Flag, VSNL agree on bandwidth

International long-distance tariffs to fall

With Videsh Sanchar Nigam Ltd (VSNL) and undersea cable network Flag Telecom resolving their long-standing dispute over landing rights, international long-distance tariffs are set to fall.

The two sides signed an agreement, in the presence of the telecom regulator, which envisages VSNL releasing 1,000 megabits of bandwidth capacity to Reliance-owned Flag. VSNL will also allow access to its landing stations in India. VSNL will release the bandwidth by the middle of April.

This means that Flag Telecom will be able to offer bandwidth to its subscribers even as the Tata-controlled VSNL loses its monopoly over the international bandwidth market. Availability of bandwidth from sources other than VSNL, in turn, will result in a steep cut in international long-distance tariffs in the next few weeks. Reliance had earlier said it might slash prices by up to 70 per cent once capacity was made available.

The agreement came after a six-hour-long meeting between the two sides mediated by the Telecom Regulatory Authority of India (Trai).

"The dispute between VSNL and Flag has been settled, with VSNL agreeing to release 17 STM1s to the latter. This will allow Flag to freely offer bandwidth to its subscribers. In turn, VSNL will get 5 STM1s on Flag's network," DP Seth, member, Trai, said after the meeting. Seth said the commercial terms would be decided by the two operators.

The Tata-managed company had earlier refused to grant Flag access to its landing stations on the grounds that enough capacity was not available. The controversy had picked up steam after Reliance Infocomm acquired Flag recently. VSNL's refusal to release capacity was putting a roadblock in Reliance's international long-distance telephony plans.

A large number of infotech-enabled service companies and the National Association of Software and Service Companies (Nasscom) had earlier written to the telecom regulator complaining that VSNL was creating an artificial shortage of international bandwidth in order to keep prices inflated. VSNL, on the other hand, had maintained that it was under no obligation to release more capacity as it was not part of an earlier agreement it had signed with Flag.

The deal

• VSNL will release 17 STM1s to Flag
• VSNL will also allow Flag access to its landing stations in India
• VSNL will get 5 STM1s on Flag's network
• The agreement was reached after a six-hour-long meeting between the two sides, which was mediated by Trai
• VSNL will lose its monopoly over the international bandwidth market