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Indian ISPs Engage in Price War

As India and Pakistan near conflict, India's ISPs are immersed in a war of their own -- a price war.

VSNL, the first and unchallenged ISP in India for more than two years, has woken up to stiff competition from new entrants like Satyam Infoway, Mahanagar Telephone Nigam Ltd (MNTL), Bharti-BT and Dishnet.

It has adopted an aggressive strategy to tackle competition from private Internet service providers and at the same time exploit demand for international connectivity from these same operators.

VSNL has already been upgrading infrastructure, cutting access rates, and planning toll-free access services as well as e-mail to pager gateways. It is now offering free Web space for its customers. Currently, they have the largest number of subscribers -- over 300,000.

Acting CMD Amitabh Kumar has been quoted as saying that the international carrier would launch e-commerce services within the next month.

"At least one e-commerce platform would definitely be ready by December," he said.

VSNL is also pursuing its plan to set up a separate subsidiary to offer Internet-related services, according to Kumar.

Banking on the strength of its infrastructure and existing customer base, telecom major MTNL has already started a price war.

MTNL started the trend by publicizing its plans of providing free dial-up to its subscribers even before the commencement of services. But the decision has been put on the backburner, thanks to the possible intervention of the Telecom Regulatory Authority of India (TRAI).

However, MTNL has announced that it will provide a telephone line free for new subscribers to its Internet services. This move by MTNL will result in new subscribers saving US$75 in telephone line registration fees.

MTNL chairman-cum-managing director S. Rajagoplan said that by February next year, 100,000 connections are expected in both Mumbai and Delhi.

"We did not anticipate such a terrific response from the public," he added. The company is set to slash Internet tariffs by more than 15 to 20 percent. MTNL hopes to be the next big challenge to VSNL.

In an aggressive marketing move to push its new Internet brand, 'Mantra Online', BhartiBT Internet Ltd -- a 51:49 joint venture between Bharti Enterprises and British Telecom - has offered prospective users a three-tier tariff package under three sub-brands.

They debuted by heavily stressing on user-friendliness while providing for the gamut of users: newbies, power-users, and corporates through dial-up, ISDN, and leased line access. The service is being offered at Bharti's retail outlets in Delhi, Mumbai and Bangalore for starters, and will be expanded to another 27 cities within a year.

Bharti Group chairman, Sunil B Mittal said that his company would invest $12.5 million in the first phase to deploy this service.

"Apart from the basic mail, chat and news, BBIL's Internet services will also offer a host of intranet and extranet solutions and Web content hosting through our portal site," said N.Arjun, BBIL's CEO.

Satyam Infoway, India's first private ISP, launched Satyam Online, which was positioned as the "friendly" Internet service -- the Internet minus the terrifying jargon, unhelpful support, and procedural hassles.

Satyam was the first to package the Internet over the counter, like a product, rather than sell it as a service. The setup CDs available in popular bookstores have all the software required to get you surfing in five minutes.

All ISPs provide POP3 e-mail accounts with Internet access. However, Satyam is the only one to provide a choice between POP3 and IMAP4. The 25-hour Discover account was an instant hit with those who wanted to try the service before investing on a largerslab.

VSNL was very late to come up with multiple usage schemes, but their smallest slab is not considered small enough for most experimenters.

However, Dishnet Ltd, subsidiary of the Sterling Infotech group, is withdrawing its inaugural and hugely attractive offer on Internet subscriptions. The company is instead going for slab rates like other service providers from July this year.

"It was time to follow the trend of slab rate charges," said Dishnet director J. Vijay.

According to a survey conducted by the National Association of Software and Service Companies (Nasscom), India will have demand for 1.5 million connections by the end of the year 2000. The actual number of users who have ready access to the Internet in India are more than 800,000, as of March.

Videsh Sanchar Nigam Ltd (VSNL) accounts for the bulk of Internet connections while the rest is now divided between MTNL and private ISPs like Satyam.