ISPs in the Doldrums

Gujarat has the largest number of ISPs in the country. It
started with 30 and increased to 35, but in four years, five have folded up.

Chirag Mehta, CEO of gateway provider Icenet Communications
says the problem is the lack of technical expertise to run the business.
"We have entrepreneurial skills but no technical background. Everyone
aspires for quick returns, and they enter the arena announcing rate cuts and
freebies. But such things are not viable in the long run and these ventures
dissolve in no time", he adds. Wilnetonline, one of the first ISPs in
Gujarat, has closed down its operations in Rajkot.

Gujarat is also the hub of four gateways and nearly 65,000
Internet subscribers. The state has 9000 kms of OFC network and it is likely to
increase to 20,000 kms. With all the talukas networked and e-governance likely
to be functional within a couple of years, the ISPs expect more traffic flow.

, but few happy faces

The fact remains that in spite of the development in IT
fields, the number of subscribers has failed to grow. The static or decreasing
customer base can only be enhanced by value added services. This is precisely
the reason that the ISP Association is pressing hard for Voice over Internet
Protocol (VoIP). VoIP will give a lease life to these ISPs and act as a catalyst
to increase the customer base instead.

But the new entrants in the broadband and telecommunications
sectors are opposing the inclusion of ISPs in the policy of the VoIP. They feel
the huge license fee will go down the drain if their projected targets are

During the visit of Pramod Mahajan, Union Minister of IT,
telecommunication, and parliamentary affairs, the ISP Association in Gujarat
submitted a memorandum to rectify the policy so as to add ISPs as partners of
progress. The government has given a green signal for VoIP only to long distance

"What is the use of Internet telephony if the real
benefit of the technology does not reach the end user?" questions S N
Khemka, president of the ISP association.

Gujarat’s share in international calls is the highest in
India what with so many of its residents living in UK and the US. No ISPs in
Gujarat have broken even and with the tariff war, many believe that the key to
progress now is to join hands with national players. The major reasons for
continuing losses include carrying costs, expensive bandwidth and non-sharing of

"Only a few ISPs can survive and that too, through
tie-ups," says Pradeep Agarwal, vice president of Wilnetonline. With 70% of
the costs fixed, there is only a remote chance that the remaining costs can be
controlled. With less than 5000 customers, no ISP can even think of running the
business beyond a certain point of time.

There are only two options for them to survive: to continue
getting funds and the other, to create sufficient revenues. The former options
have almost been closed now with the sources of funding having dried up. The
concept of Internet through cable brought in new hope but that too faded within
six months.

Users like Atul Mehta, Director of Hypernet Solutions, an
Ahmedabad based hosting and Application Service Provider company, says the
service providers do not give the actual picture to the customer when new
connections are offered. "The layman does not know what bandwidth is and
therefore he has no idea of the speed for which he is charged. Several ISPs
promise high bandwidth but end up in fiasco," he explains.

Ahmedabad has one provider of Internet through cable, which
supplies the bandwidth it promises through CMTS with cable modems. Here each
modem costs Rs 10,000 and charges 1500 per month.

But the rest promise bandwidth, which actually is the
carrying capacity, and not the one that reaches the back end. The customer is
shown that the cable can deliver upto 64 Kbps bandwidth but not how many this is
to be distributed to. One of the leading providers uses the Ethernet network to
provide the service and promises streaming videos and fast downloads.

But its
customers have no idea that if all subscribers at a hub are logged at the same
time, not even one kilobyte reaches them.

The result is that people have more complaints of cable
connections than the dial ups. Despite these problems, ISP’s still hope for a

Binu Alex/CNS

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