Heir to the Throne

After an almost undisputed four-year stint as the country’s largest
Internet service provider, VSNL has been overtaken by Satyam Infoway (Sify).
According to the latest figures submitted to Telecom Regulatory authority of
india (TRAI), Sify reported a subscriber base of 6 lakh as of December 2001,
while VSNL reported 5.5 lakh. VSNL’s subscriber base has actually come down to
5.5 lakh from 6.6 lakh.

The reason for the drop is that the 6.6 lakh figure included subscribers from
BSNL. After the Tatas bought a stakes in VSNL, BSNL branded its ISP services as
Bharat Sanchar Net and asked VSNL to stop reporting its numbers. Considering
that as a combined force, the two entities had ruled the ISP market, VSNL
suddenly witnessed a subscription fall by about 1.1 lakh. With the change in
ownership, the two ISPs now have their own individual subscribers.

SURFING, THE SIFY WAY: The iWay cafes will spearhead the company’s Net telephony initiatives

Net telephony is being seen as the next big opportunity for Internet service
providers. With a subscriber base as large as Satyam’s, there is a huge
opportunity in outshining players like DishnetDSL, Tata Internet Services,
Caltiger, Junction96, and BPL Net. While Nasscom has predicted 23 million
Internet users in India by 2003 from the current eight million, all major
players are intending on actualizing the potential of India’s Internet user
market.

With the government legalizing net telephony, ISPs and a host of cyber cafes
that are set to proliferate, will provide tough competition to international
long distance (ILD) providers. Industry watchers say that the competition in the
ILD segment will initially have to be on price, in a price sensitive country
like India. It is only at the second stage, when the market has matured
somewhat, that quality or value added services would become a factor in the
consumer’s choice.

These figures quoted by Sify imply a market share of about 20%. Will VSNL
cease to be a competitor? Is VSNL’s decreasing share a sign of it loosening
its grip on the market and allowing newer players to eat into the pie? The entry
of new performers is mere proof of the numerous choices that the consumer has
today. With affordability, the ratio between calls originating in India versus
other countries will start favoring India. But given the success of Iway cafés
across the continent and the backbone network that Sify has in place, they could
soon become stalwarts in the field. The Iway cafes will be spearheading the net
telephony initiatives of Sify. And with the introduction of soundproof booths,
easy to use dialing software and metering calls in use, the usage levels should
see an increase.

As a corollary to this change we are also looking at a rise in personal
computer sales and Internet usage. It would necessitate a change in the habitual
pattern of using a telephone to make calls to using the PC. But revenue targets
and figures are not something even Sify wants to comment on as of now. This is
because the company acknowledges the fact that a huge potential that exists in
this market.

Surprisingly, this is one point that all market players agree on–that the
potential in this market is huge. But as to who will be king, only time and some
jousting will tell.

Dhanya Krishnakumar in New Delhi