Technology: Convergence: Digital Dawn

With cable TV networks, telecom firms and internet firms rushing to a new frontier where entertainment and communications converge, life at home promises never to be the same again.

Like millions of Indians, Bangalore grocery store owner Mohan Patel has a favoured evening pastime: being a couch potato. Only, instead of a remote, he picks up his telephone, dials a number. As it connects, a menu of options flashes on his TV set: watch a movie, cable, check train schedules, open encyclopaedias, find a restaurant or a doctor. Patel's is one of 4,000 homes in Bangalore connected to the cable TV-based home and office interactive services -- an experimental service run by Mohan Tambe, a technology entrepreneur poised on a brave new frontier where telecommunications, television and the computer merge.

A Consumer Guide to Convergence
Making sense of the digital goodies streaming into the market

ť Cable Modem                          Rs 15,000
Special modems attached to the fat coaxial cables allow data transfers and Net surfing up to 500 times faster than the 56 kilobit modems available through phone lines on most PCs. And since the cable connection is always on, you don't have to dial in.
ť Set-Top Box             Rs 10,000 -- and falling
Special devices that plug into ordinary televisions and allow them to receive the Internet. A cheaper option to buying costly new televisions geared for convergence. Many Indian companies are trying to build a cheap set-top box for mass use.
ť Cellular Communicator   Rs 53,000 onwards
The Nokia 9110 Communicator, already available in India, is a palm-top computer with a 386 chip that doubles up as a mobile phone when it is shut. So you can make normal calls, send and receive faxes, browse the Net, download and even edit images.
ť Internet Computer   Price to be decided
It has no hard disk or floppy drive. Hooks up either to a cable or conventional modem and allows users to access non-Internet services like movies-on-demand, game servers. Built-in smart card reader allows e-commerce, like paying bills, shopping.
ť Web Television    Rs 25,000 to Rs 1.5 lakh
BPL, LG, Onida and Videocon offer varying fusions of computers and TVs. They have built-in modems, computer chips, some even have wireless keyboards. So you can cruise the Net, send e-mail, play its audio or video files -- and watch TV.

Internet through cable, cell phones or satellite. Telephones, video conferencing through cable. Cable through computer. This is the age of convergence, a new phase in the digital revolution where instead of numerous wires and numerous devices life could revolve around one device, one wire. The marriage of computers, mass media and telecom will allow your local cablewallah to offer the Internet, cable and, if the government permits, even telephone services through your TV or computer. Normal phone lines are like rutted country roads, incapable of handling the huge amounts of digital traffic that the new services will generate. So the favoured route in India is the cable wire, which is like a digital superhighway, capable of ferrying images, voice and data at speeds up to 500 times faster than a normal phone line. You will also be able to access some of these services on upgraded phone lines, cellular phones and satellite transmissions. Companies are already repositioning themselves for this lucrative digital dawn. Small or big, local cable operator, Internet start up or telecom giant, many are putting in big money. Never mind that many government policies are seriously out of touch with the march of technology. Never mind that there are no immediate profits to be made.

"Indian companies have invested more than Rs 1,000 crore in just developing the Internet," says Amitabh Kumar, acting chairman of VSNL, the Rs 6,800-crore overseas telecom monopoly. His Internet revenues have jumped 150 per cent this year but fierce competition is looming from 50 newly licensed private Internet companies and their grandiose convergence plans: cable, home shopping, video-on-demand, education to homes. Television giant Zee Network Ltd estimates it will single-handedly require Rs 2,000 crore in the next five years to turn itself into a media-cum-entertainment-cum-communications giant. Internet service provider Dishnet says it will pump in Rs 400 crore over the next five years to build a nationwide Internet and cable network. That's just a glimpse of India's convergence plans.

Convergence confusion The problems centre on archaic policies and creaky infrastructure
Roadblocks	Solutions
Cable networks, Internet providers, phone and cellular companies are not allowed to connect with each other -- essential for convergence to occur.	The prime minister's task force recommends telecom networks be allowed to connect to each other. Network interconnectivity is the key to the digital revolution.
Broadband networks, high speed systems for transmitting video, cable, telephone calls, music or any form of communication that can be digitised, don't exist in India.	Construction should start this year of a 15-city 25,000 km. network of fibre optic cables with maybe 1,000 times more capacity than the present dot fibreoptic inter-city system.
If cable companies and ISPs are allowed to start all manner of new digital services, what happens to the Rs 7,000 crore in licence fees paid by private telephone companies?	The new phone companies, who were licensed only to offer basic telephony, should be allowed to provide Internet and other digital services. Start with a clean slate and let the market decide.
A host of convergence plans, like direct-to-home television and Internet delivery to remote areas, presently need the so-called KU satellite band. It eliminates the need to lay wires. The government is scared of a lack of control.	DTH services are ready, but government is undecided on policy. KU band use must be allowed. A plethora of television and communication services will become reality.

