Videsh Sanchar Nigam Limited, (VSNL), is all set to cut prices of its internet services by twenty per cent in a months time, subject to approval by its board of directors. Price cuts will encompass TCP/IP (transfer control protocol/ Internet protocol) accounts and leased lines, but will not affect shell accounts.
The cut will lower the cost of TCP/IP account to Rs 12,000 for 500 hours. Currently TCP/IP account costs Rs 15,000 for 500 hours. This price cut is the first in the series of impending price cuts. Within a year, sources say, the prices could further fall to Rs 8,000 for 500 hours.
Leased lines of 64 kbps (kilobytes per second) capacity which were priced at Rs 10 lakh per year are expected to be available for Rs 8 lakh per year soon. The shell account prices are to be maintained as VSNL proposes to phase out these accounts in a few months time.
In addition to this, VSNL has come up with bargains like flexible rate packages of 100-200 hours. This entitles the user to extend his usage time, reduce it or take up extra disk space on a need basis. The rates will be the same as normal rates, only to be accounted on a proportional basis.
VSNL is said to have ruled out the possibility of unlimited access to Internet at negligible rates of Rs 400-500 per month. But on the cards is a scheme of providing Internet access to schools and colleges on leased lines only.
The proposal of department of telecommunications (DoT) to throw open the arena to private Internet services providers (ISPs) without payment of any mandatory licence fee will result in competitive pricing of the internet services, sources predict. In face of this, VSNL has been forced to reduce prices.
Also, sources add, the international telephony provider had initially projected an internal rate of return of some 30 per cent on its Internet service investment.
This was structured on a subscriber base of about 20,000 subscribers. However, now that there are almost 50,000 registered users the company has decided to lower rates.
Twelve months ago VSNL had made attempts to reduced tariffs by doubling the usage time, when its Internet service crossed some 25,000 subscribers.
VSNL officials had described this as an effective halving of rates. Chairman and managing director of VSNL B K Syngal and the manager operations Amitabh Kumar were unavailable for comments on next months price cut.
VSNL, meanwhile, proposes to float a subsidiary to take over the supply of internet services. Sources say VSNL was not in position move out of the business of providing internet services but so as to ensure fair play they had decided to float a new company.
