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ISPs in the Doldrums

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DQI Bureau
New Update

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.

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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.

LARGEST

NUMBERS
, but few happy faces

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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

missed.

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

carriers.

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"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

revenue.

"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.

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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.

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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

revival.

Binu Alex/CNS

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