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February 26, 1998



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VSNL may invest $240 million in Project Oxygen;
the warp speed, super Internet of the next century.

Videsh Sanchar Nigam Limited may invest $ 240 million in Project Oxygen.

Project Oxygen is the $ 14 billion venture of the US based CTR Group to build a 'super Internet'. When completed, it would be the world's longest
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submarine cable network, touching every continent except the frozen desert of Antarctic.

The network would measure 320,000 kilometres of fibre optic cables. The current record holder is the FLAG network, which amounts to a mere 27,000 kilometres.

In 2003, Project Oxygen would have wired 175 countries through 265 landing points and with a voice and data network that would support speeds ranging from a minimum of 320 gigabits per second to a mind-boggling 1 terabit per second.

Amitabh Kumar, VSNL's director in charge of operations, has said his company is considering participation in Project Oxygen and a memorandum of understanding with the CTR Group would be signed in a few months.

He says no commitment is being made before that date because "There are some concerns that we have regarding the configuration, price of bandwidth, exclusivity and landing points."

Kumar has, however, not confirmed whether Project Oxygen was discussed at VSNL's board meeting held recently in Cochin.

Project Oxygen will have six landing points in India: Bombay, Mangalore, Cochin, Vishakhapatnam, Madras and Calcutta.

Kumar's contention is that VSNL should be allowed to decide on the landing points, as it would be the landing party in India and would originate and terminate traffic coming into and going out of the country. This would be done through its existing network and that of the Department of Telecommunications.

But Neil Tagare, chairperson and CEO of the CTR Group, is optimistic that VSNL will sign the memorandum of understanding very soon, maybe, in even less than a month.

Fifty-three carriers have already signed MoUs with the CTR Group, totalling $ 2 billion of initial commitments. Contracts for the desktop study and the marine survey, totalling about $ 140 million have already been awarded and 14 meetings are being organised over the next 10 months to sign the remaining carriers, including VSNL.

The big names sponsoring the project are TYCO International, Alcatel, NEC, Mitsui, Sumitomo and NTT International.

Explaining the cost for VSNL, he has said the organisation would have to shell out $ 40 million every year, payable quarterly for six years from January 1999 onwards.

"Although it may seem too high, this is the kind of money that VSNL would be spending anyway to acquire capacity on submarine cables around the world in the next six to eight years.

"What we are proposing is more value for the same amount of money VSNL would be spending on buying point-to-point cables around the world. Oxygen would give much higher magnitudes of bandwidth which alone, without the international capacity, is worth Rs 10 billion and will offer total flexibility in routing traffic around the world," he explained.

Tagare claims his business model is better too. He says most traffic today is over point-to-point submarine cables with satellites used as a backup.

Carriers buy capacity for 25 years or so from companies like Alcatel and TYCO. Whenever a new cable is installed, the very same companies who control the present networks hoard capacity in the new cable too. New entrants are outbid and smaller carriers are muscled out.

Not with Project Oxygen, assures Tagare. His venture, it is claimed, allows carriers to buy capacity on the fly and when a carrier reaches its bandwidth limit, Project Oxygen will boost capacity automatically. And with this business model "that parallels the egalitarian nature of the Internet itself," carriers will finally have an alternative to the inefficient point-to-point business model.

The capacity that we will sell to the VSNL will be 200 to 500 times cheaper than what they can buy today in the marketplace," he claims.

A senior VSNL officer agrees that "Project Oxygen will be 60 to 70 times cheaper than the cheapest satellite circuit and is definitely a better cable than conventional cables."

Tagare has more good news. "We will make the Internet truly distributed. Today, traffic between Bombay and Delhi is transmitted through the US. The US government can use the situation in the future, threatening India with a cut in Internet access if it does not provide more airline slots or open up specific industries like the insurance sector. With Project Oxygen the Internet will no longer remain in a hub-and-spokes environment with the US as the centre of the world."

Project Oxygen could also result in the creation of 'cybercities' along the coast of India where the cables will land. High bandwidth users like ISPs, software companies or international banks can set up base in such 'cybercities'.

"In India, the basic problem is that of the local loop and this will no longer exist for the companies who set up operations in the proposed 'cybercities' since they will have access to Project Oxygen," Tagare points out.

More importantly, once Project Oxygen becomes reality, VSNL and the rest of the international telecom giants would metamorphose from phone companies to multimedia companies with a major chunk of revenues coming from new businesses such as redistribution and repackaging of video content, Tagare points out.

Kumar agrees and says this may be the reality, which VSNL has to prepare for in the next 10 years.

Thus, VSNL may have no alternative but to invest in Project Oxygen to survive the high bandwidth needs of the immediate future.

"It's much easier to get approvals for 10 smaller projects than for one huge project. Change is very difficult but a paradigm shift is even more difficult," feels Tagare.

And he should know. The political aspects of FLAG, which Tagare was instrumental in making a reality, took close to seven years to iron out.

But that experience is far removed from the task at hand. The size of Project Oxygen completely dwarfs that of FLAG, the biggest such network today. Yet, there is no alternative to something like Oxygen if the Internet is to survive the demands of the next century.


- Compiled from the Indian media

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