Ice Tech Baby

In the 2000, IceNet had 80% of its revenue coming from dial-up customers and

20% from other sources like leased lines and Internet over cable. Within a year’s

time, the share of dial-up revenue has come down to 33%. Meanwhile, the share of

Internet over cable has increased to 33% and leased lines are up at 33%. The

company managed to contain its exposure to the dial-up retail segment, which has

proved to be the bane of the ISP industry.

The company is optimistic about its finances and hopes to break even on its

operating costs by April this year. The turnover in the last fiscal was Rs 2.4

crore (00-01) which is expected to close at Rs 4 crore (01-02) this fiscal

ending March 31, 2002, and increase to Rs 10-25 crore by next fiscal. It has 110

leased line customers, 65 cyber cafes and a subscriber base of 22,000.

How has the company achieved this enviable revenue break-up? Almost a year

ago when the industry was showing signs of cracking, IceNet took a conscious

decision to reduce the number of dial-up customers and increase its income from

leased lines and Internet over cable. Many ISPs experimented with Internet over

cable but could not succeed due to the high cost of cable modems and huge

subscription fees.

IceNet’s strategy was to focus on reducing that cost. It concentrated on

developing low cost technology that would enable it to provide high speed

Internet access. What emerged from the company’s research and development

stables was a product called 24Online–that provides low-cost high-speed

Internet access through cables.

The capital cost for setting up a broadband network based on this technology

comes to Rs 15 lakh while the cost of setting up infrastructure to provide

broadband connectivity through a cable modem works out to Rs 70 lakh. The lower

cost of setting up a service infrastructure is thus passed on to customers as a

lower rate of subscription. Any customer deploying this 24Online technology has

to make an initial investment of Rs 3,500 for the equipment as against the Rs

12,000 for a cable modem.

With an investment of Rs 1 crore, IceNet has set up a 100 km fiber backbone

of one Gbps in Ahmedabad, Surat, Baroda and Rajkot. The traffic at the service

provider’s end is on a fiber optic ring, which is about 15 km in each city.

From the service provider to the customer’s premise, the access is through

co-axial cables with 10 Mbps capacity. Within a radius of 15 kms from the

service providers’ end, there are bi-directional amplifiers (installed at

every 700 meters) to ensure consistency in the quality of traffic. Finally, the

last mile access to Internet is through an Ethernet network.

For service providers, it is a good deal since IceNet will provide

technological support and maintenance. The retail customer could have benefits

such as video-on-demand, games and avail services like web casting, Voice over

Internet Protocol, etc. Another experiment of IceNet has been the setting up

Virtual Private Network (VPN) network for the stock traders’ community.

Enumerating the reasons why the company’s model has been successful, Chirag

Mehta, CEO and managing director, IceNet says, "Running an ISP business

requires more than just entrepreneurial skills. It calls for a lot of technical

expertise."

Essentially a technology company, IceNet is part of US tech consulting firm,

Eclipse Micro Computing. Its billing solution called Elite Core is deployed by

most Indian ISPs.

Pitched against the might of big names like VSNL, Satyam, and Bharti, IceNet’s

performance as a B category ISP provides a  ray of hope to the languishing

ISP industry. The Indian ISP industry’s accumulated loss is estimated to the

tune of Rs 1700-1800 crore right since 1998, when the Internet was opened up for

private players.

Balaka Baruah Aggarwal/CNS in New Delhi