India ISP Policy Helps Networkers, Neglects Providers

The much acclaimed ISP policy is good for network
equipment vendors but e-mail service providers continue to be left out in
the cold.

While much has been written about the vast market the policy opens up
for the prospective ISPs, little is known
or at least is being discussed about the business opportunities that this
will open up for networking component vendors, specially the
infrastructure equipment sellers.

Obviously, they will start making money even before the ISPs do.
Servers, routers, modems and local area networking equipment would
comprise the main components of the network.

“If one goes by the experience in South East Asia, there should be
over 300 ISPs in a city like Mumbai,” maintained a senior official at
Ascend Communications Pte Ltd.

This, he points out,
would open up a large market for infrastructure equipment.
Most of the networking majors are finalizing strategies to get a big
slice of the market.

3COM, Digital, Ascend, and Cisco have
already started their marketing exercise, while Shiva
is also believed to be eyeing the market.

3COM has already supplied
components for the state-run Videsh Sanchar Nigam Ltd.’s (VSNL) network.
As far as remote access servers are concerned, 3COM boasts of a 60 percent
market share worldwide.

‘Total control,’ as its remote access
concentrator is called, is very popular among ISPs, sources maintain.
Supporting both digital and analog lines, it is claimed to provide
flexibility to the ISPs.

Ascend has also emerged strong in remote access servers in the Southeast
Asian markets. While Cisco is the leading player in routers,
Digital is strong in servers.

The cost of setting up a network depends on the number of subscribers
an ISP is targeting and the features which an ISP will provide. For an
ordinary dial-up service, cost per port is anywhere between Rs 20,000 (US$472)
and Rs 30,000 (US$709).

Industry observers point out that an important factor which will impact the
life expectancy of ISP industry entrants is the port tariffs to
be charged by VSNL.

“Such high
charges will make the whole business unviable,” said a potential
Internet service provider.

“Instead, to encourage the services, the
government should lower the port charges to be paid by the service
providers, which will in turn lower the tariff which the companies
will charge from the subscribers,” he said.

This factor has dampened the prospects of having a large base of ISPs,
as only big players can be expected to remain in the sector, being able to
sustain losses for a long time.

Another major problem about the Internet in the country is that the
policy does not permit the ISPs to provide Internet connection through
cable TV networks.

In India, there are more than 50 million subscribers of cable TV,
according to a rough estimate. Many feel that it will be easier
to distribute Internet services through cable networks.

Moreover, the ambitions of e-mail service providers wishing to make a
head-start in the business of Internet service are difficult to realize,
according to market observers.

The policy states that e-mail licensees have to obtain separate ISP
license for each service area and should implement the service
independent of their existing e-mail networks.

The e-mail licensed service is based on a different protocol and the
e-mail nodes are connected with 64 kbps data leased lines and may not
be upgradable to provide Internet service at all.

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