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Monday, November 15, 1999

`Value-added services shall determine the strength of ISPs'

 
Lucent Technologies took over $ 1.3 billion Ascend Communications at an unbelievable $22 billion last June. The `merger' was a worldwide event which raised eyebrows for the price that it commanded. The reason for the premium on the price paid by Lucent is put down to the fact that the company has advanced technologies to offer for Internet Service Providers (ISPs) -- a sunrise area of growth globally over the next few years. Lucent has spun this division off into an independent division called Lucent INS (Inter Networking Systems). Spearheading the company's foray in India, Hirendra Gupta, Country Manager, speaks to NAVIKA KUMAR to discuss the company's plans in India.

What is your target market in India?
The competition between ISPs is hotting up in India. As the number of ISPs grow, their real strengths will lie in the value-added services that they can provide while providing internet services. As consumers get addicted to the internet, it will cease to be an instrumentfor e-mail messages alone. In fact, consumers will begin to demand greater value addition from ISPs.

What will distinguish one ISP from another is the number of additional features that they offer. In any case, private ISPs will have to depend on these value-added services to create a niche for themselves when compared with larger players like the VSNL, MTNL or the Department of Telecommunications.

As this need for more features is felt, the traditional cables laid for relaying communication services, basically voice, will now have to perform more functions for providing high speed data transmission and other such functions. This implies that the bandwidth carrying capacities of equipment needs to be stepped up and it is here that our company has several top-of-the-line equipment to offer. These include, ATM, frame relay systems and remote access internet systems.

What do you think is the size of the Indian market for such equipment?
The Indian internet market is in its early stages ofgrowth. Almost 70 lakh to a million internet subscribers are being added every year. Each port equipment that is required to service 10 customers costs around $ 300 --putting a crude estimate of the market size at $ 30 million (Rs 1,300 to Rs 2,000 crore) annually.

Apart from this, there is a large market for equipment for backbone networks being set up by the Department of Telecommunications, MTNL and other basic and cellphone operators.

We have also provided equipment for intelligent networks for MTNL on which the toll-free numbers of -- 1800 series level are being operated.

What are the limiting factors for the growth of the ISP market in India?What do you think the government needs to do in order to remove these bottlenecks?
The growth of the internet market in India depends on low cost personal computer prices and low cost of access to internet prices. This can only happen if the equipment used by ISPs is high quality but low cost. The ideal environment for this segment to flourish wouldrequire low cost lease lines, duties on equipment to be lowered and low-priced personal computers. This will help in improving the subscriber base for internet services.

The government will have to seriously consider allowing freer access to setting up of international gateways, essential for improving the quality of internet services. This, in turn, will help in cutting costs of other businesses and improve efficiencies across industries.

Increasingly it is felt that costs will have nothing to do with the end pricing. This will be market-driven depending on the demand and supply of such services. Therefore, operators will do well to keep costs at rock bottom at the same time keeping an eye on latest technologies. For this, duty structures would be important to make available the best services to consumers.

How do you think internet access prices will be driven downwards?
A new technology called digital subscriber line (DSL) which helps high speed data transmission using the traditionalcopper and aluminum wires is set to drive down costs. This equipment can make internet lease line prices drop to one tenth of the present prices. Currently, internet prices through leased lines are pegged at around Rs 4 lakh to Rs 5 lakh for a 64 KB line. This can drop to levels of Rs 30,000 to Rs 40,000 annually which will mean subscribers can get 24 hour internet access through lease lines at rock bottom prices.

It is this kind of shake-up that will send the internet market into a tizzy and huge growth can be achieved.

Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.


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