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First 'Power Panel' debates strategies for ISPs

The first 'Power Panel' discussion today was on how to make Internet service providers' business profitable in India through innovative methods of Internet proliferation and value addition.

Since the government threw open the ISP business for private participation recently, about 130 applications have been received for licenses to provide Internet access. Of these, 35 have already been issued the licenses.

The panellists for the discussion were:

• S Rajagopalan, chairman and managing director of the Mahanagar Telephone Nigam Limited.
• R Ramaraj, managing director, Satyam Infoway Limited.
• Anil Batra, country head, Cisco Systems.
• N Muralidharan, head, ISP business, Silicon Graphics India Limited.

National Centre for Software Technology chief S Ramani was the moderator for the event. He told the audiences that two ISPs are already in place, one at the national and regional level each.

The image of Internet as an elitist device needs to be erased, Raman said. He cited the example of Tamil Nadu that has made a beginning in getting the whole state connected.

The entry barriers are low with no license fee for the first five years and only a nominal fee of Re 1 per year thereafter. Even a 4 per cent foreign equity has been permitted. However, before beginning operations, a bank guarantee is required.

Rajagopalan said MTNL has already received an ISP license and is making efforts to get started by January 26, 1999.

The aim of MTNL, said Rajagopalan, would be to offer services better than VSNL and service consumer complaints quickly.

An ISP can really be successful only through an 'A' (national) category network and MTNL has its own gateways in two cities said Rajagopalan.

The cost of the external connectivity is high at $122,000 per month and the traffic now is only one way, all emanating from India, he pointed out.

That is why MTNL proposes to develop content that would reverse the flow of information on the expensive bandwidth.

Also there will be a focus an e-commerce and the objective here would be to replace certain information services that institutions like banks and stock exchanges currently offer.

Corporate clients would be offered alternative services and individuals would have better facilities especially in respect of payment of bills, he promised.

Rajagopalan appealed to private ISPs to work with government entities such as MTNL so as to reduce costs of achieving threshold connectivity before the requisite infrastructure in up.

R Ramaraj of Satyam Infoway cautioned about excessive interest in starting of ISPs, citing a drop in the number of ISPs in the US from 9,000, two to three years ago, to 2,800 today.

The current cost of infrastructure is too high, Ramaraj felt. The trick for success, he said, is to be nimble, offer the best in service in terms of easy connectivity and look at content, he advised. The route to success is through differentiation in quality, he was convinced.

Allaying fears about security, he pointed out that of the different methods of transaction, online frauds were found to be the least, at 1.3 per cent.

With cyber laws in place, commence on the Net would explode and it is our one opportunity to compete with the world on a level ground, Ramaraj said.

Muralidharan said that there are three questions to be addressed on the issue of ISPs:

1. How will the ISP achieve a mass reach?
2. How will the business become financially viable? and
3. Is it better to wait or to enter now?

As a technical platform provider (Silicon Graphics), Muralidharan observed that the scalability of servers would be an important factor.

A service mindset is more crucial than mere technology. There are not enough skilled people and this ought to be tackled early, he felt.

He advised that if ISPs expect profits soon it would be best to concentrate on the four Ps: Platform, Partner, content Presentation and Products.

Batra felt ISPs in India have a vast opportunity as even a 2-3 per cent of trade over Internet would generate hundreds of billion of dollars in trade.

Amazon.com has a customer base of 2.5 million and this is an indicator of the possibilities, he pointed out.

In Cisco, 70 per cent of customer service problems are solved electronically, Batra claimed. A secure pipe from ISPs would certainly enable businesses to transact in a large way, he said.

The panel discussion brought out a few interesting points. Rajagopalan of MTNL saw no need for a government versus private ISP feud. He has maintained that there is a vast market and room for all.

Ramaraj would like ISPs to concentrate on core competencies in the forms of infrastructure, content, and commerce.

Rajagopalan disagrees. There must be no bar on preferred service by any organisation and 'market Darwinism' will take care of the situation.

Ramaraj informed the meeting that an association of ISPs is being formed to address issues of business development.

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