Bandwidth prices may fall by 20%

International bandwidth prices in India are going to fall further by the end of this year once the SEA-ME-WE-4 cable commences operations in October 2005.

The undersea cable will offer huge capacities from South East Asia to India to Middle East to Western Europe resulting in an average drop in tariffs by 20 per cent, a consortium member of SMW-4 said.

Increase in supply of international bandwidth would automatically result in a drop in tariffs. While the prices of bandwidth on westward route -- Middle East to Europe may drop by roughly 20 per cent, the drop in eastward routes may be higher as an overcapacity scenario prevails with Bharti's i2i and Tata Indicom cables between Chennai and Singapore, he said.

The international bandwidth prices in India have gone down by 90 per cent from a high of Rs 16.37 crore (Rs 163.7 million) five years back to the prevailing price of Rs 18 lakh (Rs 1.8 million) for E1 (2MB) level connectivity. For higher capacities like STM-1 (155 MB) connectivity the prices have fallen over 60 per cent from Rs 21 crore (Rs 210 million) per annum in 2001 to Rs 8 crore (Rs 80 million) per annum currently.

Prices for DS-3 (45 MB) connectivity have also seen a 60 per cent drop from Rs 7.5 crore (Rs 75 million) per annum in 2002 to Rs 3 crore (Rs 30 million) per annum currently.

Over the last three years post-divestment of VSNL, there have been as many as five price reductions. The last four reductions have happened over a period of 16 months, the member said.

The current demand of international bandwidth in India is estimated to be around 16-18 GB. The current supply is estimated to be over 515 GB, largely concentrated on India - Singapore route.

The SMW-4 consortium consists of two Indian players Bharti and VSNL. Bharti and VSNL own one landing station each at Chennai and Mumbai respectively.

BSNL has also announced its plans of setting up a cable between India and Singapore via Andamans Island. BSNL cable should take 8-10 months to go live if the laying process is done at a pace similar to VSNL's Tata Indicom Cable.

FLAG Telecom's much awaited FALCON cable that will cover a similar footprint like SMW-4 is expected to go live by January 2006. According to sources, VSNL is likely to continue on its roadmap of price reduction as and when the planned capacity increment takes place, the member added.

The Sea-Me-We4 submarine cable network would nearly span 20,000 km - approximately half of the circumference of the globe - linking 14 countries from Singapore to France via Malaysia, Thailand, Bangladesh, Sri Lanka, India, Pakistan, the United Arab Emirates, Saudi Arabia, Egypt, Tunisia, Algeria and Italy, and with 16 landing points.

This system is designed to last 25 years with full reliability, and with 32 times the initial capacity of the previous Sea-Me-We 3 system, which was installed seven years ago. The network will meet the fast growing needs from India and Middle-Eastern countries. It is operated by 16 carriers, including France Telecom.