TRAI Proposes Leased Line Tariff Cut Of 62%

by Amit Tripathi    Jun 23, 2004

CEOs and CIOs across the country have something to cheer about, now that Telecom Regulatory Authority of India (TRAI) has recommended a reduction on the domestic leased line tariff by as much as 62%, in order to boost the usage of Internet and broadband in India.

In its consultation paper on leased line tariff reduction, published yesterday, TRAI considers leased circuits as a fast growing segment in the telecom industry. The reasons recognized by TRAI to recommend reduction includes significant decline in the cost of transmission equipment including optical fibre cable, reduction in the unit cost of long haul bandwidth as a result of rapid technological advances, and hard lobbying from user industries suggesting the same.

If the recommendation is approved by the government, the current tariff of a 2 Mbps leased line will go down from Rs 22 lakh to Rs 8.2 lakh annually.

CXOtoday tried to gauge the industry response in light of the recommendation, by speaking to a few CIOs.

Speaking to CXOtoday, B. Anil Kumar, QPMP, chief manager (IS Projects), BPCL, says, “It is a welcome recommendation as it will significantly boost the demand for local as well as last mile connectivity, especially for those enterprises that have set up their own networking hubs. In addition, remote connectivity will get a boost. Also this will significantly enable VOIP adoption by enterprises.”

Speaking in a similar vein, Harish Chawla, CIO, Nicholas Piramal India Ltd., said, “This move will now boost the approach of having centralized rather than distributed systems, that will in turn lead to better monitoring and management of the infrastructure.” This is pertinent in the light of the fact that heavy IT user segments like manufacturing, BFSI and others, use various applications to suit varied business needs. Moreover theres a constant concern of monitoring and controlling the total cost of ownership.

Mahesh Ramamoorthy, CTO, Development Credit Bank (DCB), said, “Nothing could have been better than a move like this. Now an enterprise can have as many redundancies built into their infrastructure, which in turn would improve disaster recovery and make it less costlier too.”

The estimates for annual rental of domestic leased circuit for capacities 2 Mbps and 64 Kbps have been calculated based on the cost of data provided by service providers, the cost estimates that have been determined by TRAI on the basis of a normated approach and taking into account the actually prevailing tariffs in the market.

The proposed rates are for a distance beyond 500 kms. It remains to be seen whether the government finally gives a nod to the encouraging recommendation, bringing a big relief to enterprises reeling under recurring bandwidth expenses.