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Follow UsAfter revolutionizing the IT sector, Internet protocol is all set to trigger another
revolution–this time in the Indian telecom sector. And with the reign of VSNL coming to a close on April 1, Indians, who have traditionally been charged some of the most exorbitant rates in the world for long distance calls, will see rates coming down drastically.
The most bullish on Internet telephony however, are the Internet service providers (ISPs) who have been fighting a pitched battle amongst themselves for their share of this highly competitive access market. The nod for voice over public network (read Internet) is being touted as the cure. No wonder almost all major ISPs–Satyam Infoway, DSL Dishnet, Data Access India, plan to add telephony services as part of their value-added products.
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IP Telephony Services |
| PC-2 -PC: When a call is made from one PC to another, both sides should have a computer connected to the Internet. The ISP provides software in a voice messenger that connects the customer to the party . This is the cheapest way to call and the only cost incurred by the customer is the cost of a local call and Internet time. PC-2-Phone: In a PC-to-phone service, the ISP provides a software called, voice portal. The portal transmits the call to the Internet gateway, which in turn terminates the call at the basic service provider’s end. These calls are relatively more expensive because the ISP has to share revenue with the basic service operator where the call terminates (whether in India or abroad). Phone-2-Phone: In the phone-to-phone service, the customer can dial an Internet telephony operator from his phone. The call is routed through an Internet gateway and passed on to a basic service operator. The Internet telephony operator shares the revenue with the basic service providers. |
Internet telephony is also expected to bring in a large number of new customers and the essential revenue for the ISPs. Customers will use their services more and ISPs can charge for the phone service. According to certain ISPs, Internet telephony will lead to the creation of two clearly differentiated markets in the telecom sector.
While individual users may pick up this service in a big way because of the low cost (even if the voice is packeted), a large chunk of the corporates may still continue to use normal telephony because of the quality of service (QoS) that the public switched telephone network (PSTN) has to offer. There is another school of thought that believes Internet telephony will attract all segments–corporate and retail–due to lower tariffs. ISPs argue that customers will now be able to choose the quality of service they want based on its affordability.
With Internet telephony, ISPs expect revenues to go up by 30-40% at no additional cost. The new service would be a key to better return on investment and help ISPs break even faster. What’s more, despite Internet telephony being banned in the country, the technology has a fairly good following and a substantial number of customers are using it bypassing the VSNL network. According to available reports, almost 4% of all incoming voice traffic from the US is via the Internet. The result: during the year 2000 alone, India lost $40 million in terms of settlement revenue with US carriers because of the diversion of incoming traffic to the Internet. Apart from losing revenues, the illegal operation also deprives the government coffers of valuable foreign exchange.
However, ISPs are lined up against mighty adversaries –the entire telecom industry is demanding that ISPs pay a fresh license fee for offering Internet telephony services. Telecom market observers suggest that the drastic cut in NLD and ILD tariff in the country has robbed users of using Internet telephony, which has a relatively poor QoS. However, telecom operators do fear the breaking out of a price war in case ISPs are allowed to get into the telephony business under the present norms that give ISPs an edge in terms of license fees. The ISPs, on the other hand, maintain that since this is just a new application they should not be subjected to additional license fees.
Shubhendu Parth & Dhanya Krishnakumar
in New Delhi