Computers Today, December 1-15, 1998, Net

The first set of private ISPs are already in line. Now, Indian Netizens can look on to better and cheaper access. But before that, issues of infrastructure, tariff, and connectivity remain to be solved.

Netizens in the country can heave a sigh of hope. The pathways to the Web are opening up at last. After a prolonged delay, the Department of Telecommunications (DOT) has begun to issue licences to private Internet Service Providers (ISPs) in the country. The new Internet policy permits unlimited number of ISPs with no licence fees for the first five years. Experts say the policy, along with the falling price of multimedia PCs, would help push the number of Internet subscribers to one million by the year 2000 and possibly eight million by the year 2002.

A long list of prospective ISPs are waiting to boot up. These include international majors AT&T, British Telecom, MCI, Motorola and Compuserve. Also in the line are Indian start-ups and joint ventures--Bharti BT, Sprint RPG, Datapro, Icnet, HCL, Fujitsu RPG, Satyam Infoway and CMC.

Among the first few off the block, Mahanagar Telephone Nigam Ltd (MTNL) has already promised 'Net' freedom for surfers in both Mumbai and Delhi from 26 January, 1999. It has selected Bangalore-based Digital Equipment (India) Ltd to set up a $1.6 million project to upgrade its network. MTNL chairman and managing director S. Rajagopalan plans to net in around 50,000 surfers within the first year of operation. Satyam Infoway expects to get rolling in about a month. Riding on a 12-city backbone network, it already offers E-mail, electronic data interchange (EDI) and online services. Other Indian P-Telcos like Reliance Telecom are likely to restrict themselves to their respective basic or cellular telephony circles, before going national. Bharti BT will kick-off in Bangalore, Delhi, and Mumbai. ETH expects to touch 15 cities in the first year.

One thing is certain. With high costs of setting up networks (Rs 150 to 200 crore) and a long gestation for returns to flow back, the ISP segment "will be characterised by low-profitability, with a shakeout imminent within two years," according to Ashok Desai, managing director, SAARC region, Silicon Graphics Systems India Pvt. Ltd. Adds Ravindra Sharma, vice president, British Telecom: "Providing Internet access is not all that easy business. It requires manpower, infrastructure, network and most importantly back-end technology." Which is why perhaps Desai foresees a survival rate of less than 50 percent. "There will be around 25 to 30 ISPs on a nationwide basis, another 100 will be operating in states and metros, and a similar number in the C- category comprising all secondary switching areas (SSAs) of the DOT."

But before that, ISPs and the Government would have to sort out issues of infrastructure, connectivity and tariffs in a de-monopolised system. Says S.S. Sodhi, the Telecom Regulatory Authority of India (TRAI) chief: "It is not a travesty of truth to say that a deregulated environment requires the most disciplined set of regulations to oversee the growth and to ensure and protect the interests of the Net surfers and the country".

The most critical is the infrastructure issue. "The expansion of Internet services will lead to a three-fold requirement--the need for more access lines, national backbone as well as international bandwidth," says Ravindra Sharma, vice president, British Telecom. The immediate requirement will be the access lines to Internet servers. With a global standard of 1:10 or a better ratio, every million customers in a city will require over 1,00,000 lines. With the policy not permitting last mile connectivity for dial-up access, basic service operators will play a crucial role in meeting this requirement.

Sharma points out that multiple ISPs would require a common point for exchange of traffic flowing between their customer groups and content sites. The Internet backbone will be built around large packet switching centres called Internet exchange points. In other countries, Internet exchanges are provided by major carriers; some of the heavily utilised exchange points include Sprint or New York NSFNAP, MAE-East (Washington DC), MAE-West (San Jose and Moffet Field) and Commercial Internet Exchange (CIX), San Francisco.

Sniffing a huge opportunity in the domestic turf, VSNL's acting CMD Amitabh Kumar is pitching for the state-owned international gateway provider to become a national exchange point. VSNL's backbone nodes at present serve as Internet exchange points for service providers such as ERnet, NIC, and software technology parks. While VSNL and DOT will continue to provide these services, private exchange points set up by the ISPs are also expected to come up. As a complement, the Indian Railways, State Electricity Boards, ONGC, and SAIL are planning to set up their own Internet backbone networks.

Internet surfers in India would not be wrong in expecting a fall in access charges. But with the DOT as the licensor, ISPs might find fixing tariffs to be a prickly affair (see Thorny Routes). Presuming the market will solve that problem in time, service providers still have to work hard at retaining customers. As British Telecom's Sharma sums up: "Any national ISP cannot be run on a brand name. It is the service which matters. A small player with focus on quality and technology will be able to do a better job than a major player who has diverse focus." With service to ensure surfer loyalty, ISPs can entrench their market shares by coming up with a range of value-added services such as banking, E-commerce, health and tourism.

On their part, ISPs must not forget that their growth will not be fuelled simply by an increase in the number of surfers, Web sites or customers. In the US, there are an estimated 7,000 ISPs. In Hawaii Islands alone, there are close to 32 ISPs. China boasts of 10,00,000 Net surfers and 30 ISPs. Hong Kong and Malaysia have 2,50,000 surfers each; HK has 90 ISPs while Malaysia has just two.

