| The factors necessitating for such an exercise include
the need to bring down the cost of bandwidth in the country to make
user industries of bandwidth globally competitive and to promote broadband
and internet access, says a Trai release.
The release has listed out some key points in the consultation
paper. It says, the cost based leased line tariffs have been calculated
using an optical fiber cable system with STM1 as benchmark capacity.
The methodology of cost estimation adopted by Trai in this consultation
paper is that of a 'bottom-up approach'. The cost of various operators
was taken into account for calculating the cost of providing the
domestic leased circuit. The revised ceiling tariff for capacities
of 2 Mbps and 64 Kbps for 'beyond 500 kms distance' comes to Rs
8,20,000 and Rs 24,000 respectively.
The proposed revision in tariff in respect of 2 Mbps and 64 Kbps
for beyond 500 kms distance would mean a reduction of about 63%
and 75% respectively from the existing ceiling tariff in respect
of these categories.
It is expected that higher capacities i.e. above 2 Mbps will dominate
the demand structure in future. Keeping this in view, price multiples
for DS-3 and STM1 capacities have been proposed as eight times and
twenty three times respectively the price of E1 capacity. This is
based on the fact that there are scale economies arising out of
higher capacities and also based on the prevailing price-capacity
multiples observed elsewhere in other markets.
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