VSNL sources said even though new users are only taking TCP/IP accounts, there are about 25,000 internet users who have shell accounts. About 20,000 of these are students.

There is a sharp variance in the rates for students which are Rs 500 for 500 hours as against Rs 10,000 for a similar duration in the TCP/IP mode.

"There is no way in which we can disband the facility altogether as this would go against the interest of our users. But we are keen to phase out shell accounts and will try and offer certain sops to existing shell account holders to switch to TCP/IP," said a VSNL source.

"The new users who are coming to us are in any case not opting for shell accounts. It is not going to be easy to offer existing shell account holders similar rates but we will try andwork out an attractive package," the source added.

Interestingly, this is the second attempt that VSNL is making to get rid of shell accounts altogether. In the past it had mooted a proposal to this effect but it was struck down by the Department of Telecommunications (DoT).

In a related development, VSNL officials have clarified that the recently announced 20 per cent discount in renewal of internet connections would not be applicable to last week's reduction in tariff by 15 per cent.

VSNL had announced earlier this month that renewals of existing accounts would be 20 per cent cheaper. This effectively meant that the 2,50,000 existing account holders would renew their accounts at a five per cent discount to the tariffs being offered by arch rival, Mahanagar Telephone Nigam Ltd (MTNL). MTNL had kicked off internet services at a 15 per cent discount to tariffs levied by VSNL.

However, last week the tariffs for fresh connections itself were brought down by 15 per cent giving ground to speculation thatthe 20 per cent cut in renewals would be calculated as per the revised 15 per cent tariffs. This would have meant that an existing user would end up paying far less than any other competitor in the market.

"We want to continue to be in business. The renewals discount would be calculated as per the earlier tariff and not the revised one," said a VSNL source. The new tariffs for fresh internet accounts would be applicable from March 16. The VSNL board had cleared the proposal last week.