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June 7, 2002 | 1225 IST
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VSNL plans to beef up VoIP funding

Hemangi Balse

VSNL plans to invest heavily in the voice over internet business over the next few years.

According to a senior Tata group official, a group of senior VSNL officials are working out the Tatas' strategy for its entry into the VoIP business and a business plan is expected in three months.

The official said the group realises that VoIP will eat into VSNL's core international long distance business, and it cannot be isolated from the change in consumer preferences.

"The difference between VoIP and regular ILD rates is still very substantial, leading to a distinct shift in traffic towards VoIP," the official said, adding that while VoIP rates quoted by vendors ranges between Rs 5 a minute to Rs 10 a minute, the peak hour ILD rate to the US is around Rs 40 a minute.

VSNL has already got its existing ISP licence modified to comply with government requirements, the official said.

"Earlier, there was only experimental home-based traffic on VoIP, but as technology improves and sound quality on internet comes closer to phone-like quality, there will a gradual shift in corporate and other bulk interest towards VoIP," the official said.

The Tatas, therefore, have asked VSNL to work out a business plan and investment strategy for its entry into VoIP, he added.

The group realises that VSNL has access to the largest bandwidth in the country, which can be leveraged within acceptable costs to harvest the VoIP business, and therefore will be a valuable link in end-to-end connectivity being strategised by the group.

The government norms for VoIP suppliers are fairly liberal in that they provide for both web-based and phone (IP-device)-based services.

With the newer generation of technology coming in, most consumers will not be able to discern whether they are speaking on a regular ILD line or on a VoIP service, hence the group's determination that it should be a significant player in the VoIP arena.

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