India's telecom regulator has recommended removal of restrictions on Internet telephony, paving the way for cheaper phone calls in the country.

Earlier rules allowed Internet service providers to offer Internet telephony only between PCs, without termination on PSTN (public switched telephone networks) and mobile networks in the country. Termination on PSTN and mobile networks was allowed for Internet telephone calls from PCs to destinations abroad.

While mobile-telephone and fixed-line service providers were allowed to offer unrestricted Internet telephony, they did not make moves to introduce this service, the Telecom Regulatory Authority of India (TRAI) said on Monday. These service providers have also opposed allowing ISPs to offer Internet telephony without restrictions, as they are worried that this will lead to a reduction of voice traffic on their networks, which will affect their business prospects adversely, TRAI added.

The proposal by TRAI must still be approved by India's Department of Telecommunications (DOT). TRAI's recommendations have often been stalled or modified at the level of the DoT and the Ministry of Telecommunications, at times because of pressure from business lobbies.

The Internet Service Providers Association of India (ISPAI) has welcomed the TRAI recommendations. Internet telephony in India could become the "killer app" for broadband penetration, which has lagged behind mobile telephony in India, said Rajesh Chharia, ISPAI president.

India had 4.38 million broadband subscribers at the end of June for a population of more than 1.13 billion, according to data from TRAI. The number of mobile telephone subscribers in contrast was 287 million.

The IDG News Service is a Network World affiliate.