Indian internet provider slashes rates

The IT sector has boomed in India

India's state-owned telephone company has announced plans to cut charges for internet access by up to 80% to boost usage.

The company, Mahanagar Telephone Nigam Ltd or MTNL, said the reduction would greatly increase usage and allow it to expand its customer base in Bombay and New Delhi.

Last week, MTNS's main rival, the state telecoms company Videsh Sanchar Nigam Ltd or VSNL, announced it was halving its rates to help it fight increased competition.

But MTNL denied it was responding to VSNL. The company had previously said it intended to lower tariffs every three months until they were comparable to the cost of cable television.

Internet boom

MTNL's managing director, Srinivas Rajagopalan, said that rates for 100-hour usage plans would be cut from 1,600 to 500 rupees ($11.49), and those for 500-hour usage would fall from 5,500 to 1,500 rupees.

Usage has soared with deregulation

But it said that for the one-month unlimited usage plan, rates had been cut from 1,000 to 200 rupees.

The company said the new rates would come into effect on 19 June, subject to approval from the regulatory authorities who required at least five days' notice.

More than 60 private internet providers are reported to have sprung up since the authorities lifted VSNL's monopoly in December 1998.

The number of internet subscribers in India is reported to have soared from 250,000 then to 1.1m now.

Fast track

That number could grow even larger if plans to use India's extensive railway network as a conduit for communications cables come off.

A team of engineers in India has said it hopes this will enable them to bring the internet cheaply and quickly to India's rural population.

If a pilot project in southern India proves a success, the engineers say they could potentially link 4,000 towns and 100,000 households to the internet within the next two years.