Date:29/05/2008 URL: http://www.thehindubusinessline.com/2008/05/29/stories/2008052951930400.htm

Back DoT removes cap on number of bandwidth resellers

Move to make available cheaper bandwidth to ITeS, BPO sectors

Bandwidth resellers are companies, which do not own any infrastructure, but buy capacity from large international long distance service providers like VSNL or AT&T and then resell it to consumers.

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New Delhi, May 28 In a move that would improve the availability of cheaper international bandwidth in the country, the Telecom Commission, the apex policy making body of the Department of Telecom, has given its approval for allowing unlimited number of bandwidth resellers in the country.

Bandwidth resellers are companies, which do not own any infrastructure, but buy capacity from large international long distance service providers like VSNL or AT&T and then resell it to consumers like business process outsourcing units. This could result in cheaper Internet services and international long distance calls.

The move will benefit larger consumers of bandwidth such as ITeS companies, BPOs and Internet service providers who will be able to buy bandwidth from the resellers at much lower costs.

It will also benefit IT services companies as they will be able to expand their product portfolio by bundling international leased lines along with the services that they offer to their customers. ILD operators, who can now ride on the resellers to increase their reach apart from getting assured business, will also benefit.

Licence fee

However, DoT will also impose a licence fee on the resellers, who will have to pay 6 per cent of their annual revenues. While this is being done to level the playing field with long distance licence holders, the revenue share would act as burden on the service provider.

“While we welcome the DoT move, by imposing a licence fee on resellers, it results in double accounting since the ILD operators from whom a reseller buys capacity would also pay 6 per cent of their revenue earned from selling the bandwidth,” said an ILD player.

In countries such as Germany, there are 27 resellers offering international bandwidth compared to five licensed ILD operators. Similarly, in the US, of the 32 bandwidth providers, 26 are resellers, making bandwidth available at rock-bottom prices.