15 February 2017 07:53:43 IST

International bandwidth rates set to crash 60%

Court upholds TRAI order asking telcos to slash cable landing charges

International bandwidth prices are set to crash by nearly 60 per cent with the Madras High Court upholding the telecom regulator’s order to cut fees charged for using a cable-landing station. The move will benefit business process outsourcing firms, Internet service providers and the banking sector. A cable landing station is the physical place where international undersea cables land and connect to the domestic network. There are about 13 submarine cables landing into India at 11 cable-landing stations.

While Tata Communications owns five of these stations, Bharti owns two. The other stations are owned by Reliance Communications (two), Sify (one) and BSNL (one).

In 2013, TRAI had ordered a 90 per cent cut in the cable landing station charges. This was opposed by Bharti and Tata Communications on the grounds that the regulator did not include all aspects of the costs before arriving at the new pricing. However, the Madras High Court has dismissed the two operators’ plea and has given the green signal to Trai to implement the nearly four-year-old order.

“The present regulations aim towards ensuring that the cable-landing station is a place where equal access is granted and the charges that are charged... are cost-based charges. This would ensure introduction of many players into the sector, leading to affordable prices for the consumer,” the court said in its judgment.

Now, charges for a 10-GB connection, for example, will be just Rs. 6.25 lakh compared to Rs. 3.4 crore. The reduced charge would mean lower costs for Internet service providers and long-distance telephony players. This, in turn, could result in lower broadband tariffs.

The biggest gain is for customers of foreign long-distance telephony companies such as AT&T, Cable & Wireless and BT.

“The court order will bring huge gains to India’s broadband market and is in line with the Prime Minister’s Digital India vision,” said Manoj Misra from the Association of Competitive Telecom Operators, the industry body representing international players. Rajesh Chharia, President, Internet Service Providers’ Association, said that the cut in cable landing station prices should be accompanied with a similar drop in national long-distance bandwidth pricing.

“If smaller Internet players have to benefit, then TRAI has to cut domestic leased-line tariffs, too. Otherwise only the bigger operators, who can afford to connect directly to the cable-landing stations in Mumbai or Chennai, will gain,” Chharia said. However, Bharti and Tata Communications could end up losing nearly Rs. 200 crore a year due to the reduced fee. In addition they may have to pay back the excess money collected since 2013, which could amount to Rs. 800 crore, according to one industry estimate.