Videsh Sanchar Nigam Ltd (VSNL) has shot off a letter to the department of telecommunications (DoT) protesting the latters move to take over its gateway Internet access service (GIAS).
DoT sought to take over VSNLs Internet service offering some weeks back. Under the proposal, VSNL was to transfer its Internet infrastructure like servers, routers and other facilities, besides its Internet subscribers to DoT.
The department which has Internet servers in about 20 cities and towns in the country felt that it could handle providing Internet services. VSNL has more than 40,000 subscribers to its GIAS, of which hardly 5,000-6,000 are estimated to be on DoT servers.
The reason behind DoT asking VSNL to transfer Internet subscribers to itself is interesting. The department felt that there was a conflict of interests in the Rs 5,300 crore international telecom carrier adopting the role of an Internet service provider (ISP) and, at the same time, being the gateway provider to private ISPs.
The Internet policy that the Union cabinet cleared a fortnight ago envisages the entry of private ISPs into the arena. However, the policy has vested the right of the international gateway with VSNL.
In its reply, top DoT sources told Business Standard, B K Syngal, chairman and managing director of VSNL, has stressed that being both an ISP and international gateway services provider would not lead to a conflict of interests.
Singapore Telecom, Hong Kong Telecom, AT&T and several other international telecom majors are both ISPs and international Internet gateway providers to ISPs, he pointed out.
VSNL, instead, has proposed that it be allowed to spin off its GIAS into a separate subsidiary. An independent subsidiary, it was felt, would be better equipped to handle competition from private ISPs and provide quality service.
This structure would also keep the requisite distance from VSNL, the Internet gateway provider to ISPs.
The DoT brass is yet to take a decision on the VSNL proposal. It is reportedly having second thoughts on being an ISP itself because of the competitive nature of the business worldwide.
The ISP business in the country is tipped to explode in the country in the years to come as the number of telephones and computers increase.
Already there are 16 applications for ISP licences pending before DoT and there are some 50 other companies including big names like AT&T, Compuserve, Microsoft, BT-MCI which are reportedly interested in setting up Internet services in the country.
Industry analysts feel that VSNL will have an edge over new entrants in the ISP sector. This is primarily because its prices Rs 15,000 for 500 hours of Internet access which is proposed to be reduced to Rs 10,000 are recognised to be among the lowest in the industry and it may be difficult to wean away its existing base of 40,000 subscribers.