Isps: Open Sesame

So you think surfing the Net is a great experience, never mind that it takes endless minutes to get connected and it doesn't come cheap. By August, you could be rewarded for your tenacity. The speed at which you get connected to websites will increase manifold, tariffs will take a tumble and long-awaited phenomena like broadband and e-commerce will become a reality. For this, thank God and then the department of telecommunications (DoT) which has thrown open the bandwidth sluice gates for private international gateways. DoT has given the nod to 26 companies to set up over 100 gateways. A handful of these are expected to be up and functional in another three months.

 

In the process, another public sector monopoly has been dismantled. Till date, the Videsh Sanchar Nigam Ltd (VSNL) has a stranglehold over Internet connectivity as it owns India's only international gateway access. It channelises 300 megabytes (Mb) of bandwidth through its six gateways. Now, with the private players joining the bandwagon, close to 1,000 Mb of bandwidth is expected to be opened over the next three to six months, even if half of the approved proposals see the light of the day.

According to the National Association of Software and Service Companies (NASSCOM) president Dewang Mehta, the country's actual requirement of bandwidth is at least four times _1.2 Gb _ of what is available. By that reckoning, the private Internet gateways might just be able to bridge the demand-supply gap, though sceptics argue that no amount is ever going to be adequate.

In the last round of approvals given on May 8, the DoT gave in-principle clearance to eight more operators for as many as 35 gateways. In fact, ever since a policy decision was taken in December 1999 to allow Internet Service Providers (ISPs) to use foreign satellites with coordinates over India as hosts for international connectivity , DoT has been rather liberal in granting approvals _ Delhi alone could see as many as 15 gateways. ISPs such as Bharti BT, Satyam Infoway, Global Electronic, Dishnet DSL, and Sigma Input Output and Comsat Max have all got approvals for eight gateways each while Wipronet and Macronet for nine each.

And more are beginning to queue up. Zee Telefilms subsidiary E-Connect, for instance, is in the process of applying for three gateways, one each in Bangalore, Delhi and Bombay to support a clutch of broadband and e-commerce products and services. Reliance Telecom along with Atul Punj's Spectranet is also waiting in the wings for the DoT's approval.

But what does it mean for you? More bandwidth means quicker access to the Net. Until now, all the international bandwidth could be accessed only through VSNL's gateways with a small bandwidth of 300 Mb which too was recently raised from 115 Mbps.

Worse still, VSNL has been hawking it as shared bandwidth in a contention ratio of 1:4. This means if one paid for 8 Mb of bandwidth, one could expect never to receive more than 2 Mb at any given point of time. "VSNL's monopoly made sure that competition was stifled even before it began," says Amitabh Singhal, secretary of the Internet Service Providers Association of India (ISPAI), the industry mouthpiece. There have even been instances when ISPs have never got adequate and sustained throughput, so much so that the circuit had to be simply kept out of use.

"The problem," explains Singhal, "is that VSNL is not just a bandwidth provider but is also a competitor and treats us like one." So that even when the VSNL option is the cheapest one, (see graphic) the quality of its service remains poor. International Private Leased Circuit (IPLC), the alternative for dedicated bandwidth, proves to be expensive.

Private gateways will be a way out of the logjam, though the initial costs might be forbidding. But as an ISP in this case owns the bandwidth and is free to use it whichever way it wants, there will be equal and instant revenue streams to match the higher costs. Little wonder the ISPs are making a beeline before the DoT for gateway licences.

Clearly, setting up gateways has implications in terms of pricing even though definitive costs are difficult to assess. Mahanagar Telephone Nigam Ltd chairman S. Rajagopalan while talking about his company's gateway plans, which it is setting up at a cost of Rs 20 crore, points out that he will slash its bandwidth access costs by a factor of four. Rajagopalan plans to pass it on straight to the subscribers. Atul Kunwar, CEO of Mantra Online, which is planning to invest about Rs 30 crore for setting up gateways in seven locations, too agrees that costs will come down.

Most of the cost cutdown is going to arise as a result of competition in international bandwidth prices. "It's really a buyers' market now; suddenly bandwidth is available at much lower costs," says Rajagopalan. Singhal goes a step further when he asserts that a customer (ISP) can now quote its own price and get it too. So, an ISP can now contract half-a-circuit of international bandwidth from foreign satellite carriers for as little as $17,000 per month depending upon the route and the telecom company one is talking to. Well-known names such as AT&T, MCI, Sprint and British Telecom will offer you the international half-circuit for $20,000 per month. The Telecom Regulatory Authority of India too has slashed its rates for the domestic half-circuit by almost half recently _ from Rs 1.97 crore per 2 Mb port per year, it is now down to Rs 94.7 lakh.

So how soon are these gateways going to be in place? According to NASSCOM's Mehta, at least some eight private Internet gateways should be up and functional by August-end. MTNL, which has floated global tenders for its proposed gateways in Delhi, expects to commission them in the space of about three months. Mantra Online is more upbeat. It has already started work on its Delhi gateway which it hopes to operationalise as early as June end. As for the remaining seven, Kunwar is confident of putting them in place in another eight-ten weeks time.

Both Mehta and Rajagopalan feel that the outlook should brighten up by this year-end when most of the international bandwidth will be available directly from the private ISPs And don't forget, the new bandwidth unleashed by the private gateways might eventually even tell on VSNL's business, forcing it to bring down its prices. Since fibre optic connectivity continues to be VSNL's domain, it might offer new services linked to it to cope with the competition. The old order has to give way to the new.