ISPs Busy Days Ahead

 In India, bandwidth and VSNL have been synonymous. ISPs have cried

hoarse about their inability to provide quality service to their customers,

putting the blame on VSNL. From slow speed to choking of the gateway, VSNL has

been a convenient reason.

With recent policy measures like those allowing private

players to set up their own gateways and enter into direct negotiations, for bandwidth, with international satellite vendors, they are shunning their dependence on their competitor-cum-infrastructure provider–VSNL.

According to Dewang Mehta, president, Nasscom, "Private players will be the

key to bring in international bandwidth in the country."

Impact–cost

The first ramification in the ISP segment of an increased

bandwidth can be the lowering of the bandwidth cost. If ISPs are able to

negotiate effectively, the cost of acquiring bandwidth can come down

drastically. Says Mehta, "Higher bandwidth volumes will mean lower prices

and will be in the interest of the consumer." Today a 2Mb Internet-leased

line from VSNL costs users about Rs 42 lakh. However, with private ISPs evincing

interest in laying their own submarine cables, the costs are expected to fall

drastically. Private ISPs like Dishnet have announced 2Mb bandwidths for Rs 2

lakh. Such initiatives will see users getting assured speeds at cheaper rates.

Though good for consumers, this could be a bad news for ISPs themselves.

As costs fall, the segment could see many regional ISPs

joining the fray and trying to cannibalize the market share of existing players.

Currently, the high cost of bandwidth is one of the key entry barriers in the

industry. With this entry barrier falling, the competition will only heat up.

Access cost can be history. Says Anil Menon, director marketing, Citrix Software

India, "It could even become free where people pay for services on the

network and not for access." The already heated up access market will

witness more instability in terms of access rates.

Impact on services

With the international bandwidth not being a problem, will

the consumer have the kind of fast and reliable Net access one only hears about?

From the corporate perspective, probably yes. DSL and cable could become a

reality faster than we think, given the extra bandwidth. But for the home users,

a majority will still be on the dial-up access route. Says Amitabh Kumar,

director (operations), VSNL, "Broadband access is expected to remain

expensive in India." Hence it will be more common for the corporate users

rather than the home users. Adds Kumar, "It is interesting to note that

there are only 1.5 million customers using broadband in the US out of a total of

130 million." With Rs 30,000 per annum average cost of the Internet access,

it will be difficult for home users to move into this segment.

It will be the corporate users who will take the maximum

advantage of the high-speed access. Not only will ISPs cater to this segment but

also provide a whole host of services for them. Says Anil Bakht, CMD, Eastern

Software Systems, "For businesses, there will be options to work on the Net

and use it for all their communications needs, even for tasks like word

processing."

With the much-maligned bandwidth not an issue in the country,

corporates will be actively looking forward to deploy bandwidth intensive

applications like extranets, ASP, videoconferencing and supply chain management.

Says Menon, "The ISPs will increasingly transform themselves from being a

pure Web mail and access provider to an ASP and a co-locator of data center

services."

With assured and quicker bandwidth, users will be demanding

service level agreements and quality of service from ISPs. From the end-user

perspective, it will be interesting to see if the players can assure service

level agreements (SLAs). Currently, VSNL offers shared bandwidth and hence

cannot offer SLAs. But with private players also in the game of selling

bandwidth, if the same translate in quality services is another question. Says

Bakht, "Unless some quality parameters can be associated with the access,

what is the point to have access free."

In fact, these will be the key differentiators for ISPs in

the years to come. With bandwidth no longer a deterrent for providing services,

ISPs will have to increasingly look at providing other non-access issues like

security, disaster management, SLAs, quality-of-service, data center design and

value-added services to end users.

Revenue streams

Apart from value additions, ISPs and other companies will

look at data centers as an attractive revenue proposition. According to Mehta,

"As on June 30, there were only 1,600 Web sites hosted in India, whereas

Indian companies and individuals around the world own more than one million

domain names and Web sites." Nasscom hopes to ramp up the local hosting

from the current 1,600 Web sites to about a lakh by the next year. For this to

happen a reality and with the bandwidth no longer an issue, ISPs and other

companies will have to move in quickly to address the data center issues. Though

a few companies like Global Electronic Commerce have already set up their data

servers, Intel and VSNL have shown keen interest in setting up server farms in

the country. Says Menon, "The growth of server farms will also fuel a

reverse hosting drain into India as most of the Indian sites hosted in the US

will prefer to set up base here." Like the quality of services and SLAs,

the focus will be on building farms with emphasis on business continuity,

planning and disaster management with replicated sites.

Bandwidth exchanges will also need to be set up for an

efficient handling of such data. This will have a multiplier effect on the data

server farms as the customer will not have to route through the US or anywhere

else to get access to Web sites, as exchanges will simply route back the request

to another Indian ISP or data center. This will further reduce the requirement

of bandwidth by the ISPs. Says Mehta, "India’s bandwidth requirement of

300Gbps by 2003 can come down by about 100Gbps if we are able to put local

Internet exchanges in the country."

With the 10Gbps target achieved by 2000 and the domestic

infrastructure to route this bandwidth across the country available, ISPs’

role is going to gain prominence. They will become the starting points for any

internet-related activities ranging from access to e-commerce to Web hosting for

the corporates.

Yograj Varma



In New Delhi