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July 9, 1997


Let the revolution begin

Salil Murthy in Bombay

The first step to opening up the Indian Internet service business to private companies has been taken. And a much criticised monopoly looks set to go.

The Telecom Commission's decision to allow private players to enter the ISP business will, if confirmed by the Cabinet, spell the end of the Videsh Sanchar Nigam Limited's stranglehold over the industry.

The policy will not require ISPs to pay license fees for the first two years of operation but lays on them the responsibility of setting up their own infrastructure. The National Association of Service and Software Companies, an influential lobby group has been demanding that private ISPs should not be charged a license fee. NASSCOM points out that a license fee would violates the spirit of the Internet.

Over 50 companies have already expressed interest in becoming ISPs and 16 have actually applied to the Department of Telecommunications for a license. These include international players like British Telecom, HCL Comnet, Fujitsu, Allent Technologies and Wipro Infotech.

The Telecom Commission, which is the apex body of the DoT, has recommended that licensing of the ISPs be done through the DoT.

The ISPs would further be expected to buy leased lines from DoT and establish their own connections to the international gateway.

Control over this all-important gateway would, however, still rest with the VSNL.

Telecom sources have another story to tell. The VSNL monopoly over the international gateway is expected to continue only for 2 years, after which even that sector of the Internet provision business will be thrown open to all competitors.

The ISPs will then be given the choice of setting up their own gateway (a capital intensive proposition), or connecting through other gateways.

A DoT source says that no decision has been taken regarding foreign direct investment in the area. Existing government policies on FDI should suffice, he feels.

The services provided and tariffs charged will be entirely driven by market forces in the setup visualised by the Telecom Commission, which does not plan to impose any regulatory controls on the service providers.

All inter-ISP disputes and issues of unfair trade practices will be dealt with by the three-member Telecom Regulatory Authority of India.

Eventually, the proposal aims at moving VSNL completely out of the ISP field. Official sources say that the DoT will probably take over that part of the VSNL fiefdom along with its subscriber base of around 40,000 customers.

VSNL officials were locked in meetings with a Parliamentary committee and were unavailable for comment when Rediff On The Net tried to get through today.

S Ramakrishna, director, customer services, Department of Electronics, had earlier told Rediff On The Net "VSNL should not be the only commercial ISP in India." For the moment, though, VSNL has only lost the rights over the 'front end' part of the ISP business which involves the physical linking up of the subscribers to the gateway.

Sources close to the VSNL's brass told Rediff that the monolith is actually quite eager to get rid of this front-end business and the hassles of dealing directly with thousands of consumers. It would rather concentrate on retaining control over the 'national backbone' and international gateways, the source said.

But this is precisely what the private players would like to avoid. They feel that the quality of their service would be reduced to that of the VSNL. "This would not be the answer to customer problems," a senior executive of India's largest infotech company said.

Related story: Binary illogic - One and one equals zero when the Department of Telecom and the Department of Electronics are asked to collaborate on policy.

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