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Druknet to slash tariff

Despite a drop by 6 to 63 percent, the rates are still almost double those in India

Leased Line Connection: As a response to customer pressures to make the Internet more affordable, particularly potential tenants of the IT Park, Druknet is slashing its leased line Internet tariff by six to 63 percent from February.

The revised tariff follows bandwidth use with higher reductions for higher bandwidth.  The last revision took place in the early part of 2010.

As of December 2012, Druknet had 226 clients, such as banks, corporate offices and business houses, using the leased line service, which is a dedicated connection to the Internet, available 24 hours, for a flat monthly fee.

Druknet currently offers leased line connections between 64kbps to 9mbps, and 61 clients, the maximum, are using the 1mbps connection.  A total of 46 users are subscribed for the 512kbps connection.

A 1mbps connection, which currently has a published rate of Nu 48,790 a month, will come down to Nu 29,900 a month from February.  But Druknet manager, Tshering Norbu, said that it has offered clients much lower rates than the published ones, depending on the kind of contract signed.

The maximum reduction is for a 9mbps connection, which will come down to Nu 141,235 from Nu 368,100 a month.  The Royal Institute of Management has subscribed to a leased line bandwidth of 8mbps.

This time, Druknet has revised and fixed tariff up to 30mbps keeping in mind international clients that might take up space at the IT Park.  After 30mbps, there is an incremental increase of Nu 12,595 for every additional mbps.

But even with the reduction, tariff charges in Bhutan are still higher than what it is in the region.  According to Druknet manager, Tshering Norbu, a comparison with rates in India showed that the revised rates were in general more than double that of India for 1, 5, 10, 15, 20 and 30mbps. “In India, service providers offer discount on these prices, depending on customer profile, long term and business relationships with the customers,” Tshering Norbu said. “We hope that our reduction will to some extent help potential IT park tenants to decide in favour of Bhutan but there are also other factors which influence such decisions.”

The chief operating officer of the IT Park, Tshering Cigay, said the reduction would definitely help and make Bhutan a more competitive destination . “It’s still going to be much higher, but we’re grateful to Bhutan Telecom for the move,” he said.

Bandwidth Revised rates Existing rates
64 Kbps Removed 3,960
128 Kbps 7,000 7,470
256 Kbps 8,575 14,220
512 Kbps 16,445 25,585
1 Mbps 29,900 48,790
2 Mbps 58,305 92,735
3 Mbps 86,000 134,385
4 Mbps 100,335 176,120
5 Mbps 111,625 213,690
6 Mbps 115,195 255,340
7 Mbps 124,985 288,915
8 Mbps 133,555 334,645
9 Mbps 141,235 368,110
Internet leased line tariff (Courtesy: Druknet)

Druknet is also in the process of doubling its international bandwidth from the existing 622mbps to 1.24mbps, as the current bandwidth is nearing congestion with utilisation at 95 percent.  It last increased bandwidth by 155mbps in July 2012.

“People are using the Internet more frequently; at the same time the customer base is also expanding,” Tshering Norbu said.

Once the international bandwidth upgrade in done, Druknet plans to reduce tariff for individual broadband users within the first quarter of 2013.  Druknet had 16,500 broadband users of as December last year.  In Bhutan connection speed of 256kbps and above is considered broadband.

Meanwhile, the plan is to increase international bandwidth to 2.5gbps in the second quarter, and to 5gbps by yearend.  Tshering Norbu said that subscribing to a higher bandwidth would naturally mean cost per mbps would come down, but whether this would be transferred to users would depend on whether usage also grows.

By Phuntsho Wangdi

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  1. Unless the government allows more insternet providers, telecom will keep holding the yardstick to play with the tariff. DIT as a regulator has failed to make sure affordable tariff is provided to the users. Tashi has hardly been able to compete with Druknet. So, I suggest we help new providers to come at par with Druknet. Then perhaps, we can see some competitive market.

    Nevertheless, Druknet still needs to improve its connectivity in terms of continuous service. The service is intermittent.

    Regarding IT park, it is a shame that they failed to foresee factors that will determine the fate of the project. Cigay blames global meltdown and economy of scale mainly. Well, global meltdown is over and its not just us its everywhere in the world. Other countries are attracting investments.. how come we cannot? Economy of Scale is not a new issue. We all know that. How come the planners failed to take that into account beforehand? Blaming on it at this point is a lame excuse and if true, then the planners lack basic instinct. With huge investments like this, forecasting has to be done better than this.

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