Financial Daily from THE HINDU group of publications
Wednesday, Aug 07, 2002
Info-Tech - ISPs
Birds of a feather fight each other
Vipin V. Nair
The result today is that the industry is facing an uncertain future even before it really took off. Internet Telephony Service Providers (ITSPs) themselves have started asking this question: `Will Net telephony survive in India?'
The core of the issue that the ITSPs strive to sort out is a tug-of-war between large and small players. The issue is so complex that even at this point of time, no viable solution has been arrived at. The Internet Service Providers Association of India (ISPAI), which has been the forum to address this issue, still does not have a clear answer to the problem.
When the Government decided to permit Internet telephony in India or rather legalise it since everyone could use it on the sly from April 1, 2002, a clutch of ISPs such as Data Access, Satyam Infoway, Net4India, HCL Infinet and Caltiger came out with services that offered rates as low as Rs 5 per minute to a call to the US.
Since there was no licence fee for ISPs to start Internet telephony services, it was but natural that there was intense competition in the sector. But it would soon turn brutal.
The problems started when some larger ITSPs who have established their own network infrastructure blocked usage of pre-paid cards by other ITSPs on their network. This meant that cards issued by companies such as Net4India and Caltiger could not be used if you are using Internet accounts of Satyam or Data Access.
Smaller ITSPs accuse these companies of trying to "barricade" the Net and throttle smaller players. "How dare anybody barricade the Net," asks Joe D'silva, Chairman of Caltiger. "This is a severe issue of freedom of speech and a distortion of the Internet telephony policy of the Government," he argues.
Satyam and Data Access counter this argument by saying that the licence for Net telephony allows an ISP to provide services only to its customers and in this light, their action is nothing illegal. When the issue heated up, it was taken up at the ISPAI Executive Council, but still remains unresolved.
A complex issue
Apart from the fighting service providers, a third party is also involved in the issue, though indirectly. It is the international call terminator (ICT), who provides the facility to route the calls off the Internet to a PSTN system for termination. Major players in this category are Net2Phone, Dial Pad and Delta Three, of which the first one is very active in India.
As a possible solution to this predicament, the ISPAI has mooted a revenue sharing between the three parties, ie, the card issuing ITSP, the ISP whose network carries the call and the ICT. However, the issue still remains unresolved.
But Net4India's Chief Executive Officer, Jasjit Sawhney, pooh-poohs the idea of revenue sharing. "It's like saying that if Rediff.com sells mangoes from its portal, an ISP through which Rediff was accessed, should also get a share from the portal. It's not feasible."
Says the ISPAI Secretary, Amitabh Singhal, "This is a complex issue involving commercial considerations. We need an independent platform and should find out a win-win situation."
Even the Telecom Regulatory Authority of India (TRAI) was concerned about the battle between the ITSPs, but the regulator later decided to keep its hands off and let the players solve the problem, Singhal says.
According to leading cyber law expert, Pavan Duggal, there is no special provision in the IT Act which bars an ISP from blocking a service. "You have invested money in your network and you can block whatever you want to from using that netwok," Duggal says. However, there are certain clauses in the Act which prevent blocking, he points out. "So it is a fluid situation and a solution has to come from within the industry itself, " he says.
Menacing shade of grey
The grey market is another crucial issue that affects Internet telephony in the country. Rough estimates by the industry put the use of grey market cards at as much as 60-70 per cent of the total Internet telephony market. And here again, the industry stands divided. Caltiger's Joe believes that "grey is not entirely objectionable now," since it too helps the market grow in a way. "Technology and services should be easily available. The more the use, the more the familiarity," he argues.
How does the grey market operate in Internet telephony? One way is to smuggle in pre-paid cards and sell them at cheaper rates than what the ITSPs offer. You can also obtain a user name and password, say through friends abroad, and start using a Net2Phone or Dial Pad service.
Internet activist, Dr Arun Mehta too believes that grey operators do help the market grow and it is impossible to check their service. But the ISPAI's Singhal is of the view that the grey market throws up the question of unaccounted money and it should be regulated. Companies such as Net2Phone, which are the main victims of the grey market, are taking strong action to check illegal operators.
"Ultimately, the quality of the service will decide who will prevail. A grey market operator can never ensure the quality that an ISP can guarantee. ISPs should distinguish the Internet telephony traffic exclusive and provide separate bandwidth to the user," says Sandeep Sharma, Managing Director of Glide International, the largest ISP in Punjab.
No answers on quality
Come to think of quality, here too the fledgling ITSPs face issues which have no clear-cut answers. "TRAI discussed this issue with operators. If we have to adhere to certain norms on quality, the telecommunications companies who have the networks need to provide us guarantee on quality," says Singhal.
Dr Mehta feels that Internet exchanges must be set up in India urgently so that the quality of services can be improved and costs cut. Caltiger's Joe says it is best to leave the matter of quality to users who will decide whom to go for.
Opening Net telephony to STD
This is one issue where all service providers unite. They all want the Government to allow domestic long-distance calls (STD) to be made through Internet telephony. Currently PC-to-phone calls are not allowed within the country and only PC-to-PC calls are legal.
"Last year, Videsh Sanchar Nigam Ltd (VSNL) carried 600 million minutes of international voice traffic from India to outwards. Even if Internet telephony captures 10 per cent of this traffic, at Rs 5 per minute, our market size is just Rs 30 crore.
The big pie for us will be the STD business, but that is not happening," laments Joe.
But before asking for more, Joe and his ilk would do well if they resolve their current set of troubles.
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