Battle lines are being drawn after India’s telecoms regulator called for full-blown telephone services via the Internet, paving the way for another fall in the nation’s already cheap call rates.
India’s Internet service providers (ISP) are delighted at the prospect of a new revenue stream, but fixed line and mobile players are objecting that they paid high market entry fees, whereas ISPs will not have to stump up any money.
Under the plan proposed this week by the Telecommunications Regulatory Authority of India, people could call from their personal computers with Internet connections to a land line or a mobile phone and vice versa.
The move could ring in another big drop in call prices in the world’s fastest-growing phone market, where consumers already enjoy some of the lowest telephone costs, the regulator said.
The proposal is aimed at putting India’s telecoms sector “in tune with global trends” in which such “Internet-based services are very popular” and boosting paltry broadband penetration, the regulator said.
The government is keen to boost broadband use, especially in poverty-hit rural areas, where the Internet is seen as key to development.
But Cellular Operators Association of India chief T.V. Ramachandran said the regulator’s proposal was not fair to existing telephone companies.
“There should be a level playing field ... it’s unfair to allow unrestricted Internet telephony to ISPs at no additional cost,” he said.
The telecommunications department just recently issued pan-India licenses to several telecoms players, charging each an entry fee of 16.5 billion rupees (US$37.7 million).
India’s largest phone company, state-run Bharat Sanchar Nigam Ltd, said the entry of ISPs would hurt revenues.
Under the regulator’s plan, international call rates via the Internet could drop to one or two rupees a minute from the average seven, while national long-distance rates could fall to less than half a rupee.
Local calls could be virtually free.
But experts say it would take a long time for broadband subscribers to pose a threat to fixed-line and mobile license holders, given India’s low Internet penetration rate.
India has just 4.38 million broadband subscribers, while there are 287 million mobile users and 38.9 million land line subscribers.
Internet telephony could be “the killer application” to boost broadband penetration, which has “lagged far behind the very successful mobile telephony,” Internet Service Providers Association of India head Rajesh Chharia said.
Analysts are betting that the government will go ahead with the idea.
“The government has been pushing reforms in telecoms, I think they’ll give it the green light,” said an expert at an international consultancy, who did not wish to be named.
The regulator said telecoms companies have no reason to fear. ISPs rely on lines leased from telecoms companies to carry their signals, so they have to sign deals with existing license holders.
The regulator calls it a win-win situation as 85 percent of an ISP’s revenue is earmarked for resources mainly from telecoms license holders.
“In other words, an increase in the ISPs’ business will also result in a boom for existing telcos. Given this scenario, the government would do well to accept [the regulator’s] recommendations,” an editorial in the Business Standard said.
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