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May 7, 2002 | 1250 IST
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Cyber cafes' rates plunge

Bipin Chandran & Shweta Rajpal Kohli

There is good reason to surf at an Internet café. Surfing charges have crashed to Rs 5 per hour from Rs 30-40 per hour about three months ago.

What is more, it works out cheaper if you surf the Net in a café with these rates rather than at home where you pay Rs 30 per hour -- a net connection costs Rs 6 per hour and the Mahanagar Telephone Nigam Ltd (MTNL) charges Rs 26 for using the telephone line for an hour.

Cyber café owners attribute the drop in prices to the reduction in the prices of leased lines by the telecom companies and innovative ways of bandwidth usage. The café owners are depending on volumes to generate revenues rather than making customers pay more.

"We have stopped using dial-up connections, retrieving the charges from a limited number of users. Instead, we take leased lines or ISDN lines and distribute them among a maximum number of machines and retrieve the investments or charges by attracting the maximum number of customers," said Sudhir Sharma, owner of a cyber café in Rajendra Nagar in Delhi. His café charges users Rs 10 per hour.

With lowered prices, café owners are seeing increased usage. "We see the number of users going up. Besides, this also helps us retrieve our costs faster. We used to get an average of 30 customers, which has gone up to about 50 now. Moreover, these users are heavy users," Sharma said.

Also, with MTNL offering a free 100-hour free Internet connection with each telephone connection, cyber cafés without leased lines are taking up the offer and making marginal profits by offering the MTNL connection to users.

"Another reason why rates are falling is because some of the cyber cafés have started offering Internet via cable, in which case they do not require a leased line and can offer lower rates," said Arun Kumar, an information technology consultant.

The average surfing cost per hour in places like Malviya Nagar in Delhi is Rs 15, and cyber cafés are offering prices as low as Rs 5.

"What happened to the Internet service providers earlier is now happening to cyber cafés," said Siddharth Ray, managing director of Data Access Systems.

"It's surprising that cyber cafés are dropping rates even though ISPs are pushing up their prices. In a competitive scenario, the cafés don't have much of an option."

How long can they sustain the prices? "Apart from surfing charges, we also charge the customers a price for printing and scanning. We are making some cash profits and we can improve profitability if the number of users go up," said Rajendra Kumar, who runs a cyber café in Delhi's Khan market.

But with the drop in prices, quality is also deteriorating. "The only way cyber cafés are making money is by squeezing the bandwidth available per terminal," said Ray.

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