India is set to usher in an era of virtual network operators (VNOs), with a high-powered government committee recommending wireline bandwidth resale in the Rs 6,000-crore national long-distance (NLD) telecom market. The Telecom Regulatory Authority of India (Trai) will now frame the necessary regulation and set levies.

The emergence of VNOs, which lease bandwidth in bulk from existing optic-fibre network owners, is likely to trigger an unprecedented drop in domestic long-distance tariffs. This will also bring down bandwidth rates dramatically. Besides retail consumers, the ITeS/ BPO industry also stands to gain immensely from the move.

But the recommendations are a setback to existing national long-distance operators like Bharti Airtel, Reliance Communications and BSNL, which have created their own optic-fibre networks since they will be forced to lower STD call rates.The committee, comprising members from the department of telecommunications (DoT), the defence ministry, the Planning Commission, the department of information technology, the railways and PowerGrid, recently submitted a report to the Prime Minister's Office. The report termed essential the re-sale of bandwidth in order to bring down prices, increase competition and ensure a faster infrastructure rollout. Now, new NLD licencees Hutch, Sify and AT&T, all of which got licences recently, do not need to invest in their own infrastructure to roll out long-distance services. Other operators like Idea Cellular, British Telecom and Tata Teleservices, which have applied for NLD licences, will also be able to roll out their services quickly. Most of the new long-distance licencees are likely to piggyback public sector undertakings (PSUs) Railtel, Gailtel and PowerGrid because all these companies have not only received NLD licences, but also have nation-wide networks and spare optic-fibre capacity. The committee has suggested that re-selling be allowed in a phased manner—for instance, 30 per cent of capacity in the first year and then go in for a gradual increase. It said re-sale be allowed initially in rural areas.

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