Videsh Sanchar Nigam Ltd softened its stance and offered a 40 per cent discount to undersea cable system FLAG Telecom on access and facilitation charges for using the landing station in India. The offer, made on Monday, also makes room for the allocation of more capacity to the Reliance-owned FLAG Telecom.

VSNL had earlier released around 4 STM1s to Reliance Infocomm after the telecom regulator asked the company to resolve all bottlenecks that were creating artificial drought in international bandwidth availability (an STM1 is equal to around 155 mbps capacity).

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According to VSNL sources, the Tata-managed company has offered to part with a chunk of the commission it gets from FLAG for allowing access to the landing station.

"We get about 10 per cent of the revenue share as access and facilitation charges. Of this, we have offered a 40 per cent discount. We have also made an offer of freeing bandwidth capacity, in addition to the 15 STM1s that have already been allocated to FLAG."

VSNL sources said they were willing to sign a fresh agreement with FLAG for allocating more bandwidth. FLAG, recently acquired by Reliance Infocomm, had earlier written to VSNL that the long distance operator was not releasing bandwidth despite having it.

If FLAG agrees on the new offer, it will resolve the four-year-old battle between the two companies. Complaints were also made by Indian telecom and IT companies that there wasn't enough bandwidth because of which the price on international capacity was on the higher side.

Industry associations like National Association for Software and Services Companies had also accused VSNL of taking advantage of the monopoly situation.