ISPs to take cue from VSNL on price hike

Prachi Verma in New Delhi

Major Internet service providers (ISPs) like Mantraonline, DSL-Dishnet and Network of the World (NOW-India) are contemplating price hikes followed by Videsh Sanchar Nigam Limited’s (VSNL) recent decision withdraw its monsoon package. The price increase, which may range from 15-25 per cent, is expected to be announced by private ISPs in next two months.

VSNL recently withdrew its four-month long monsoon package which has resulted into an effective price increase of VSNL’s Internet connection charges from an average Rs 7.50 per hour to Rs 10 per hour.

The price rise by private ISP companies was long overdue as almost of all of them are incurring losses due to cut-throat pricing resulting in insignificant revenues.

“By raising prices, VSNL has reiterated the point that ISPs need a healthy revenue model and once the market leader raises prices, it will be easier for others to do the same,” Internet Service Providers Association of India, secretary, Amitabh Singhal said.

Taking advantage of VSNL’s price hike, NOW-India plans to raise its prices by 25 per cent from the existing average price of Rs 7.5 per hour to Rs 10 per hour in the next two months. This will bring NOW’s prices to the same level as VSNL.

“In the last two months, we had raised the prices by almost 15 per cent and we intend to go for another round of price hike of 25 per cent in a month or so,” Data Access India, CEO, Sidhartha Ray explained.

Mantraonline is also working out a strategy to raise prices to come up to the same rate as VSNL in the next few months, according to Bharti Broadband, CEO, Ashok Juneja. At present, the average rate is Rs 8 per hour.

DishnetDSL which is currently charging around Rs 6-7 per hour is also contemplating a price hike, according to DishnetDSL, corporate communication manager, R Desikan.

“The ISP division of VSNL contributed almost 4.5 per cent to the total revenue of Rs 2,900 crore and now our aim is to contribute almost 6 per cent to the total revenue in this fiscal,” according to the company’s chief general manager (Internet) KP Tiwari added.