Telcos, tech firms clash over India's enterprise internet

At the centre of the clash are Domestic Leased Circuits (DLCs)—dedicated, high-security broadband lines used by banks, data centres and enterprises. The Telecom Regulatory Authority of India (Trai) is conducting its first review of these tariffs in more than a decade, which could slash price caps that have been unchanged since 2014.

The total revenue earned by service providers from DLCs in FY 2023–24 is around ₹13,300 crore, which is approximately 60% higher than the revenue earned in FY 2012–13, according to Trai.

Mobile operators, including Reliance Jio and Bharti Airtel, are defending their turf, arguing that government intervention would amount to a subsidy for Big Tech. They contend that the market is already competitive, citing massive private investments in fibre and spectrum that other players haven't matched.

“Imposing price ceilings in the DLC market will create a subsidy from telecom providers to other businesses, including ISPs and enterprise clients,” the Cellular Operators Association of India (COAI), which represents private telecom operators, told Trai on 2 March. “This violates the core principle of a free market, where prices are determined through direct negotiation between business entities.”

Telcos argue that there is no evidence of market failure, denial of access, or consumer harm in the segment that would justify regulatory intervention.

For tech companies like Google, Amazon, Meta, Zoom, and internet service providers represented by Broadband India Forum (BIF), the current system lacks pricing transparency, unfairly disadvantages smaller providers, and allows for near-monopoly pricing in remote areas. With market rates now as much as 99% below official ceilings, the outcome of this review will determine who controls the private highway-like DLCs of India’s internet.

Broadband India Forum (BIF), in its submission to Trai on 2 March, said that a regulated price would reduce the burden on smaller regional ISPs that depend on telcos for bandwidth. “High tariffs persist in remote/hilly areas due to limited competition and infrastructure constraints, necessitating a review of the 2014 cost model,” it said.

Transparency gap

Operating at bandwidths ranging from 2 Mbps to 10 Gbps (and sometimes higher), DLCs form the backbone of enterprise connectivity. Trai prescribes tariff ceilings for four bandwidths: 2 Mbps, 45 Mbps, 155 Mbps, and 622 Mbps. More than a decade ago, the regulator cut tariffs by up to 60%. Pricing now starts at ₹3.41 lakh per annum for a 2 Mbps line and goes up to ₹1.8 crore per annum for a line over 500 km with 622 Mbps connectivity.

Since Trai sets a ceiling, service providers can offer lower rates. Currently, providers offer discounts ranging from 30% to 99% below these ceilings, suggesting the 2014 limits are significantly higher than actual market rates.

“The issue is not about the bandwidth charges, but the higher one-time or local leads charges which are charged by operators for providing DLC infrastructure. There is a need to have a ceiling on the same,” said Satya N. Gupta, former principal advisor at Trai. The telecom regulator should ask the operator to declare prices, including those of local leads/one-time installation, in a non-discriminatory manner for all enterprises, he said.

According to industry body BIF, capital investment and maintenance costs for local leads (last-mile connectivity) can be significantly higher, ranging from ₹10-20 lakh per km in some areas.

Video conferencing company Zoom, however, has told the regulator that operators do not share their base tariff rates, and customers are in the dark about what a fair price is.

“Trai can collect billing information from operators and publish prevailing rates by operator anonymously...for various capacities and distances,” Dinesh K. Shiv, head of telecom compliance and regulatory at Zoom India, said in his submission to Trai.

"This will help customers to refer to this information and help them negotiate fair prices with service providers. This will also avoid Trai getting into cost analysis, which may be complex," he said.

Infrastructure access

In contrast, telecom operator Bharti Airtel said there is no demonstrable evidence that enterprise customers lack access to the relevant pricing information necessary for procurement decisions.

“On the contrary, enterprises routinely solicit and receive detailed pricing proposals from multiple operators during competitive bidding or negotiation. The absence of documented market failure in information asymmetry undermines the rationale for mandating standardised disclosures,” the operator told Trai.

On the proposal to allow ISPs to offer DLC services, telcos argue that this would be an ‘indirect assault’ on their revenue, as it would allow competitors to bypass the massive capital investments and strict service-level agreements (SLAs) they have already established.

“Without prejudice to our submission that there is no need to permit ISPs to offer DLCs in future, we submit that there will be no impact on tariffs because of this new competition, even if ISPs are permitted,” Reliance Jio told Trai. The telecom operator also rejected the argument that allowing new entrants in the segment would lead to competition.

There are currently 71 licensed National Long Distance (NLD) operators providing DLCs, along with multiple Access Service Providers (ASPs). Traditional leased lines connecting two locations are being replaced by smarter networks that can carry much more data at a lower cost. Over the last decade, VPN (virtual private network)-based DLCs have grown to a 47% market share by offering a faster, more agile, and cost-effective alternative to traditional leased lines.