The battle for bandwidth between corporate giants Tatas and Reliance came to an end on Wednesday with the former agreeing to release 1000 mega bytes additional capacity within a week, thus paving the way for a cut in prices for end users.

Tatas-controlled Videsh Sanchar Nigam Ltd and FLAG, acquired recently by Reliance, on Wednesday reached a settlement in the presence of the Telecom Regulatory Authority of India and the warring parties signed the minutes stamping the agreement this evening.

The agreement assumes importance in the wake of Reliance's earlier declaration of cutting down bandwidth price by upto 70 per cent for the end users whereas VSNL offered release of 17 STMs (a capacity totalling 1,000 Mbps) to global carrier FLAG in case it had the capability and capacity to accept the same.

Terming as successful the talks between the two players, Trai member D P S Seth told PTI after chairing a six hour long meeting of the officials of the two companies that "VSNL will release 17 STMs within a week...Reliance has accepted the proposal."

With this the release of bottleneck facilities sought by Reliance had been achieved, Seth said, but added that the commercial terms between the two would be decided by them.

Neither Tatas nor Reliance officials were available for comments immediately after the meeting.

Seth said there were some doubts over FLAG's capacity to provide bandwidth equivalent to 17 STMs, which was clarified by the concerned party.

Asked whether VSNL's proposal of 40 per cent discount on access and facilitation charges was also accepted by FLAG Cable System, Seth said the issue of pricing would be negotiated between them separately.

He, however, pointed out that there were some concerns on the operation and maintenance charges and both the players would be discussing them in future on long term basis.

The officials of FLAG and VSNL are believed to have decided not to issue any statement with regard to today's meeting and both the parties may issue a joint statement soon.

VSNL, a day ago, had offered to release 17 STMs while offering 40 per cent discount on access and facilitation charges which would translate into four per cent reduction in the cost of bandwidth.

With this offer, VSNL virtually put the ball in Reliance's court to lower the bandwidth prices.

Seth also said that with the release of 17 STMs, this would effectively mean that bottleneck facilities (landing stations), which are currently controlled by VSNL, were opened up for competition.

Earlier this month, Reliance had announced that it would reduce the prices of international bandwidth to $1 million per STM from the existing $5 million if the bottleneck facilities were opened up at fair market prices.

Reliance, which acquired Flag Cable System recently, claimed that it has sufficient international bandwidth but is facing difficulties in getting it released from the incumbent VSNL which has the exclusive right on the landing stations.

Reliance has plans to set up its own landing stations, but that would take another 10 months.
 
It had alleged that denying access to international bandwidth was nothing but violation of ILD license's terms and conditions.