In a significant decision, the Indian Telecom Commission has decided to open up the Internet to private service providers. This move will virtually end the monopoly of Videsh Sanchar Nigam (VSNL) as the sole commercial Internet service provider (ISP) in the country and has sparked a headlong race by the global majors to secure a slice of this massive market.
The new Internet Policy, to be announced soon, envisages about 1.5 milion subscribers in 18 months - a 15-fold increase over the existing base. There will be no ceiling on the number of ISPs.
The most significant part of the policy is that the service providers will be charged normal commercial rates for leased lines. Currently, electronic mail providers and private data networks in India are charged twice the normal rates. It has also been decided that the new private ISPs will not be required to pay licence fees for the first two years.
Over 60 companies have already expressed interest in being ISPs. Among those who applied to the Department of Trade for licences are telecomms majors like AT&T, BT, MCI, Motorola and Compuserve. Others in the fray are local companies such as Wipro BT, ICIM, Satyam Infohighway, Bharti Telecom and state-owned CMC. Other companies including Microsoft, PCL, IBM, Infosys and Tata Infotech are also said to be considering a move.
VSNL will cease to exist as an ISP and all its existing Internet subscribers will be transferred to the DoT. VSNL will continue to be the sole international gateway for both the DoT and private ISPs.
The VSNL/DoT monopoly on Internet services has been a disaster. In two years, access is available only in 22 cities, the service is terribly congested and waiting lists are long. Most customers are frustrated with today's level of services. Those outside the 22 cities have to reach its points of presence by STD calls, which are expensive and long winded.
On the other hand, when the monopoly is abolished, almost every town with over 100,000 people can be expected to have competing private ISPs, just as there are hundreds of computer training institutes even in small towns in India. Hence the potential for private ISPs is greater than in any other Asian countries.
There are still potential obstacles to progress. One is that international connectivity to the Internet will only be through local DoT or VSNL Internet gateways and no international direct lines will be allowed - a security precaution.
And a big question mark still hangs over the role to be played by VSNL, which is to provide the infrastructure for the ISPs, but can also still compete as an ISP.
Domestic industry feels that, unless the ground rules are clear, the potential of the Internet will never be fully realised in India. As it is, the subcontinent is far behind the developed countries like China and Korea, even though their developments began at the same time as India's. It is estimated by potential ISPs that the Internet subscriber base will touch 7.5 million by 2002 and revenue is expected to be at least US$10 billion.
The decision of the Telecom Commission to waive the licence fee for the first two years underlines the keenness of the government to attract private companies into this high growth area. It will set up a high profile Internet Management Group to supervise ISP operations and take responsibility for activities such as domain name registration. With this kind of backing and the eagerness of the potentially huge subscriber base, India will prove a goldmine for international ISPs, despite the bureaucratic obstacles.
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