GoI offers Third Internet Gateway at USD 4.5 per Mbps after subsidy

At the end of January 2022, it was announced that the Government of India (GoI) would offer a concessional rate for the third internet gateway, but details were lacking.

Earlier negotiations were stuck with Indian PSU Telecom provider Bharat Sanchar Nigam Limited (BSNL) which wanted to charge USD 8 per Mbps per month inclusive of the USD 3.85 per Mbps rate of Bangladesh.

Bhutan’s expectation was USD 4.5 per Mbps as the argument is that if Bangladesh can charge USD 3.85 per Mbps for wires coming from 3000 km away in Singapore, then why should BSNL charge such a high rate and so wanted it not to go higher than USD 4.5.

USD 8 per Mbps per month charge would also have made the third gateway economically not feasible.

The issue was stuck since March 2021 when Bangladesh offered the rate.

Even prior to that, the issue of a third internet gateway had been stuck since 2011 when three elected governments had been pushing for the gateway.

The issue finally came down to price as Indian Telcos were bidding USD 14 to even 21 per Mbps compared to the USD 7 that Bhutan currently pays. Their reasons were the price charged by Bangladesh and the price charged by the Power Grid Corporation of India for carrying the cables on its towers.

While Bangladesh gave a lower rate the issue was still the higher pricing by Indian Telcos.

The GoI put forward BSNL for the task but even BSNL’s rate was too high.

Now to bridge the gap between BSNL’s price (inclusive of Bangladesh rate) of USD 8 and the one expected by RGoB at USD 4.5, the GoI will offer a subsidy of USD 3.5 and ensure Bhutan gets USD 4.5 per Mbps per month for the entire gateway.

The subsidy will be given by GoI as an annual recurring charge.

According to BSNL it is paying Bangladesh Nu 3.85 per Mbps per month.

With the GoI subsidy, the annual recurring charges for the India component has been reduced to USD 0.65 per Mbps month.

This third gateway will connect through a 3000 km submarine terrain from Singapore to Bangladesh (Comilla and Kuakata) and then on the Indian side it will go through mountainous terrain from Agartala in Tripura to Gelephu of approximately 768 km.

The gateway is expected to enhance redundancy, connect remote pockets of Bhutan, increase internet bandwidth, and reduce the cost of internet connectivity for users in the country.

The deal will be between Indian telecom BSNL which will be the service provider to Bhutan Telecom for the third international internet gateway.

After the GoI subsidy Bhutan Telecom will pay BSNL, India a recurring charge of USD 4.5 per Mbps per month, or USD 540,000 annually inclusive of the Bangladesh Submarine Cable Company Ltd (BSCCL)’s component of USD 3.85 per Mbps per month.

As per Bhutan Telecom’s agreement with BSNL, there will be a one-time installation cost (non-recurring charge) of USD 10,350.

Bhutan Telecom will pay BSNL, India any future escalation of prices or rates by BSCCL, Bangladesh.

An earlier release by the Indian Embassy said that India is collaborating with the Royal Government of Bhutan on a number of technology initiatives. Under Bhutan’s Flagship Program ‘Digital Drukyul’, an optical fiber backbone has been provided till the gewog (village) level across all 20 districts of Bhutan.

Additionally, a peering arrangement has been established between India’s National Knowledge Network (NKN) and Bhutan’s Druk Research and Education Network (DrukREN), for the benefit of users in Bhutan in the fields of telemedicine services, research and education.

It said GoI is contributing Nu 1.98 billion during the 12th Five-Year Plan (2018-2023) to support Bhutan’s digital transformation through several people-centric projects in education, e-governance, trade, service delivery.

It said GoI is committed to further strengthening its close ties of friendship and cooperation with Bhutan across all sectors, including in the technology domain, in keeping with the priorities of the people and the Royal Government of Bhutan.

A Bhutanese official said they are very grateful for the generous subsidy from the GoI and appreciate the gesture.

However, there is still come confusion.

The first confusion is that Bangladesh agreed to a friendship rate of 3.50 and so it is not clear why BSNL is being charged a slightly higher rate.

The other confusion is on if the subsidy is only for BT or if private Internet Service Providers in Bhutan like Tashi Cell and other private operators can also be eligible for it. The worry among officials is on fair competition.

A third confusion is on how long the subsidy is for as if it is only for a limited time then the third gateway would become unaffordable if it expires or is withdrawn.

An ideal solution according to a source would have been to have a permanent rate, but things appear to be more complicated with the subsidy having to be given to bring down the price.

However, there is gratitude for the rate coming through and the aim will be to sort out the details, clear doubts through discussion and tie up any loose ends before going forward with implementation.

The third gateway is crucial for Bhutan as current both the gateways come through Kolkata and Siliguri which can be prone to disasters like Cyclone Amphan in 2020 when Bhutan got cut off.

It is also a requirement to attract international IT investors and grow the sector.

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