Cheaper bandwidth to trim Internet rates

NEW DELHI: Indian Internet customers can look forward to a further cut in

access rates because of cheaper bandwidth costs.

State-controlled Videsh Sanchar Nigam Ltd (VSNL), India's main Internet

service provider (ISP) and international bandwidth supplier, announced a steep

cut in leased line charges on Monday, setting the ground for what could be a new

fare war.

"We believe that this is a very good thing for the industry in general.

It is a positive step and would overall bring down the prices and accelerate

growth," David Appasamy, spokesman for Satyam Infoway, India's leading

private sector ISP, told Reuters on Wednesday.

He said the details were being worked out by ISPs, and the exact amount of

the price cut would depend on individual strategies of companies. The price cuts

could be announced any time in the next few weeks.

Most Indian ISPs now charge roughly Rs 3,500 ($75) to Rs 4,500 a year for

unlimited dial-up access, but the customers must pay the telephone charges. A

handful of free ISPs rely on advertisements to provide access to customers.

VSNL said on Monday it proposed to cut rentals for private international

leased circuits by about 75 per cent and leased Internet lines by about 70 per

cent with effect from January.

Atul Kunwar, chief executive officer of Mantra Online, an Internet venture

involving India's Bharti group and British Telecom, said VSNL's cuts would go a

long way.

"Reducing the cost of bandwidth access is a logical step to promote the

quality of Internet connectivity in the country in line with international

standards," Kunwar said in a statement.

Appasamy said information technology-enabled services like call centers will

also gain from the VSNL measure. He said Satyam, which is also building its own

international gateway, was not adversely affected as a bandwidth supplier.

"We believe that a mix of bandwidth providers will spread our risks. Our

bandwidth comes from VSNL, MCI Worldcom and satellite gateways," he said.

(C) Reuters Limited 2000.