Anshul Kwatra
India Infoline.com
2nd Fl. Can Bank Bldg, Adi Marzban Path
Ballard Estate, Mumbai-400038
Email: anshul[at]indiainfoline[dot]com

The Prime Minister made an announcement that aims at breaking the long established monopoly of VSNL in the provision of bandwidth in India. This has been more than welcome by everybody and has been hailed as a breakthrough. Let's see what makes the announcement so significant.

The Announcement _ its negatives and positives
Private players would be allowed to set up landing stations anywhere in the country in collaboration with any undersea operator. VSNL will have to make arrangements to alter its arrangement with its international submarine carrier partner, FLAG and to end the dispute over who has the rights to allocate bandwidth to private ISPs.

The Positives

• With the VSNL monopoly gone, private ISPs can have their own gateways using submarine cables. Private players were earlier allowed to have their own gateways but only through satellites. This would make available access to cheaper and greater bandwidth for data traffic and Internet.

• Ability of the private ISPs to have their own gateways would lead to improvement of the throughput available to the customer of the data and Internet services.

A primer on gateways

Gateways

Gateways are entry and exit point for outbound and inbound data. Gateways are necessary to link the international connectivity with the local networks. Gateways also act as the control points for the type and amount of data. Further they are equipped with security servers and software to protect the information of the country from being poached by hackers. Gateways can be either through satellites or through undersea cables.

Satellite Gateways

Satellite Gateways are gateways set up with the connectivity link being provided by the satellites. That is if any of the ISPs were to setup a satellite gateway, it would need to have a base station here in India connected to the satellite. The other end would be from another gateway in any other country connected to the satellite. This along with all the landing and end point hardware would form the gateway. The medium of transmission of data from one point to another is air using a satellite as an intermediary.

The Advantages of using satellite gateways

The satellite gateways can be set up in short time. This is if there is a transponder available on the satellite. The installation can be done at point without doing much of groundwork. The base station can be moved from a point to another whenever needed. The installation is restrained by direct visibility between the base station and the satellite.

The disadvantages associated with satellite gateways

The use of satellite gateways is riddled with its own problems. The problems include atmospheric interference, misalignment of the base station with respect to the satellite due to earth's revolution etc. Further the setup cost of the gateway is independent on distance between the two points but dependent and restrained for the frequency bandwidth available. The connections are not also very stable and expensive to run.

Optical Fibre Cables based undersea gateways

Gateways which are set up with the medium of transmission of information from one point to another being optical fibre cables already present undersea are known as optical fibre cable based gateways.

The advantages of undersea gateways

The undersea cables are able to offer lower rates per MBPS and also can offer very large bandwidth. The bandwidth is limited by the equipment used in the cabling and not by the cable used. Further the cable provides very reliable connection between two points. The cable is unaffected by the climatic conditions prevalent and thus offers better and more reliable connection.

The disadvantages

The undersea cables are prone to snapping in case of fish, rodent attack and even ship anchoring. Further the cable needs to be planned well in advance with respect to the demand, supply, routes depth etc. Further the cost of dredging and laying the cable is dependent on the distance between two points, the terrain and the depth dredging. The cables are constrained location wise. The cable cannot be ended at any point and further the connection is available only at the location where the cable ends. The connection can be taken to another place using other cables or wireless technology.

• Availability of better bandwidth would make the access to information faster and less painful. Several businesses related to the bandwidth would get a shot in the arm. For example software export, medical transcription, call centers etc. would be able to improve their performances.

• The cost per MBPS of the Internet services would come down. This would be for the reason of availability of bandwidth and competition amongst the players.

The Negatives

There are no apparent negatives of the offer, but the security of information could be a problem point. Smaller players could try and circumvent the security routes, thus making information vulnerable.

Other issues that would need to be addressed

• How are the private players to access the existing capacity of FLAG? Are the players to set up their own new landing points or use the existing landing point of VSNL in Mumbai.

• In case they are to use the landing point of VSNL, how would VSNL's compensation for the use of the landing point be calculated?

• What could be the other interconnection issues like, are the operators to link from the landing point using the VSNL network or could they set up their own network to access the fibre.

In case each operator was to set up its own landing point, then the industry would be flooded with landing points. This would put smaller operators in a financial fix and vulnerable to attack.

Implications on VSNL due to removal of its monopoly on the bandwidth

VSNL has only 6.66% revenue from internet and related businesses. The contributions are as follows, Leased Lines 3.65%, GPSS 0.10%, Global Network Services 0.09%, GEMS 0.26% and GIAS 2.56%. This shows that VSNL has a very small contribution from the internet and internet related services. Thus, if the monopoly is withdrawn VSNL would not see a drastic reduction in its revenues as a direct consequence of this decision. However, the announcement could point to removal of VSNL's monopoly in international voice traffic earlier than 2004. Already groups have expressed their views which calls for having the monopoly demolished by 2002.

* Reproduced verbatim with the permission of the Author. Editor
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