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VSNL to crush IT growth

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I obtained this article from SiliconIndia

Vamsi M.

NEW DELHI - The Videsh Sanchar Nigam Ltd (VSNL)
has turned down a proposal by the Communications
Ministry to allow private Internet Service Providers
(ISPs) to bypass it and have direct access to bandwidth.

The VSNL has also reportedly refused to accept a
further reduction in the Telecom Accounting Rates, a
demand which has often been expressed by the United
States carriers.

The impasse may cause some embarrassment to the
Ministry as it is hoping to define its stance in time before
the Clinton visit.

In a meeting held yesterday, the company reportedly
made it clear that it was not ready to lose its monopoly as
a bandwidth provider to private ISPs and allow direct
access to the undersea Fibre Optic Link across the

At present, ISPs are allowed to set up international
gateways using only satellites. Flag, a submarine fibre
optic cable system, is willing to provide international
connectivity to private ISPs directly, however, VSNL
has vehemently opposed the move.

According to Ministry officials, the cost to the end user is
expected to dip drastically if private ISPs are allowed to
set up gateways using submarine fibre optic cables from
Flag or some other consortium.

In yesterday's meeting, VSNL reportedly maintained that
the commercial agreement between them and ISPs
should be honoured and there should be no

The subject of Telecom Accounting Rates (TAR) which
is high on the agenda of the US team, has also reached
an impasse with the VSNL not agreeing to a further

The Ministry had proposed a reduction of TAR but
subject to certain conditions.

The US carriers are not very happy about the existing
rates - a total of $1.28. Eager to keep the level to above
$1 per minute, the VSNL had recently agreed to bring it
down to $1.10.

However, the US regulator had set a deadline of 2002
for bringing down the rates to as low as $0.70 per
minute, which is unacceptable to the Ministry since it will
have to bear the brunt of a majority share of the decrease
as per the revenue sharing agreement with VSNL.

Since incoming calls to India are much more in number
than outgoing calls, a further reduction in TAR would
lead to a considerable loss of revenue to the government.
Payments have not been coming from the US since late
last year, with both sides unable to arrive at an

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