ISPs target Net infrastructure to win customers

Anshuman Daga

BANGALORE: Internet providers in India are rapidly working to boost

infrastructure in a market showing the highest growth rate in the Asia-Pacific

region.

Setting up dedicated Internet gateways will enable India's Internet access

providers to increase and improve the quality of bandwidth, or network capacity,

and help attract more customers in the long run, analysts said.

Internet service providers in India currently buy bandwidth from the

state-run Videsh Sanchar Nigam Ltd. (VSNL), but a few of them have launched

gateways after the government ended VSNL's monopoly in June 1999.

"The main advantage of these gateways is that this gives us independence

and direct control over the quality of service to the customer," Rahul

Swarup, chief technology officer at Satyam Infoway Ltd. told Reuters.

The US Nasdaq-listed firm has set up three satellite-based Internet gateways,

as part of its plan to have 17 of these operational in India by the first

quarter of 2001.

Mantra Online and Dishnet DSL are among those that have launched their

gateways. Pacific Internet India and the Internet units of electricity firm BSES

and Zee Telefilms have announced similar plans.

"A lot of smaller players who can't make investments to build gateways

could also shift to bigger ISPs to source bandwidth," said Alok Tiku,

analyst at consultancy firm Frost & Sullivan, India.

The top four to five ISPs account for a lion's share of India's Internet

market which now has over 200 players after private ISPs were allowed about two

years ago.

"Gateways will be a big competitive advantage for an ISP," said

Bharat Parekh, Internet analyst at DSP Merrill Lynch.

"They could offer more bandwidth and better quality and if the quality

of services improve, the usage of Internet will automatically be more," he

said.

India's nearly two million Internet subscribers are seen soaring to about 15

million by the end of December 2003, according to the country's software

industry body.

But even with these growth rates, India's Internet access market will be

dwarfed in Asia by giants such as Japan, China, South Korea and Australia.

Increased bandwidth



Once a number of these gateways are operational, analysts expect Internet
providers to roll out better quality of bandwidth in India and also boost the

use of broadband services.

"These gateways will contribute to the total bandwidth coming into the

country not only for Internet but also for IT-enabled services," said

Satyam Infoway's Swaroop.

Broadband brings Internet, video, phone and other multimedia services to

homes and offices at high speed. It has not caught on for a majority of Indian

Internet users due to limited bandwidth and poor quality.

For many users, speed is still the biggest constraint for increased use of

the Internet.

Broadband services are also getting a boost from the large investments

planned by many big Indian companies.

Firms like Reliance Industries, Tata Electric Companies and Bharti

Enterprises are wiring the country with optic fiber networks, which should boost

bandwidth capacity.

VSNL has already commissioned one gigabit bandwidth capacity to cope with the

rising demand in India.

Earlier this month, India's top telecom bureaucrat Shyamal Ghosh said the

country was on course to increase bandwidth to allow most areas access to

broadband services.

The government is doing its best to achieve its targeted 100,000 route km of

fiber this year in addition to 185,000 route km which already exists, Ghosh, who

is the chairman of India's Telecom Commission said.

(C) Reuters Limited 2000.