ISP India
The Internet not only affects our everyday lives. It is also an important variable in a country's economy. India is no exception. We have over 300 licenses issued. Today there are more than a 100 ISPs in operation. The Indian ISP community is growing at the rate of one new company per week.
This increase in growth rate is a result of the deregulation of the Indian internet market, passed by the Indian government on October 20,1998. The ISP policy was unveiled by the Minister of State for Communications, Kabindra Purakayastha. According to the proposal, ISP licenses will be issued for 15 years. Moreover, zero license fee for the first five years and number of licenses awarded will have no specific limit. However, after the initial first five years, a nominal amount will be charged. The downside of this policy is that it does not allow internet telephony.
The Railways, State Electricity Boards and the National Power Grid Corporation have been permitted to provide Internet backbone services. Foreign equity up to 49 percent in an ISP is now allowed. All this spells out direct access for private players in an Indian market traditionally ruled by VSNL (Videsh Sanchar Nigam Ltd). The first two private ISP providers were Ortel Communications and Surevin Consultants.
According to NASSCOM (National Association of Software and Service Companies), the increase of over 800,000 subscribers in the last 20 months is directly attributed to deregulation of the ISP policy. In November 1998, the number of Internet users was a mere 170,000. Since then this has increased to a million users on 30 June 2000. It is predicted that there will be nearly 23 million subscribers by 2003.
In a nationwide survey, Dataquest magazine estimates that the Indian ISP access market, worth 1.02 billion in 1999, is likely to touch a staggering 15 billion by 2002.
The key players have been VSNL, followed by DoT (now BSNL) and MTNL. But private ISPs like Satyam Infoway, Caltiger, DishNet and Bharti BT are closing this gap. Recently, the Prime Minister, Mr. Vajpayee stated that the state-owned VSNL must make the necessary changes in its agreement with FLAG (Fibre optic Link Around the Globe), its international partners, to fully utilize the existing bandwidth. VSNL has a 25 year agreement with FLAG and acquired exclusive rights for allocating bandwidth in India.
The current agreement does not allow FLAG to allocate bandwidth to private ISPs in India. The Prime Minister is keen to end this monopoly to remove the constraints of international data communications, which has slowed Internet progress in India. Right now for private ISPs their infrastructure provider is also a competitor.
Currently 2 gbps leased lines cost VSNL about $180,000 annually. It compresses its available bandwidth eight times before selling it. Were the terms of the VSNL and FLAG agreement to change, VSNL would have to provide ISPs a capacity of 10,000 mbps and the prices of bandwidth will fall. Currently ISPs receive only 150 mbps.
But leaving aside the bandwidth issue, another cause for concern is the telephone infrastructure. The most popular medium to access the Internet are telephone lines. However, in India basic telephony services are still not up to the mark. Cable modems and DSL (digital subscriber lines) are still in the pipeline. Currently limited services are available in parts of Delhi, Hyderabad and Mumbai.
There are several ways and means to accelerate Internet's market growth in India. The Railways, Power Grids and the Gas Authority of India already have fibre networks and cable ducts in place. And are already in a strong position to deliver high-capacity bandwidth to the market. BSNL is also building a nation-wide backbone for Internet bandwidth.
Lifting restrictions on national and international networks will give way to rapid infrastructure development. Private carriers and ISPs have already started talks with their foreign partners to help them on the finance and technical front. The greater the competition, more the chances of reduction in bandwidth cost, which currently account, for 30 percent of the ISP cost. Moreover this allows ISPs to make provisions for more bandwidth, improve performance and attract customers. In fact the Gartner Group expects further improvements when the Indian government decides to deregulate its policy further. For instance, removing the 49 percent cap on foreign equity, permitting Internet telephony services and focused licensing facilitates competition across the telecom market.
The Government too is doing their bit to promote Indian ISPs, specially in the international market. They have come up with two policies that are likely to have a strong positive impact on the Indian market. These policies are related to International gateways and permission to use Ku-band.
International gateways: The Department of Telecom issued licenses to MTNL and Dishnet-DSL for setting up International gateways. VSNL too have theirs. These companies have set up their gateways within the service area of the ISP's license. Their biggest responsibilities include guarding against anti-national and unlawful activities. For this, they have set up monitoring equipment at the gateway location. Licenses do not permit gateways in security sensitive areas like Jammu and Kashmir, Northeastern states, border areas of Rajasthan, coastal areas of Gujarat and Tamil Nadu, Punjab and Andaman and Nicobar islands. All Internet traffic must be routed through VSNL. The Government has gone a step ahead to clear all those ISPs that have applied for international gateway license using satellite technology.
Private ISPs permitted to use KU-BAND ISPs can now use Ku-band transponders for international connectivity. This not only improves quality of transmission,but also reduces the capital cost required to set up gateways. However, private ISPs are still awaiting permission to use Ku-band frequency. At present they can use c-band and extended c-band. The reason behind ku-bands success can be attributed to smaller dish size. Unlike the C-band whose diameter is 3.7 and 7 metres, the Ku-band is 1 to 1.5. Ground equipment costs are slashed by 50 percent and maintenance too is far cheaper. If you have noticed ISP tariffs have come down drastically, take for example VSNL. In 1995 it charged Rs. 15,000 for 500 hours. Now the figure has come down drastically to about Rs. 3000.
In conclusion, the liberalization of the telecom industry, plus the new bandwidth unleashed on the Indian market is sure to bring Internet access costs down further. You can be sure this will boost Internet penetration on the subcontinent, which is potentially the second-largest market in the world after mainland China.
Suhana
D Basu
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