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

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