ISPs bottomline set to improve

NEW DELHI, MARCH 9: The drastic reduction in leased line charges and port charges would significantly improve the profitability of intern...

NEW DELHI, MARCH 9: The drastic reduction in leased line charges and port charges would significantly improve the profitability of internet service providers ISPs which is bound to result in lower internet access charges for subscribers.

The reduction in 2mbps leased line charges will particularly benefit category A and B licence-holding companies such as Satyam Infoway, Global Electronic Commerce Services, Bharti BT Internet and Wipro and result in a spurt in demand for these lines. These ISPs aspire to provide service in metros and are in the process of setting up their networks. They have preferred to take 2mbps circuits so that they are able to provide real-time internet access to subscribers.

Since they will need to take circuits over long-distances such as those between Delhi-Mumbai and Chennai-Mumbai or Bangalore-Delhi, the steep reduction will benefit them more.

Depending on the size of the network, the reduced cost of 2mbps leased lines is likely to effect at least a five per cent costbenefit for such companies on a recurring per annum basis.

According to Internet Service Providers Association of India ISPAI secretary Amitabh Singhal, the introduction of a lower tariff plan will also benefit category C ISPs significantly as they will pay less for leasing the circuit with the maximum cap being 500 km. Under the existing structure, a flat rate was charged for a distance beyond 1,000 km. quot;Now the ISPs in smaller cities will be able to pay much lower charges for the connection from the node to the exchange,quot; said Singhal.

The existing charge for a 64kbps line is Rs 14 lakh, but the maximum payable for a distance of over 500 km will now be Rs 96,000. Similarly, for a 2mbps line, ISPs will pay a maximum of Rs 22 lakh instead of existing Rs 72 lakh. TRAI has recommended a peak tariff of Rs 56,000 for 10 km access, Rs 5.39 lakh for 100 km and Rs 11.58 lakh for 250 km for a 2mbps line.

ISPs will also gain by the cut in port charges from existing Rs 72 lakh for 2mbps to Rs 42 lakh which ispayable to the international telecom carrier Videsh Sanchar Nigam Ltd.

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quot;I definitely hope that these cuts will be reflected in the tariff plans of major ISPs when they go to the subscribers later this year,quot; felt Singhal.

Interestingly however, where the ISPs will heave a sigh of relief, the subscriber will end up shelling out a little higher for accessing the internet due to increase in the local call charges. In fact, ISPAI chairman Rajeev Arora called the hike in local call charges as detrimental to the internet prevalence in the country.

quot;It is after all a hidden cost and will matter in the long run when people start accessing the Net more and more as they will pay higher telephone bills. It will also allow providers like MTNL and VSNL to continue their monopoly as they have their own networks. They can even afford not to charge anything for internet access,quot; he felt.

Higher local call charges could affect the subscriber base of private ISPs, warned Arora.