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Tata Group Considers ISP Business, Issues Evaluation

India's most famous all-market conglomerate Tata group is evaluating the possibility of getting into the ISP business on an all-India basis.

The process of evaluating a possible ISP offering is on and when it comes through, "TTL will assist that effort in Andhra Pradesh," said Tata Teleservices Ltd (TTL) director S. Ramakrishnan.

He added that TTL's investment of $2 billion over a 15-year period in the state of Andhra Pradesh was the single largest investment the company has made in recent times in any area. While he said the group would be making other investments in Andhra Pradesh, he said he could not name any specific area at the moment.

Chief minister of Andhra Pradesh N. Chandrababu Naidu said he had taken up the issue of dismantling the Videsh Sanchar Nigam Ltd. monopoly over international gateways in his capacity of co-chairperson of the National IT Task Force.

"Unless we compete, it will be difficult to benchmark ourselves and deliver quality and customer services," the chief minister said.

Naidu said his government had been actively promoting the establishment of a digital broadband network in the state, apart from taking the lead in the Inter-University Net.

Market observers state that TTL will be closely monitoring the recommendations pooled in by the Ratan Tata Task Force on Communication as will the Tata Consultancy Services, which has joined hands with Microsoft.

The Task Force, under the Prime Minister's Council on Trade and Industry, had recommended that the government should evolve an integrated communication policy to address all communication services, including cellular, basic, Internet and cable television. It had also suggested free and unrestricted access and investment in his sector.

Claiming that the demand for basic services in India is expected to be 31 million lines by year 2001 and 64 million lines by 2006, the task force has said that demand from Internet subscribers is expected to increase from 0.15 million at present to over 8 million by 2002.

The paper has added that the communication industry has evolved as a set of vertical markets such as telephone, radio, television broadcast, data communications, etc. But these distinctions are disappearing due to the rapid adoption of digital technology which allows the same network infrastructure to carry voice, data, multimedia, or Internet traffic as data streams.

The task force paper notes that different regimes have been framed over time for each of these sectors with little or no cognizance of their overlapping nature.

For example, progressive policy announcements made recently for Internet services have adversely affected the privatization process initiated for telecommunications.

The group has suggested a regulatory framework that focuses on addressing the technology convergence issue, while extending the forward-looking liberalization initiated with the ISP policy. It also pointed out that the convergence of technology permits all services (telephony, Internet, cable TV, etc) to be carried on a common infrastructure.

The group concludes that the government regulation banning ISPs from carrying voice traffic is technologically unsound.

Already, Voice Over Internet is a reality, the paper states, and, in future, the Net will be able to carry high quality voice traffic. Moreover, audio and multimedia, which have embedded voice content, are an integral part of Net traffic and it will be impossible to prevent ISP from carrying such traffic, according to the group.

With the ISPs able to access business users with 64 kbps lines and residential customers accessing soon through cable TV networks, both the department of telecommunications and private basic service operatorswill have to face competition from ISPs in core segments, the paper suggests



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