Private players to enter ILD arena

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.

Licences



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.