Broadband prices to fall further

Broadband prices have fallen from Rs 1,800 in January 2004 to Rs 500 today, expect them to fall faster now.

The average monthly tariff for a broadband (256 kbps or above) connection, which has witnessed a 72 per cent fall over the last 14 months to touch Rs 500 in February 2005, is likely to decline even further following the Telecom Regulatory Authority of India's move to slash international bandwidth rates.

Trai announced on Friday international bandwidth rates would fall by up to 70 per cent from April 1.

With the regulator all set to announce a revised leased circuit tariff structure for domestic bandwidth within a week, industrial analysts share the view that the combination of international and domestic broadband tariff reduction would eventually see the average monthly tariff fall to Rs 350.

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According to data compiled by the regulator, the average broadband tariff was as high as Rs 1,800 in January 2004. From Rs 1,000 in September 2004, the average tariffs witnessed a 100 per cent fall over the last five months.

The entry of state-owned players Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd into the broadband market in January and the ongoing price war has only accelerated the fall.

In addition to slashing tariffs for home users by over 40 per cent to match those offered by the two PSUs, private players like Bharti, Sify and Hathway are combining a slew of freebies to lure new customers and retain existing ones.

While Trai's figures show a 65 per cent growth in the number of broadband users from June to December 2004, with the country having 650,000 broadband users, industry analysts estimate over 200,000 new users have been added in the last two months.

In a statement, Trai said, "The growth in demand induced by the lower prices mandated by the Authority will itself act as a demand stimulant, leading to higher utilisation of capacities, that would have secondary effects in pushing down the price levels."

BSNL executives said the company had installed over 15,000 connections based on the ADSL 2 Plus platform since the launch of its "DataOne" services on January 14. The company has set a target of 1 million broadband subscribers by December 2005.

"Most of these connections are in Chennai, Bangalore, Hyderabad and Kolkata. We have a waiting list of over 160,000. Currently, our services are available only in 14 cities, against our target of 200. We are, however, confident of meeting the one million target by the year-end," said a senior BSNL executive.

According to MTNL Chairman and Managing Director RSP Sinha, the company had provided 3,500 connections so far, and had a waiting list of over 20,000 (Delhi and Mumbai together).

"We are still in the process of rolling out our services. Our subscriber base will cross the stipulated target of 500,000 by December-end," he said.