Home India 2007 The Internet – India’s competitive edge

The Internet – India’s competitive edge

by david.nunes
Rajesh Chharia Issue: India 2007
Article no.: 2
Topic: The Internet – India’s competitive edge
Author: Rajesh Chharia
Title: President of Internet Service Providers Association of India, ISPAI; founder, Director & CEO of C J Online Pvt. Ltd
Organisation: ISPAI/C J Online Pvt. Ltd
PDF size: 280KB

About author

Rajesh Chharia is the President of the Internet Service Providers Association of India (ISPAI). He is also the founder, Director and CEO of C J Online Pvt. Ltd, the first operational private ISP on a 100 per cent digital platform in Ghaziabad (NCR Town of Delhi) and its adjoining areas. Mr Chharia played a major role in creating the National Internet Exchange of India, NIXI, of which he is presently a Director. Mr Chharia began his career as CEO of the family’s business, manufacturing packaging materials. Mr Rajesh Chharia earned his Bachelor’s degree from Delhi University and his Master’s Degree in Commerce with Honours from Meerut University.

Article abstract

India has made great progress building out its broadband capacity and increasing its usage since the market was liberalised by the government in 1999. This has enabled the growth of India’s service sectors, including business process outsourcing. Despite the growth in access, much of India’s connectivity is still furnished by international bandwidth providers. NIXI, the National Internet Exchange of India, has established nodes in India’s major cities to interconnect national ISPs, without recourse to international bandwidth, to route domestic traffic.

