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India
Telecom
October 9, 2002
ISPs Hesitant to get into ILD
Rajendra Prabhu
NEW
DELHI -- Except for Data Access, most of the Internet
Service Providers, who sought licenses as international
long distance carriers also, are having second thoughts
over this venture.
Data Access CEO Siddharth Ray says that he has committed
bandwidth and facilities in London, New York, Hong Kong
to capture a good portion of the inbound traffic to
India. As inbound traffic is five times the outbound
traffic, the focus of new ILD operators would be this
area, leaving the outbound traffic to the incumbent
carrier VSNL. The recent agreement that Data Access
has entered into with New Skies for use of their two
satellites enhances its capabilities for carrying traffic
to India as well as out of it. For the domestic part
of the international traffic it has agreement with incumbent
basic service operator BSNL.
Other ISPs who applied for licenses and have got Letter
of Intent include Sify, DishnetDSL, Net4India and Caltiger.
Each one has to put in Rs. 25 crores upfront as licence
fee and a bank guarantee for a similar amount to convert
the LoI into license. In the depressed conditions with
Internet subscriptions below two million mark and growth
plateauing, ISPs are not in a position to bring in more
capital. Besides, they have a new opening in Internet
telephony that they intend to develop through the Internet
cafes they are supporting across the country.
ISP association Secretary-General Amitabh Singhal says
that when ISPs themselves are facing a funds crunch,
it would be too risky for them to go for fresh capital
investments in any other service. Sify has returned
the LoI. Others are having second thoughts and are getting
extensions on their LoI before finally deciding to quit.
With Sify expecting a change in the management after
Japanese and UK based firms have decided to invest 20
million dollars in it, the focus is entirely now on
extending the domestic Internet service.
What the ISPs do not openly say but concede privately
is their assessment that ILD is not worth anymore as
there are already too many players-- besides incumbent
VSNL and newcomer Data Access, there are Bharti sponsored
i2I and Reliance that have firm plans and committed
bandwidth to operate ILD services. Tatas who own VSNL
are considering merging it with its basic service operator
Tata Teleservices to form a full blooded telecom service
encompassing domestic local and long distance and international
long distance services. If that plan comes through the
economically viable space for the other new comers in
ILD would be to that extent restricted.
The stand off between BSNL and VSNL over the interconnect
agreement is also another factor in the ISPs hesitating
to take the plunge into ILD. BSNL as the incumbent domestic
carrier has enormous clout in its interconnect with
any ILD. It is using that to beat down the portion of
the call charge that VSNL wants to retain for the international
part of the carriage. With more carriers queuing up
at BSNL doors, it is sure to bring down this portion
further. The ISPs are therefore are cautious.
Significantly, this trend of early enthusiasm and later
second thoughts has affected almost every segment of
the telecom services ever since in 1995 the de-regulation
process began. Early bidders for basic services and
cellular licenses who offered astronomic sums for these
had to storm the government to change the terms of license
and shift to revenue sharing and most of the foreign
participants withdrew within two to three years.
Contact:
Internet Service Providers Association of India
Ph: 642 4001
E-mail: ispai@ispai.com
Web site: www.ispai.com
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