New Delhi: Bharat Sanchar Nigam Ltd has decided to slash tariffs for leased line based Virtual Private Network (VPN) services by about 50 per cent from December 1.

The move would benefit corporate houses, which would now be able to take a 2Mbps connection from BSNL for as low as Rs 3.5 lakh per year compared to the existing tariff of Rs 6 lakh per annum.

The higher standard VPN services with 99 per cent assured quality level would cost Rs 7 lakh a year compared to Rs 12 lakh at present. The move is aimed at reducing the gap with the tariffs offered by private Internet Service Providers (ISP). VPN services are used by corporates to link up their retail chain and branch offices on a secure and dedicated communication network. Until now, private Internet Service Providers such as Sify have dominated the VPN market owing to lower cost of operations compared to long distance operators who are also competing for a share of this segment.

The BSNL move assumes significance as it comes at a time when a decision by Department of Telecom (DoT) to impose entry fee and licence fee on private Internet Service Providers for offering VPN services has come under heavy fire from the industry. The fresh levy would increase the cost of operations for private ISPs that is likely to be passed on to their consumers making Internet services such as VPN dearer.

ISPs have accused the DoT of imposing the entry fee at the behest of BSNL. The state-owned company had earlier objected to ISPs offering VPN services as it was beyond the scope of Internet operators’ licence. BSNL has even refused to give leased lines to the ISPs on grounds that the level playing field was not even. While long distance operators such as BSNL had to pay a licence fee of 15 per cent of the annual revenue, ISPs did not pay anything. This kept the costs of leased line service from long distance operators at a higher level compared to ISPs.