India to Expand Web Access

U. L. Pai

After much dithering, the Government of India is set to allow private parties to become Internet service providers (ISPs) to compete directly against Videsh Sanchar Nigam Limited (VSNL), the monopoly ISP in the country. Although this announcement, made by the Department of Telecommunications earlier this year, says that license fees for the new ISPs will be waived for the first couple of years, it's not a real opening of the Indian Internet access market.

The predicament is that VSNL, which was nominated to provide the backbone infrastructure for the new ISPs, will still operate as an ISP. In addition, service providers are forced to go through VSNL's international gateways. This arrangement has earned a lot of criti cism from the E-mail and I nternet Service Providers Association of India (EISPAI) and from the Confederation of Indian Industry (CII).

"There seems to be no rationale behind it," says Padma Chandrasekaran, vice president of Internet and Services at Satyam Infoway, one of the founding members of EISPAI. "VSNL's role is obscure." Both organizations advocate the entry of private players into all segments of Internet access provision, including backbone and international gateway services.

Despite these debates, several global telecom operators and national players have already applied for private ISP licenses. The National Association of Software and Service Companies (NASSCOM) reckons that over 150 new ISPs will enter the scene by the end of 1997. According to EISPAI, the Internet subscriber base in India will touch 500,000 by the end of next year (compare this to VSNL's 40,000 commercial subscribers and 60,000 university users today). The revenue from Internet access is expected to gather at least $60 millio n per year, according to some analysts. Electronic commerce on the Internet could generate an additional $145 million.

However, if these estimates come true, VSNL might have problems trying to extend its current 35-Mbps backbone to cope with the new ISPs' demand for bandwidth. In addition, considering the shortage and poor quality of ordinary voice phone lines, Internet access via the public switched phone system could be a nightmare for customers and local telephone operators alike.

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India Internet Infrastructure by the Numbers

India Internet Infrastructure by the Numbers
Main telephone lines in 1996	14, 450,000
Telephone density per 100 inhabitants	1.5
Number of Internet hosts in 1996	3100
Internet hosts per 100 phone l ines	0.02
Number of PCs in 1996	1,400,000
Internet hosts per 100 PCs	0.22
Number of Internet users in 1997	100,000
Source: International Telecommunications Union