Full Article

In 1998, it was said that: “If the Department of Telecom, and their cohorts, the VSNL, got off their high horse, and broke up the Telecom and Internet monopolies in India, we just might catch the train we have nearly missed. Shortsighted, grabby, greedy and paranoid policies by the Telecom barons in their ivory towers are strangling India’s biggest hope of catching up with the rest of the world, on the Internet.” The Internet in India then, in 1998, was merely a shadow of its international equivalent. India had no nationwide backbone. An organization purchasing Internet access from incumbent or another ISP was almost entirely dependent on international bandwidth to reach the US backbone. Most of the Net was available only through a connection to the US. One could buy a 64 Kbps Internet connection, but the effective bandwidth was whatever the international provider had available at any given moment. Service providers everywhere provide clients with shared bandwidth, but the ratio of users in India to the available bandwidth was much greater than the norm, so the actual usable bandwidth for a 64K customer was more likely to be in the neighbourhood of 30 Kbps. Then came NTP 1999 (National Telecom Policy) and the incumbent government operator was privatized and private players were authorised to provide Internet services. With this, India’s ICT sector started growing and many value-added quality services like IP VPN, VoIP, video conferencing etc. became available to users at very affordable prices. Due to the availability of these services, many industries such as software development, call centres, BPO, business process outsourcing, etc. started coming to India from overseas and took advantage of these services. Indian companies also began to provide these services to overseas companies. Given the reasonable costs and the high-quality skills that Indian human resources offer, many foreign companies found they could economically and reliably outsource some of their business processes to specialised Indian companies. The Internet-driven development of the IT sector has fed upon itself – the need to meet the growing demands of the service providers are driving the rapid growth of the entire information and communication technology sector in India. In the past, bandwidth in India was only available from the incumbent player, whose limited undersea cable and satellite capacity resulted in high costs. Given the growing demand for bandwidth, the Indian government liberalized its regulations and, as a result, encouraged many Indian and foreign service providers to create the needed infrastructure and make a great amount of high-quality, reasonable cost bandwidth available. Presently, in addition to the growing number of undersea fibre landing stations in India, there is an abundance of satellite bandwidth on the market. The competition has lowered the cost of international bandwidth significantly and, of the value added services that depend upon it, but bandwidth rates are still generally higher than those of the international market. Nevertheless, much can be done to bring down tariffs and increase Internet usage and penetration. Internet bandwidth availability has shot up in India in recent years, but Internet penetration and usage has not kept pace, according to the National Association of Software and Service Companies, NASSCOM. India had 1.2 Gbps of international bandwidth in October 2001, but its use by Internet service providers, ISPs, was much lower, according to NASSCOM’s strategic review of the information technology sector for 2002. So there is surplus, bandwidth available. There are many reasons for the surplus, including a lack of last mile connectivity, high rates and inadequate quality of service. Many feel the real driver for bandwidth will be multimedia applications. There has been talk for years about the impact that rich multimedia content and video would have but, in reality, this has not yet been felt by Indian enterprises. Organizations are increasingly using their IP networks for voice communications but, since voice streams are compressed for transmission on data networks, voice is not much of a bandwidth guzzler. VoIP, voice over IP, will be a big bandwidth consumer, despite compression from 64K to 14K, because the bandwidth is needed to guarantee the quality needed for multiple voice channels even if the routers are configured to prioritize voice traffic. Network convergence will also affect bandwidth usage; when voice, video and data (triple play) are pushed along the same pipe, bandwidth requirements can soar. As connectivity costs drop, more enterprises will migrate towards using a common network for voice, video and data because of the huge cost-savings. The growth of business will also increase the demand for bandwidth. Enterprises, especially in the banking and finance sector, are acquiring more bandwidth to satisfy their growing business requirements. All MNC, multi-national corporation, banks in India for instance, are upgrading their bandwidth by 50 per cent this year as they introduce more ATMs, branches, and new applications. The government-controlled State Bank of India, SBI, the country’s largest bank, has also electronically networked most of its metropolitan, urban and semi-urban branches and its ATM network, the largest in the country, through its Core Banking System, CBS. Today, the bank’s customers can access their accounts from anywhere in India. The heavy messaging and core banking applications use quite a lot of bandwidth. Recently, the Finance Ministry required companies to file their income tax returns using their Internet-based eFiling system. Also, the Registrar of Companies, ROC, also required all the companies registered with it to file all their returns, forms, etc. through the eFiling system. As a result, almost all corporations, chartered accountants, company secretaries now require substantial bandwidth for their eFiling needs. The Finance Ministry and the ROC, accordingly, have both had to contract a significant amount of bandwidth to provide eFilers with access to their servers. Much of the rapid growth of bandwidth, consumed for data transfer or access, is due to the mushrooming growth of call centres, BPO, Web hosting firms, data centres and the like. The burgeoning use of low-cost VoIP telephony to call overseas clients has also contributed greatly to the demand for international bandwidth. Next, in bandwidth usage growth after data and VoIP, are multimedia applications such as video, video conferencing or video with VoIP (as with Skype), and IPTV. Huge growth is expected for multimedia applications. Corporations are using more video/speech and conferencing applications and younger users are beginning to employ their PCs as TVs to view movies and events, to download music and for video chat. Recently, a movie in India was released simultaneously at cinemas and on the Internet. Producers are beginning to sell rights for their movies to Internet content providers for on-line distribution. The increased demand for Internet bandwidth has encouraged infrastructure expansion. In 1999, when the National Telecom Policy was put into practice, total bandwidth capacity was 21 Gbps; by 2006, India’s infrastructure could count upon more than a terabit of bandwidth. In spite of the huge growth in international bandwidth usage, the prices are still quite high compared to those practised in other countries with similar bandwidth usage. To control the prices and utilization of international bandwidth, the Indian government with the help of ISPAI, the Internet Service Providers Association of India, established National Internet Exchange of India, NIXI, in the year 2003-2004. NIXI presently has four nodes – in the Delhi, Mumbai, Calcutta and Madras metropolitan regions. Now the major domestic ISPs can peer their links at NIXI to route their domestic data and save international bandwidth. The policy to establish and interconnect NIXI nodes in all states will enable the domestic transfer of data between all NIXI nodes, and economise at least 30 per cent of international bandwidth usage. We are also discussing the interconnection of all the region’s national backbones, and exchanging the traffic of all connected countries through NIXI, with all the SAARC countries – Pakistan, Bangladesh, Nepal, Sri Lanka, Male (Maldives) and Bhutan. This will save at least 40 per cent of the region’s international bandwidth. We are also working to get local content providers to connect their servers to NIXI through licensed ISPs; this will greatly reduce delays between clients and content providers and, as well, save international bandwidth. Internet bandwidth is more perishable than a banana; hence optimising its usage results in greater availability. The greater supply will tend to make the market for bandwidth increasingly competitive, resulting in reduced prices, increased demand and accelerated uptake by Internet users. In India, Internet demand is huge, but for many reasons – including changing rules and regulations for licensing stand alone ISPs – penetration is generally low. Consequently, the government’s targets and projections often fall short. Removing the licensing barriers will ensure that more players enter the market. By increasing the number of players and fostering competition, technological innovation will also increase, prices will come down, user acceptance will increase. As Internet volumes increase, so too will government revenues.

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