"Convergence is a down-to-earth reality," says N. Seshagiri, convener of the prime minister's task force on information technology which last month submitted its final report to the government, recommending telecom deregulation. Its new mission is more dramatic: construction will begin this year on a state-of-the-art fibreoptic network linking 15 cities with a capacity to carry 1,000 times more audio, video and data traffic than current lines. In two years it will hopefully give India the backbone for convergence. Similarly, VSNL signed a Rs 1,200-crore deal on May 22 with the Power Grid Corporation to use its 45,000 km length of high-tension transmission lines to build a nationwide fibre optic network of high-capacity digital pipes. "Streaming live video, audio, video conferencing -- everything that wasn't really possible in India -- will now be available," says Kumar.

But the revolution is already underway in small pockets of India. In Delhi, two new services, Cell M@il and Cell Surf, allow subscribers to receive e-mail on cell phones without an Internet connection. In Bangalore, 100 subscribers of Zee's Siticable can access the Net on their TVs. The commercial launch is in August and in four years Siticable foresees 1.2 million subscribers of Internet via cable nationwide. In Pune, 3,000 subscribers have signed up within a month for Dishnet's Internet services, a harbinger of how the Net could reach home through the cubbyhole operations of cable operators.

Dishnet's hub is a chilled, gleaming new network operating room in a Pune suburb. Encased in sheaths of thick rubber and plastic, the fibreoptic cable -- finer than a human hair but hugely more capacious than the old copper wires -- snake out of the room. To transform the obsolete cable market, Dishnet's "fibre in the sky" swings overhead like high-tension lines and embed themselves 6 km away in the control rooms of Silicon Mountains, a motley group of 70 cable operators who have already pooled in resources and laid 60 km of fibreoptic trunk lines through the city. "It's a great business opportunity," says Dishnet's chairman Vijay Bhatkar, who doesn't see any profits for two years at least. "Five years ago no one thought of Internet through television or cable carrying Internet or telephone. Now satellites are joining in, telecom wants the data game and data wants telecom. Everyone wants to do everything."

So it's getting a little confusing out there. "VSNL's image has changed from a telephone company to an Internet company," says VSNL's Kumar who predicts his Net revenues will double every year. Computer giant Wipro Ltd and India's first private telephone company Bharti Enterprises in Madhya Pradesh have both spun off Internet subsidiaries. In Andhra Pradesh, Tata Teleservices is setting up an ISP to pipe in Internet and infotainment services over its telephone lines.

But nothing exemplifies the paradigm shift more than MTNL. The staid phone giant (revenue Rs 5,200 crore), after starting Internet services this year, now wants to provide cable and is setting up new exchanges that will allow high-capacity traffic like video over phones. MTNL has also struck a deal with Dishnet in Mumbai and Delhi. It will provide Dishnet with access to telecom lines for a share in the ISP's revenue from its education-to-home plans. "There are great opportunities in convergence for us," says MTNL Chairman S. Rajagopalan. "If we and the (private) telecommunications companies don't realise that voice traffic will be trivial, at least in the metros, we are doomed."

India is only following a worldwide frenzy of convergence of technologies and business alliances. In a huge multi-billion-dollar deal struck in May, AT&T became the largest cable and phone company in the US, delivering high-speed voice, video and Internet services to 60 per cent of American homes. In the deregulated US and European markets, the government, instead of allotting areas, auctions frequencies, allowing companies to run anything they want, from cell phones to cable to Internet services, on that frequency. The technology behind such deals is already in India.

A variety of digital goodies, like televisions-cum-computers and set-top boxes that enable televisions to receive Internet, are already available. Even some farsighted local cable operators are investing in making their systems two-way, so that Internet and other connections can travel back along the old single-way cable wires. "I can provide anything today: cable, Internet, even telephone," says Vikki Choudhary, managing director of Home Cable Network, a cable operator in the middle-class south Delhi colony of Sukhdev Vihar. Choudhary has invested Rs 12 lakh in making convergence a reality for 3,000 of his 10,000 subscribers. But, apart from peculiarly Indian technical problems -- Internet connections dropped when a vacuum cleaner started up next door -- the problem, he says, is the government.

Yet, the gold rush continues. At the Indian Venture Capital Association, Ahmedabad, which receives at least one infotech investment proposal every day, 30 domestic venture capital funds and private equity funds operating out of India will invest nearly Rs 600 crore in digitally driven projects in the current financial year. "In the past two years this industry has been the largest taker of money," says Chairman Vishnu Varshney. The leading investment areas: Internet and electronic commerce.

