No Getaway From VSNL’s Gateway!

In a market-based
economy, partly like India, monopoly is a dirty word. No wonder, any
competition generates lot of hope, optimism and expectation from the
new comers. In India, internet users welcomed the entry of serious competition
to VSNL’s monopoly in the internet service provider (ISP) business.
The net users expected improved level of service, with hassle-free dial-up
connection and fast downloads becoming possible. Well, reality check
is still far from expectations. As Avinash Nigudker, President, Icom
Communications Ltd, puts it, "On Satyam’s account, it took me about
two hours to download a 1MB file using a 56K modem connected at 28K
speed." Agrees Lawrence Alfonso, Marcom Manager, Satyam Infoway,
"Yes, we had a serious problem on the throughput from the VSNL
gateway."

Before one passes judgement about the service levels of private ISPs
(so far only Satyam Infoway on the national level), one needs to appreciate
that competition in the true sense implies a free and level playing
field. Apart from competing with VSNL on the ISP front, private ISPs
still have to deal with the monopoly for their back-end internet connectivity-gateways.
Since gateways are an ISP’s access point to the internet, it can make
or mar their business. Having one’s own gateway makes sense on two counts.
Firstly, it gives more control and flexibility to the ISPs in their
effort to provide better service to the customer. N Arjun, CEO, Bharti
BT Internet, quips, "Any ISP would like to have dedicated bandwidth,
services and cost optimization. This is only possible with one’s own
gateway." Secondly and more importantly, the ISPs avoid being at
the mercy of their competitor.

Gateway access
So what’s the hitch? An ISP can have internet connectivity by setting
up its own gateway (subject to security clearances), by taking the international
private lease circuit (IPLC) route or by using VSNL’s gateway. Of these,
ISPs find the VSNL option to be the cheapest. However, at around Rs72
lakh for a 2Mbps shared bandwidth connection, the problem of congestion
is very high, making it necessary for the private players like Satyam
to think of increasing the bandwidth. Moreover, according to industry
sources, as multiple users share the bandwidth, VSNL is compressing
its 2Mbps bandwidth by around eight times-which means that the ISP is
actually getting only 64Kbps! With such a constrained bandwidth, not
more than 20-25 subscribers can log on at a time. Also, downloads will
be in bytes and not in kilobytes. Admits Alfonso, "To solve the
problem of throughput, we decided to take additional pipes into the
gateway to have a capacity of 6Mbps and further increase it to 8Mbps
by next March end."

However, Amitabh Kumar, CMD, VSNL, has a different viewpoint. Says he,
"Our normal distribution ratio from international pipes to the
domestic network is approximately 1:3 against the international norm
which ranges from 1:5 to 1:8. This [the higher ratio in India] does
not provide any bandwidth limitation to the prospective ISPs."
Countering this argument, R Ramraj, MD, Satyam Infoway, says that "irrespective
of the distribution ratio VSNL talks about, my only concern is whether
VSNL is able to provide quality bandwidth at the [existing] tariff structure."

IPLC, the second option, is a costly affair for the ISPs. They have
to shell out Rs2-2.5 crore for the connection up to VSNL’s server and
then negotiate with the international service providers for the bandwidth.
Though expensive, the IPLC guarantees the exclusivity of bandwidth to
the ISP and hence a better service could be delivered to the users.
However, for the fledging ISP business in India, this is a chicken-and-egg
story. Huge IPLC investments, to ensure better service, can be made
if the traffic is high. And traffic will not come without quality service.
Moreover, VSNL will continue to dictate the terms of IPLC option as
the international link terminates at VSNL premises and not at the ISP’s.
Talk about living without VSNL!

The third option of setting up one’s own gateway is still uncharted
territory. The cost of bandwidth would be around Rs5-15 crore for an
8Mbps link either via optical cables like Flag or via uplinking it to
satellites like Loral Orion, Panamsat and others. This is a very conservative
estimate as the amount does not take into account the cost of hardware.
According to Nigudker, "No Indian ISP can set up a total gateway
solution as it will cost them around Rs200 crore.

The options of one’s own gateway and IPLC will only see the light of
the day when the inter-ministerial committee comes out with clear guidelines
on the security clearance documentation. Assures Parmeshwaran, Deputy
Director General, License and Regulation, DoT, "Like the ISP policy,
we want to bring out a policy which is acceptable to the industry and
the government alike. Moreover, security is a very sensitive issue and
ministerial unanimity is important in the interest of the country."
Others differ on the opinion. Since many ministries are involved, it
will definitely take time. Warns Amitabh Singhal, Head, Corporate Affairs,
Global Telesystem, "We are keeping our fingers crossed. Moreover,
it is not only the security issue that the committee needs to consider
but also other concerns stopping the smooth takeoff of this industry.
All this may take time." Issues like time frame for these clearances,
satellite issues, applications forms and other problems needs to be
seriously looked into before one can expect the internet revolution
in the country.

The conflict
Monopoly will continue to remain a bad word. No doubt, the government
has invested huge amounts to create the current infrastructure and it
wants some of that money back from the private ISPs. However, the key
issue is whether the government wants the country to be a part of the
growing ecommerce world or continue to ensure monopoly by dilly-dallying
on important issues. It is not a problem if the monopoly aims to be
the back-end service provider and help the industry’s growth. The conflict
arises if it also competes with others at the end-user level. The advantage
clearly lies with the monopolies.
If monopolies like VSNL are not given their share of competition (on
a level playing field), one will continue to hear grouses from the industry
people. And groans from the end users.

Yograj Varma,
in New Delhi

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