Rejoice! STD rates set to crash by 40%

NEW DELHI: The department of telecom (DoT) has approved the proposal of nine companies to begin national long-distance services (NLD). With this, STD tariffs in the country are estimated to crash by as much as 40% on account of heavy competition in the long-distance sector. Currently, there are four operators, but DoT officials expect the number of carriers to go up to 20 by the year end with the entry of new players.

However, some of the big names who have applied for the NLD licence are yet to make the cut. For instance, Hutchison Essar and Dishnet Wireless’s proposals have not been cleared on account of their failure to submit Foreign Investment Promotion Board clearances, while the application of Tata Tele was found to be deficient.

DoT sources added that the department had sent reminders to Hutchison Essar and Dishnet Wirelss on June 19 with regard to their FIPB approvals, but was yet to receive a response.

When contacted, Tata Tele sources, said this was a routine process as the application can be returned to the company for additional details.

According to DoT sources, the companies whose proposals (to start NLD services) have been approved include Shipping DOT com owned by the Essar group, HCL Infinet, Hughes Communications (India), Tulip IT Services, Mahanagar Telephone Nigam, Power Grid Corporation of India, RailTel Corporation of India, Oil India and i2i Enterprises.

Currently, all STD traffic in the country is carried by the four existing NLD players — Reliance, Bharti, Videsh Sanchar Nigam and Bharat Sanchar Nigam. The new entrants can take on current players and even trigger price wars as the government has abolished rollout obligations, reduced bank guarantees and also reduced the entry fee to Rs 2.5 crore from Rs 100 crore.

“Apaksh Broadband and Sify Communication are also set to join the party as their files have already been submitted to the ministry of communications and IT for approval. Besides, we have received similar proposals from Idea Cellular and Spice Telecom,” DoT sources added.

In fact, GailTel, RailTel and PowerGrid have already formed a strategic alliance to take on the current NLD majors — this consortium is strategically placed to offer highly competitive prices due to synergising of resources.

They also have a pan-India presence and can therefore target the enterprise segment by providing virtual private network (VPN), broadband and managed services.