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India's Net Use to Triple in 1999

The rush by private ISPs to capture chunks of the newly liberalised Indian Internet market continues, with analysts now expecting 1.5 million Internet users to be online by year 2000--up from the current estimated 500,000 users on the Net.

In the western state of Gujarat, ICENET has become the first company to receive a private ISP license. Its proposed value-added offerings include Web site design and hosting. Targeted businesses and consumers for ICENET will be in the cities of Vadodara, Rajkot, Jamnagar, Bhavnagar, Surat and Gandhinagar.

"By the end of the year, we can expect to see major positioning moves from 6-8 national ISPs--such as VSNL, MTNL, Satyam Infoway, Bharti-BT and Global Telesystems--plus 5-6 medium-size players in each major metro, and at least 10-20 smaller players," said Ajit Balakrishnan, managing director of the popular Indian Webzine and e-commerce site Rediff on the Net.

Trying to become more competitive, monopoly long distance carrier and commercial sector ISP Videsh Sanchar Nigam Ltd. (VSNL) has reduced its Internet access rates over the past three years, from Rs. 25,000 for 250 hours down to Rs. 10,000 for a 500-hour account (1 USD = Rs. 43). VSNL will be spinning off a separate subsidiary company called VSNL Seamless Services Pvt. Ltd. (VSSL), focusing on value-added services like EDI.

VSNL is planning to bundle Internet access with PC purchases, via "Internet-ready" computers. VSNL has also been a partner in major under-sea cable projects, such as the SEA-MEA-WEA which stretches from Japan to the U.S. via India, the Middle East, South Africa and Europe.

Players eyeing partnerships for cable-TV Internet access include Pentafour Software and Exports, which is setting up a wide area network of IBM AS 400 mainframes which can be used for interactive TV and Internet access services, according to managing director V. Chandrasekaran.

Major ISP player Satyam Infoway has launched a content and community-oriented Web site called SatyamOnline with news and discussion on a wide range of topics like politics, car finance, and music.

India on the Internet, an Internet solutions company based in Calcutta, has launched a comprehensive news site called AllIndiaNews, geared at Internet users who would appreciate a round-the-clock news service on the Web.

But ISPs may face challenges in getting enough telephone lines in the four big Indian cities--Bombay, Delhi, Bangalore and Madras--from where up to 70 per cent of new ISP connection demand is expected to come.

Legal and regulatory challenges still arise in areas like setting of access tariffs for private ISPs, international gateways, Internet telephony, and opening up of the last-mile telecom market.

"The most revolutionary aspect of India's Internet policy is letting ISPs do the last mile connect--and this could well be the source of litigation from basic service license holders who worry about voice over IP," predicted Balakrishnan.

The Indian government has now set up a 12-member expert group on telecommunications, headed by deputy chairman of planning commission Jaswant Singh, to make recommendations on these issues. For the coming months, moves in ISP business and regulation are expected to dominate the Internet market, while prospective ISPs gear up with value-added offerings in content, community, e-commerce and intranetworking.

Earlier this week, India's first privately run ISP, Satyam Infoway, launched its Internet access service. It hopes to sign up 100,000 subscribers in its first year of operation from almost 40 cities, according to managing director R. Ramaraj. Nearly 300 private firms have joined the race to launch ISPs.