NET.COLUMNS: The Internet Doors Open in India

On Tuesday night, the Union Cabinet cleared the Internet policy, paving the way for private ISPs in the country. Detailed guidelines are expected to be announced by the DoT and DoE shortly. Indications are that there will be no licence fee for the first two years, and there will be no limit on the number of ISPs. A National Information Highway is also going to built. The DoT’s stated goal is to garner a million subscribers in the next two years. Finally, it appears, the government is waking up to the Internet.

What does Internet privatisation really mean? What are the real bottlenecks for growth? Do we really need a million Indians to be on the Net by 2000?

Private ISPs, while most welcome, are not going to solve the most fundamental of India’s Internet problems: not enough dial-up lines to accommodate the present base of 35-40,000 Internet accounts. Dial-up lines need to be made available in large numbers to allow people to get through without getting busy signals. In India, even though VSNL tries to keep a ratio of 1 line for 10 people, growth is faster than lines becoming available. Also, even though the per-hour-charge of Rs 30 is reasonable, the necessity to pay up-front for 500 hours of usage lends itself to account sharing, which means there can be multiple people using the same account at the same time, thus skewing the entire phone line calculations.

The short-term solutions to this lie in (a) software, to disable two logins from the same user at the same time, and (b) charging businesses more for a premium level of service. Indian businesses would be willing to pay higher amounts for a premium service which included guaranteed connectivity and higher bandwidth (available through ISDN). An executive-class service which has higher per-hour-tariffs with a greater number of phone lines would be most welcome by corporates, since the communications savings through the Internet are very significant.

Private ISPs will not be able to compete easily in the consumer access market and will necessarily have to look at business-oriented services. They will not be able to compete on price, they will have to provide value-added services. In India, the business user is the one for whom the Net will be the most critical in the coming years. Consumers will still take time to get on the Internet, especially since the installed base of computers in quite limited. Rather than trying to target a million Indian households, we should be targetting 100,000 Indian businesses and enabling reliable and speedy Internet access for them: they are the key for India to achieve a 7 pc growth in the coming years.

One of the most dramatic decisions which VSNL/DoT can take is to sharply drop leased line tariffs for Internet access. Make it affordable for businesses to take up leased lines to the Net and then see the exponential growth in communications — and productivity — within the country. Today, a 64 Kbps leased line costs Rs 10 lakhs per annum while a 2 Mbps line (with 30 64 Kbps channels) costs Rs 70 lakhs. (To this, you need to add DoT’s tariffs). I would like to see 64 Kbps leased lines being made available for Rs 25,000 per month. VSNL can use a 1:4 ratio, and thus use a 2 Mbps leased circuit to accommodate upto 120 64 Kbps customers, thus generating a revenue of Rs 3.6 crores per line per year, which should make it profitable for VSNL and affordable for the end users. Since companies don’t tend to use up the entire bandwidth all the time, it will be possible to use the 1:4 ratio and still offer a very good service. Of course, ISDN can offer similar levels of access at far lower rates, but then there’s still a dial-up component to it.

High-quality content is very important for spurring Internet growth within India. We also need more Indian companies to set up web servers locally, thus ensuring that high-priced international bandwidth is not consumed accessing content which is essentially local. This will once again ensure effective utilisation of the thick pipes for which India has to pay large amounts to international telcos.

More important, perhaps, is the humble email. Imagine if you could communicate by email to your suppliers and customers via email. Extranets would allow them to also plug in to your network. This will make Indian business much more efficient and hasten the flow of information. But for this, a revolution has to take place across vertical industries. Once business-to-business communications becomes digital, electronic commerce will follow. This is where India has an opportunity: since little infrastructure is in place, we can embrace the Internet and come out ahead with a superior communications platform in the next 12-18 months.

For this, mere policies and privatisation will not make a big difference. It requires a change in mindset. The importance of Digital Information needs to be realised; information — along with timely access to it — can become a key competitive advantage. The challenge of leveraging the Internet and its technologies lies with Indian businesses. Making Internet access available to India, Inc. must be the top priority of VSNL, DoT and the DoE: this is one situation where the Common Man can wait a little longer.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.