Net telephony gets a leg up

Long distance call charges may fall further with the Telecom Regulatory Authority of India (Trai) opening up the Internet telephony market, say industry experts. Internet Service Providers (ISPs), however, may lose out on the Internet telephony front because of the high entry fees proposed by the regulator for offering these services.

"Routing calls through IP (Internet Protocol) will break the price barrier. Internet telephony as a separate offering will not take-off," Sunil Mittal, Chairman, Bharti Tele-Ventures told Business Standard. He, however, did not give any details about the company's future plans for the segment.

TV Ramachandran, Director General, Cellular Operators Association of India said, "The telecom companies can route calls generated from their networks through IP switching circuits. This will reduce the cost for the companies, which could translate into cheaper calls for the consumers."

If the government accepts the Trai recommendations on Unified Licensing, all service providers with Unified Licences will be able to offer unrestricted Net telephony. Integrated players like Reliance, Bharti and the Tatas, with Unified licences, are likely to play a major role in the Internet telephony market, according to experts.

Some large (ISPs) may also acquire Unified Licences in order to participate in the unrestricted net telephony market. The entry fee barrier, however, will discourage small ISPs from going in for Unified Licences, the experts feel.

The government had legalised restricted Internet telephony in 2002. Total Minutes of Usage (MOU) for Internet telephony during the year were estimated to be around 70 million.

A total of 43 ISPs were offering Internet telephony as of end-March 2004.