ISPs seek cut in access charges

MUMBAI, FEB 17: The proposed reduction in the Videsh Sanchar Nigam Limited's VSNL tariff rates has sent other operators into a tizzy. S...

MUMBAI, FEB 17: The proposed reduction in the Videsh Sanchar Nigam Limited8217;s VSNL tariff rates has sent other operators into a tizzy. Satyam Infoway, one of the earliest players on the internet turf, has reacted by saying they would intensify lobbying for a corresponding drop in gateway access charges from the public-sector undertaking.

quot;There are around 500 companies planning to be ISPs. Even if only 20 per cent of them actually launch, it would be a strong lobby,quot; said a senior company official. The Internet Service Providers Association of India has already asked for a drop in gateway access charges in its recommendations submitted to the Telecom Commission.

quot;Lower prices mean more subscribers. But it also means higher losses,quot; pointed out the official, quot;This business requires a lot of investment upfront.quot; The company has launched in 12 cities and has an aggressive plan of reaching 20 cities in the next six months. It had pegged its tariff rates almost on par with VSNL8217;s at the time of launch inJanuary. Now with VSNL planning a 20 per cent reduction in tariff for renewals and the Mahanagar Telephone Nigam already having launched at a 15 per cent discount to existing rates, Satyam would be only player left in the high-price segment.

The company spokesperson refused to rule out the possibility of trimming its rates but admitted it would not be a viable proposition given the infrastructure costs involved. quot;The margins are low,quot; he said about the prevailing scenario. However, if gateway access charges were slashed it would pass the benefit on to the customer, he added.

One of the options the company may consider is cross-subsidisation. Part of Satyam8217;s revenue comes from e-commerce services which involves setting up of Electronic Data Interchange networks for corporates. These networks enable companies to exchange information electronically for higher efficiency and increased cost-effectiveness.

Another option the company is seriously considering is launching of more products. It currently hasthree products for its subscribers: Discovery 100 for beginners, Discover 500 and Venture 500. The new product may come with a 50-hour slot and value addition in the form of free software.

Meanwhile, VSNL acting CMD Amitabh Kumar clarified that the proposed discount was being considered only for those subscribers who opt for renewing their accounts. quot;There is no proposal to reduce tariffs for new subscribers in the near future,quot; he said.

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quot;The VSNL is all for reducing tariffs. But DoT and TRAI Telecom Regulatory Authority of India are not in favour of such a move,quot; added a source. By offering a discount for renewals, the VSNL which has over 2 lakh subscribers, will ensure at least its existing customer base remains intact. Satyam, which plans to be long term player in the internet market, is far behind VSNL with 1,500 customers. However, with hardly three months into ISP privatisation, it is still too early to predict who the winners will be.