The Hindu : Business : India's international leased lines too expensive

Online edition of India's National Newspaper
Wednesday, Oct 06, 2004

Business

Business

India's international leased lines too expensive — study

By Our Staff Correspondent

MUMBAI, OCT. 5. International leased line prices from India are five times more expensive than Asian hubs according to a report on International Bandwidth Pricing Trends in Asia-Pacific released by Gartner.

Gartner says that the prices from India are high owing to factors such as less competition as compared to hub routes like Singapore-Hong Kong or Singapore-Tokyo. The report also stated that international bandwidth prices in the Asia-Pacific region would continue to decline by 20-25 per cent annually in the next three years. This is because of the large number of players aggressively competing for enterprise business and the excess capacity across Asia.

For the fast growing Indian market, new submarine cables such as TICS (Tata Indicom Chennai Singpore), FLAG Falcon (Reliance) and SMW-4 will add capacity on the western routes towards Europe and eastern routes towards Singapore. This will result in a 40 to 50 per cent annual price decline for international connectivity from India.

Commenting on the report, Puneeth Punja, principal analyst, Gartner, said, "Significant price variations continue to exist between open markets and controlled markets. On the high-traffic competitive routes that connect relatively open markets like Singapore, Hong Kong and Japan, the monthly recurring charge for a 1 Mbps international leased line is $700-900. The prices from the hubs to developing markets like Indonesia, Malaysia, Thailand and India are more than five times higher.''

Competitive markets

According to Gartner, the most competitive markets for international bandwidth are Hong Kong, Singapore, Japan, Taiwan and South Korea, whereas the least competitive markets are Indonesia, Malaysia and India.

The report also compares intra-city leased line pricing across Asia-Pacific markets. Local access costs constitute more than 50 per cent of total end-to-end cost for international connectivity. Even with increasing de-regulation there will be limited competition in access and prices for the link between the end-user premises and the international bandwidth providers point-of-presence will not decline much.

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