They are connected thru ERNET via IISc with a 64 kbps line, and they have to pay 2.5 lakhs a year. However, their connection is really slow, and they get much less than that bandwidth. They claim that they have to share the bandwidth with IISc; is that so? In that case I think they should pay proportional to their usage, or number of users, or actual traffic, don't you think so? I do not know whether they have a direct connection, it does not seem like that from the message.
ERNET has some absurd policy regarding the charges they impose on their "customers" especially considering that there is not much service to speak of!
Any service provider only guaruntees the stated bandwidth from your router/modem to their router/modem. All the rest is shared! Now it so happens that there is a fibre optic cable joining TIFR centre to the IISc network (I don't know exactly which part they join with) so technically they have a very high speed link to the ERNET. However, they join the ERNET at one of the most choked points -- IISc. So they get very little out of this link. Ideally, ERNET should not have charged them anything for this --- but then the ERNET is still charging the IMSc about 2 Lakhs for the absurdly slow nominally 19.2K/64K up/down link over VSAT. The moral is don't expect ERNET to be moral or just in pricing!
They are thinking whether to get a connection via VSNL for 2.19 lakhs a year. That will require investment on some hardware, but they are not sure since they might move to the NCBS campus (well, this is not very clear).
In the long run this is a good idea --- if only to threaten ERNET with it. As far as the Hardware is concerned the principle problem is to get IISc's permission to lay the leased line which is required in order to obtain the VSNL link. The modems can also be used if/when they move to the other campus unless that campus has also been wired. Alternatively, the modems could be obtained on lease from VSNL. The pricing would have to be worked out.
As far as software and networking is concerned. They obtained a class C address as part of the ERNET package which they should not have to give up since VSNL is anyway the intermediary for the Bangalore ERNET set up. So they would only need VSNL to re-route their existing Class C over the new route. VSNL might make some noise about this --- they seem to think that the network traffic is directly proportional to the number of IP addresses allotted and only allot 16 addresses for a 64K connection! Since they do not have to allot but only to re-route they may agree. Otherwise a IP masquerade/firewall set up would have to be done.