The real growth, experts say, will be driven by an increasing use of bandwidth-hungry applications. Millions of home-pages of information including graphics, audio and video, have been placed by thousands of firms, advertising their wares and services on the Web. As a result, a more sophisticated Internet user, Sharma says, is emerging--one who appreciates its full potential and wishes to utilise it.

According to Sprint, the average message travelling over its networks is today ten times larger than it was a year ago. Users are downloading larger and larger Web pages. They are also steadily pushing up data-heavy applications such as video conferencing, LAN connectivity and enterprise networks. Within the next three years, the bandwidth requirement of the Net could grow by a factor of 50 to 100, significantly overtaking the telephone network bandwidth. On the Net backbone, the traffic is today doubling every 100 days.

With the Internet set to become the global theatre of commercial activity, ISPs would be the engines of boom. As is happening in the West, a nascent Internet-based industry in India will be highly dependent on the proliferation of organisations whose businesses is the creation and delivery of content. Two decades ago, a similar growth curve marked the beginning of the growth of the IT industry. It was heralded by the spread of software organisations, creating applications and generic solutions for every functional need.

VSNL: Wake Up Call

Jolted by the Government's decision to allow private ISPs in the country, state-owned Videsh Sanchar Nigam Ltd, the sole Internet service provider to common people so far, plans to invest Rs 50 crore to improve its services. Acting chairman Amitabh Kumar, sees VSNL changing its role from that of an ISP to becoming a connectivity provider. "We are going to revamp the service with new features like automatic, online registration, online billing, and software download facilities," Kumar claims. Internet surfers have been unhappy with VSNL's services. Complaints of unreliable connections, low speeds and high tariffs have been rampant.

VSNL is now keen to change the status quo. It is setting up six major point-of-presence (PoP) equipment, and planning to reorganise its servers. Each of the POPs will have a directory server, mail server, radius server, proxy server and news server. The increasing number of ISPs will push up the bandwidth demand. VSNL is going ahead with significant acquisitions of Internet capacity through its extensive reach of global fibre networks. Kumar emphasises that India is already well-connected to optical fibre cable systems, with FLAG (5 Gbps per fibre), SEA-ME-WE-3 (10 Gbps per fibre) and others in the pipeline. Kumar is not sure whether the Government would allow VSNL to cut tariffs and put private ISPs at a disadvantage. "We certainly want to reduce our tariffs and can afford to do so," he says. "But, we may not be allowed to go below a benchmark tariff." Nice excuse that.

The Thorny Routes

Legally, it is unclear whether any 'licence' from the DOT is required because an ISP is not "establishing telegraph" requiring a licence from the Telegraph Authority in terms of the Indian Telegraph Act 1885. But forget it. Now that the government has de-monopolised the Internet service, it still has several issues to address:

Dial-up calls to access the nearest point of presence (POPs) of the ISP are required to be charged as local calls. Would this apply only to DOT/MTNL's customers or to others using the P-Telcos?

Suppose there are several P-ISPs in a city. Each will require its own set of dial-up access numbers which have to be in a hunting group--if the first number is dialled, call will be switched to the first free line in the group, automatically. Would the DOT or P-Telco (basic service) give so many lines--at local call rates--which will not earn much money (they would not carry STD/ISD calls)?

The P-Telcos (basic) are deploying wireless local loop which support no more than about 9.6 kbps. Would business subscribers requiring Internet be satisfied with such low speeds?

The P-ISPs can deploy wireless in the 2.4 GHz band to pick up their customers, by-passing the PSTN. Similarly, they can interconnect to Internet back- bones abroad through their own satellite earth stations (after clearance from the DOT). The DOT should therefore expect and permit third party enterprises who would be in the business of providing wireless Internet access and international Internet back-bone connectivity.

The Railways, the State Electricity Boards, the Power Grid Corporation and Oil Companies are all allowed to build broadband, digital, high speed, data infrastructures for leased use by ISPs. The DOT, must publish the terms and conditions and guidelines for universal application and not deal with case-by-case.

The DOT must produce a public document as to how its WPC, the radio spectrum manager would allot the 2.4 GHz band to P-ISPs; and how the P-ISPs would get satellite transponder capacity for their links to the Internet backbones abroad.

--T.H. Chowdary

Eight Commandments Of Service Provision

To reduce costs

Use high-speed digital trunks to consolidate incoming lines from a local carrier's central site that carry multiple channels on a common link.
Consolidate Point-of-Presence (POP) equipment that replaces entire racks of equipment and is less expensive and easy to monitor.
Look for a compatible and scalable family of products. It is one of the most important features for POP equipment often neglected.
Prefer open standards when selecting equipment. Basic standards include RS-232, ISDN, T1, V.34.

To Increase Revenues

Support all WAN services: plain old telephone service (POTs) for analog modems, ISDN, frame relay, etc.
Support ISDN to sell bandwidth on demand, offer an upgrade to high-speed digital services with an ISDN Basic Rate Interface (BRI).
Attract SOHO users by offering a less expensive ISDN Integrated Access Device (IAD) to meet their demands.
Offer virtual private network (VPN) for businesses for their mobile users, telecommuters and branch offices.