TRAI postpones bandwidth rate cut

VSNL on Wednesday got a temporary relief after telecom regulator TRAI decided to keep its earlier order of announcing up to 64 per cent reduction in international bandwidth prices in abeyance till October 3.

TRAI made a statement in TDSAT to keep the tariff order of September 8, 2005 on hold till October 3, its counsel said.

The order was to be implemented from September 16. VSNL had appealed for the stay of the order. TRAI's original bandwidth reduction order of March 2005 is applicable to all other players like Reliance Infocomm, Bharti and others.

Earlier VSNL in its petition said, "TRAI has fixed tariffs on the basis of costs, which after having being demonstrated by VSNL to be erroneous, TRAI has changed its established methodology by adopting a higher denominator to arrive at a much lower figure of costs, thereby fixing tariffs at a low level.

This gravely prejudices the VSNL as the implementation of the impugned order will force it to sell capacities at below costs running into severe losses," it said.

TRAI in its September 8 order had stated that tariff regulation in international private leased circuit market is a must and urgent while calling for up to 64 per cent cut in the tariffs.

To justify intervention, it had said the decline in the tariffs for IPLC half circuit services in India is substantially less than the extent of decline witnessed in other parts of the world over time.

There is skewed market structure that is detrimental to competition. The services of IPLC are critical to the penetration of Broadband/Internet services and to IT and IT enabled services.