Sterling Nets Microsoft, Compaq

Information technology giants Microsoft and Compaq have decided to join hands with the C Sivasankaran-promoted Sterling group for its proposed private nationwide internet service.

The Sterling group is among the dozen companies that have sought government permission for becoming internet service providers (ISP).

The cost of the proposed venture is estimated at Rs 400 crore. It is likely to be one of the country's largest internet services.

Microsoft has promised the Sterling group six million internet subscribers in India within five years from the launch of the service, ETH Research Lab & Dishnet's chairman Vijay P Bhatkar told Business Standard over the telephone from Pune yesterday.

The proposed private nationwide internet service would be called eth.net. "The ETH internet operations would be carried out through Dishnet, a new company formed under the umbrella of the Sterling group," Bhatkar said, adding, "both Microsoft and Compaq would be our technology-providing partners."

Dishnet will also sustain the venture's education-to-home mission. According to Bhatkar, the project cost is pegged at around Rs 400 crore and will be funded by the Sterling group and financial institutions. "The pattern of funding has not been finalised yet," Bhatkar said.

Microsoft and Compaq will, however, have no equity participation in the venture. Compaq will provide servers and other hardware to the venture.

"The proposed venture will deploy Microsoft's commercial internet service," Bhatkar said.

Senior officials of the department of telecom said a formal clearance to interested private parties for providing internet services would be given after the cabinet approves the new licencing norms for ISPs next month.

A cabinet note to this effect would be sent in about 15 days, the officials said. DoT has decided to extended the licence period for ISPs from ten years to 15, as recommended by the Telecom Regulatory Authority of India (TRAI) and the Prime Minister's information technology task force.

DoT is also considering doing away with the performance bank guarantees prescribed in the internet licence agreement issued by the government earlier this year.

DoT had suggested a bank guarantee of Rs two crore for a nationwide ISP licence, Rs 20 lakh for a state or metro licence and Rs three lakh for a city licence.

It has been suggested to the department that it adopt other means to ensure that private ISPs meet performance parameters and commercial conditions.

A government source recently said: "It has been proposed that we follow a legally verified undertaking format and opt for self-regulation. On top of this, there can be ex-post checks and balances to replace the bank guarantee system."

TRAI too had suggested working out other modalities to avoid putting entry-barriers for ISPs.

The rapid spread of cable television in the country was cited as an example. No licensing requirements or area-wise restrictions are imposed on cable TV operators.