Private players to enter ILD arena

By : |March 31, 2002 0

Santosh Menon

NEW DELHI: A bonanza is in store for those making international calls from
India as charges — among the world’s highest — are set to plummet this month.



A call to the United States from India costs nearly one dollar per minute,
about three times what a caller there pays to call India. That cost fell nearly
20 per cent on Monday, and it is about to fall further this month as a raft of
private competitors enter the newly liberalised market.

"We expect call charges from India to come down by 40 to 50 per cent
soon," Kobita Desai, analyst at Gartner Inc told Reuters. India’s telecoms
minister Pramod Mahajan in February forecast overseas calls would be at least 50
per cent cheaper from April.

The government ended on Monday a decades-long monopoly held by recently-privatised
Videsh Sanchar Nigam Ltd. (VSNL) over the international long distance (ILD)
business, paving the way for private players to enter the near $1.3
billion-a-year market.

The government has also permitted Internet service providers to offer
drastically cheaper, but lower quality, telephone services to customers using
computers. The tariff cuts have already begun. India’s largest telecoms company
state-owned Bharat Sanchar Nigam Ltd. (BSNL) announced at the weekend it was
cutting international call tariffs by 20 per cent from April 1.

Analysts said more cuts would follow when private groups such as Bharti and
Reliance start their ILD operations, offering India’s fixed-line and mobile
service providers vastly cheaper terms than VSNL.

The government has signed license agreements with Bharti, Reliance and Data
Access and has issued letters of intent to many others to enter the ILD
business. Bharti aims to launch its service by April 10.

Bharti Telesonic chief executive officer N. Arjun said, the long distance
service unit of New Delhi-based Bharti Tele-Ventures, said he was awaiting
approvals for its tariffs from the telecoms regulator and other security
clearances to start its service.

Reliance Communications, a unit of India’s powerful Reliance group, plans to
kick off its services by the end of the month or early in May. Internet service
providers have been quicker on the draw. net4India, an unlisted New Delhi-based
Internet access provider, has rolled out its service, offering cards for
customers to call overseas using personal computers.

The firm said on its Web site customers using its service could call the
United States for as low as five rupees a minute. Analysts said vastly cheaper
Internet telephony would encourage individual callers, but was unlikely to lure
corporate users as call quality was inferior.

Lower gap
Greater competition in the business, besides cutting call costs, is expected
to help lower the gap between incoming and outgoing international calls.
"The incoming to outgoing call ratio is around four to one. That will
change as lower rates prod more Indians to call abroad," said an analyst at
a European brokerage.

Legal status for Internet telephony will also help bring the large share of
illegal calls made over the Internet, estimated at some 800 million minutes in
2001, onto the official system.

Gartner’s Desai said it was not so much the voice market but the corporate
data market, forecast to grow 18 to 20 per cent over the next five years, that
the new entrants were really after.

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