The digital revolution's targets are nearly 20 million cable connections, more than a million personal computers and thousands of offices. "So far the consumer has been a passive player," says Vijay Jindal, managing director and CEO, Zee Network. "Convergence lays the foundation of consumer democracy and creates a market with no intermediaries -- one where at the press of a button you can get news, information, education and talk shows."

Jindal's Siticable will become the Sitinetwork, an integrated web of voice, video and data services offering subscribers everything from the Internet to video conferencing. The company, which reaches 4.5 million homes, has already run tests in Bangalore and Mumbai with the blazingly fast cable modems needed for this consumer cornucopia. It is also close to clinching a deal with the Karnataka Government to allow subscribers to pay power and water bills over its cable network.

It plans to lay fibreoptic trunk lines, offer connections to small operators and lease out expensive cable modems to consumers. "This is an era of alliances," says Jindal. "I'm telling small cable companies, 'you don't have the money to invest in modems, you don't have the money to invest in bandwidth (Rs 5 crore for two megabits, a basic Internet capacity), so I say if you connect with me, I'll pay for all that.' They repay me through a chunk of monthly subscriptions."

But will Indian consumers, notorious for fighting even a Rs 10 increase over their Rs 150 cable bill, pay the Rs 1,500 to Rs 2,000 subscription fee expected when Internet services begin streaming into homes over cable? The hope is many Internet subscribers -- there are nearly five lakh today, projected to grow to two million in the next year -- will switch. If you subscribe to an Internet service you pay at least Rs 600 a month, tie up a phone line and pay Rs 24 an hour to MTNL to stay connected. "If I could be online 24 hours for Rs 1,500 at superfast speeds, sure I'd pay," says Rohit Dabrai, a restaurant owner in Pune who has plans to put his menus and services online when Dishnet, his Internet provider, comes in over cable perhaps later this year.

It is the spread of e-commerce -- still nascent today because of poor telecom lines -- that could really drive convergence. If the connections are made right, the pay-off in the next 10 years could be $20 million (roughly Rs 85 crore), and nearly one million jobs, like teleworking, where employees work from India for an office thousands of miles away, says a recent survey released by the National Association of Software and Service Companies.

As for the Internet itself, there are already more than 50 Indian "shopping" sites that offer everything from vegetables to music. They mostly don't make money, but they want a toe in the door -- and wait for laws to enable e-commerce in India. "Who says there are any barriers to e-commerce?" asks Ajit Balakrishnan, chairman of Rediff On the Net, India's most active shopping site. He argues the main hurdle is mindset, not policy: "The first thing an entrepreneur thinks about after he gets an idea is, 'What permit do I require?'"

But there are infrastructural and policy obstacles. Yet even the monopolies recognise the inevitability of a digital free market. "Technology makes it extremely difficult for the government to say what you can't do and can do," says mtnl's Rajagopalan. "The government can't prevent this." No surprise then that this year alone, vsnl's Net monopoly was dismantled and "last-mile" access, the right to go into homes, was given to private telecom firms. All that remains is a monopolistic mindset. "Mindsets change slowly," says Seshagiri. "But change they will."

Dreamers and Doers
Some of the people and the roles they are playing in the spread of India's emerging digital revolution

The Gatekeeper
Amitabh Kumar, Chairman, VSNL
India's first Internet company faces competition from 50 private start-ups. But with a Rs 1,200 crore deal to string high-capacity fibreoptic lines along 45,000 km of the power grid, it will offer companies the means to carry streaming video, voice and data.

The Conduit
Vijay Bhatkar, Chairman, Dishnet
Quitting his job to build an Indian supercomputer, he's linked his Net services over fat digital pipes to Pune's cable system for high-speed Internet access. In the works: wiring up local schools.

The Phone Giant
S. Rajagopalan, Chairman, MTNL
With cable and Internet companies threatening to corner the converging future, MTNL's two new exchanges in Delhi and Mumbai will handle video, audio and data traffic. And it wants permission to provide cable.

The Techie
Mohan Tambe, Innomedia
With government funding, Tambe is experimenting with India's first cable-TV based interactive service in 4,000 wired homes in Bangalore and Mysore. With a team of 40 he's built his own equipment to convert ordinary cable to receive everything from shopping guides to encyclopaedias.

The Conglomerate
Vijay Jindal, Chairman, Zee Network
Investing an initial Rs 250 crore, Jindal is converting part of his Siticable network of 4.5 million homes into a system capable of paying electricity bills, video conferencing, Net access. Trials are running in Bangalore.

The Cable Guy
Vikki Choudhary, Home Cable Network
From his cubbyhole of a control room in south Delhi, Choudhary has seen the future. He has invested Rs 12 lakh to upgrade his cable lines for Internet and phone services. But until government policy changes, he can do no more than wait.