better the same way as it happened to mobile phones
    as far as illetracy is concerned i would say this internet revolution hasent got anything to do with litracy it just wont help its the lazy ass govt which needs to do somethign about illetracy
    indian government is one of the most corrupt govts in the world and the babu raj still prevails
    i am waiting for things to get privatised and as soon as a private company is allowed to enter a field things get a lot better like but the core infracture is still in hands of this govt (which consists of illetrate old aged bastards who go no idea whats going on around the world and have got nothing to do with development all they care for is thier chair )
    down with the Indian government

    long live manmohan singh who brough in privatisation to india in the earlu 90’s and as now he is the prime minister ive got a lot of expectations with him provided the idiots in the government let him do something good

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