RealTime IT News

Private Companies Receive Licenses In Liberalised Indian ISP Market

Two private companies, Ortel Communications and Surevin Consultants, have become the first private ISPs to receive licenses for Internet access in the Indian market.

Government-owned telecom provider MTNL has also received licenses for the Delhi and Mumbai Internet markets, and the government monopoly ISP for commercial services has announced aggressive new plans for the Internet market.

"I think India shall boast of more than 6-8 national level ISPs, over 30-40 regional ISPs (operating in more than one city), and over 200 local ISPs as early as August '99," said Manish Sharma, CEO of Mumbai-based Web solutions company DBS Internet Services.

The ISP policy, mired in litigations and controversy for over a year, was unveiled late last week by the minister of state for communications Kabindra Purakayastha. ISP licenses will be issued for 15 years and there will be no licence fee or any limit on the number of licenses awarded.

Several large Indian industrial groups such as the Modis, Nandas, Rais and Mittals are reportedly undertaking ISP feasibility studies. The Bharti group, HCL, Crompton Greaves, the Escorts group, Bharti-British Telecom, and a host of other companies are in the ISP business pipeline.

Demand for PCs is now expected to increase significantly as it did in the West once the Internet caught on; India currently has an installed base of about only two million PCs, and about 500,000 Internet users.

"The largest challenge will be in terms of lack of expertise in handling ISP operations. Most of those jumping in to the ISP business have no clue about the dynamics of the game and the exponential demand it produces in relatively short periods," Sharma observed.

Other analysts were of the opinion that the long-overdue policy still had some shortcomings in terms of bank guarantee stipulations and prohibition of Internet telephony.

"For an ISP, a bank guarantee works out pretty expensive too--they won't call it that, but it pretty much amounts to a license fee," said Arun Mehta, a datacom consultant in New Delhi. "The spirit of the national infotech taskforce recommendations have been lost here."

He said it was also a "shame" that the government had decided to ban Internet telephony.

"I expect we'll need to mount a full legal challenge here," said Mehta, who has in the past lobbied for progressive legislation for bulletin board systems in India.

He advised Indian ISPs to examine cable and wireless options for delivering service, and form lobbying groups.

He also said the government monopoly may be shaken, but it is still formidable.

"The monopoly ISP for commercial services, Videsh Sanchar Nigam Ltd. (VSNL), has a couple of years experience in offering Internet services in India, and has a large installed base of customers. It won't be easy to lure them away," he said.

VSNL itself has been upgrading infrastructure, cutting access rates, and planning toll-free access services as well as e-mail to pager gateways.

"About Rs.10 crore (US$2.36 million) will be invested in the next one or two months to reorganise our Internet services," said Amitabh Kumar, VSNLs director of operations.

The Indian ministry has stipulated that ISPs wishing to set up their own international gateways would need to obtain security clearance from an inter-ministerial committee, but the norms for security clearance have not yet been worked out.

Despite these uncertainties, many Indian companies are announcing forays into the ISP business. Bangalore-based networking solutions company Microland is teaming up with cable television operators IN TV and Siti Cable to develop cable-TV Internet services.

Nortel, which has acquired Micom and Bay Networks, is expected to offer complete hardware solutions to Microland for this purpose, according to Anand Sudarshan, vice president of Microland.

"India has a huge potential for providing Internet connectivity through the existing cable TV network," he said.

"We are very happy, since more users in India means more traffic for our sites," said Rajesh Jain, managing director of IndiaWorld Communications, one of the first content aggregators and Web publishers in India. "As the size of the Indian audience rises, so will domestic Internet ad spend. The policy augurs well for a competitive marketplace."

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