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India Broadband Open House: Unbundling, Taxes, Infrastructure Sharing, IPTV, Right Of Way

“There are 86 million cable connections, with people capable of paying around Rs. 200 a month, and 22-23 million DTH connections,with people paying the same, when there is a need. Unless we target a number and do a reverse calculation, we’ll keep debating growth.” – Net4India

Probably the most pertinent point of discussion at TRAI’s open house discussion on India’s National Broadband Plan today, where the ISP’s were out in full force, but much of the discussion focused on the view that ISPs in India have been dealt a poor hand by the Indian government. It was also one of the few points made during the discussion that focused on consumer issues and needs. Calls were out for unbundling of the local loop, IPTV limitations to be relaxed, and most importantly, right of way. They almost led one to believe that the reason behind the lack of growth of broadband in India, is because the ISPs have too many problems to deal with. Not entirely true, in my opinion – having experienced two years of terrible connectivity and customer service from Hotwire and Sify, before I switched to the relative stability of MTNL. Some of the issues that were raised by the ISPs and other stakeholders present:

– On unbundling of the local loop: The ISPAI (ISP Association of India) said that a lot of copper is lying idle, and they want unbunding of the local loop, which means that any ISP can utilize the wires that already have right of access to a consumers home.

Tata communications said that the cable operator sector is unorganized and there are lots of customer service and quality of service issues. In case of the last mile on a wireless, the cost of spectrum is very high: according to their calculations, overall the cost of spectrum comes to around Rs. 800 per month, as against Rs. 20 of international bandwidth price. This is where there either has to be a free band or unbundling of local loop, so there are more service providers.

No unexpectedly, BSNL was the only entity to speak out against unbundling of the local loop: Ashok Rawat from BSNL said that the company is optimally utilizing its copper, and even if they use 100% copper laid, it will not go beyond 3.4%. More copper needs to be laid, and instead of unbundling, there should be favorable licensing of wireline services.

– Infrastructure Sharing: ISPs want to be able to share their existing infrastructure with other service providers, but are not being allowed to do that. The ISPAI said that an MVNO model should be allowed for ISPs: “We’re not able to sell broadband connections through the cable operator without a reseller arrangement. Include registration for cable operators, so that they don’t have to be regulated, and can take services from licensed ISP.” Spectranet, though, said that though cable operators lack technical knowledge to manage customers, they’re willing to put in the time, which ISPs lack, and pitched in with support for a reseller arrangement. Net4India also made a pitch for a reseller agreement.

– Stability In Policy: The ISPAI also said that frequent changes in government policy regarding the ISP business is preventing foreign investment in their business.

– Cost of domestic bandwidth: The ISPAI said that there’s a need for the government to review the cost of domestic bandwidth, which hasn’t been done for quite a while now

– IPTV Issues: There’s an unnecessary burden that has been imposed on ISPs in India, the ISPAI said, that they need to have a Rs. 100 crore valuation in order to be able to offer IPTV services. At the same time, there is no such restriction on cable operators, preventing them from offering entertainment (television) services. This is especially an issue since ISPs are paying the Adjusted Gross Revenue as payment to the government. Another speaker mentioned that IPTV can be made cheaper than DTH or Cable TV, and that will spur the growth in broadband.

– No migration plan between old ISP license and new ISP license

– Right Of Way: The ISPAI said that there’s an issue of non-rationalization of the right of way – the local government has started imposing taxes on towers, and are now demanding right of way charges, as well as annual charges for laying of copper and cable. One speaker also mentioned that some telecom operators sign exclusive deals with builders, and no other ISP or telco is allowed to provide service in that building. That is monopolistic in nature, and it needs to be open and non-discriminatory. Another speaker mentioned that we probably need to handle broadband right of way the same way DMRC has set up the Delhi Metro underground – and set up last mile access like transport infrastructure.

Another speaker said that the right-of-way cost is around 40% of the cost of laying fiber.

– ISPAI said that Web hosting and content availability in India is an issue preventing growth in broadband: cost of web hosting in India is higher than in the US. Overseas has international bandwidth usage, and there is latency. Spectranet added that if latency is brought down, the same download will take a user much less time, providing motivation for content providers to host content in India. Microsoft added that the advent of cloud computing means that the dependency on international bandwidth will increase if we don’t have (affordable) hosting in India.

– Lawful Interception: One of the ISPs also highlighted the issue of lawful interception, saying that the cost of such equipment is very high, and it burdens the ISP with no real benefit to the consumer.

Customer Premises Equipment: A speaker mentioned that WPC levies a charge of Rs. 1000 per annum per CPE as a charge, and this needs to be reviewed.

– Spectranet said that there’s a need to supplement NLD infrastructure, and today when there is a need for international capacity, they face significant charges. Per capita consumption of bandwidth is going to go up exponentially, as consumption of video content increases.

– Net4India highlighted the key cost factors, in order: real estate, electricity, bandwidth and manpower, followed by storage, and taxation issues. Net4India said that one cannot meet International standards primarily because of electricity issues, and import duties on equipment, even if you don’t look at service tax one has to pay here.

– National optic fibre network: Net4India said that the national optic fibre network looks like a case of duplication, since India has “lakhs and lakhs of fibre laid which is underutilized.” Tata Communications added that a national optical fibre network, the system is already operating: “we (ISPs) talk about swaps and routes. If I’m relaying 10 km, I get 20 km or more to swap. We are trying to reduce our optical fibre network cost. On cable landing station – excess charge RIO was submitted, for raw bandwidth. This under review and charges will be reviewed by next month. But what we would like to highlight is, that the landing station charges we pay in UK and Singapore needs to be take care by operators raising that issue. These are not applicable to international bandwidth, only to raw bandwidth. The market is intensely competitive, in terms of reselling the Internet bandwidth, who are again selling lower down and competing with us. It doesn’t require a relook.”

Cisco said that there is no fibre between districts and village, and no commercial business model today, so there is a need for the government to get involved in laying out the national optic fibre network in a public private partnership.

– Internet telephony: the issue with Internet Telephony, according to Net4India, is revenues from Internet Telephony are not treated as passthrough. “The termination cost that we pay to partners, are not considered passthrough, and Adjusted Gross Revenue calculations are not same for ISPs. The cost of NLD is the major component. 20% of cost is International, and 80% of cost is last mile and NLD.” Microsoft added that VoIP is available only to people with an IP device, though it can be used on mobile or Internet as well. Even though that has been permitted since Jan 2006, it hasn’t been made available to customers.

– Cybercafes: Naresh Ajwani said that the total number of cybercafes in India is down to 120,000, from 180,000 three years ago. He called for broadband enabled cybercafes as the way forward, similar to the PCO revolution in India many years ago. (ED: our take on this – PCO’s grew because of a lack of supply of telephony services, which did not meet demand. Even at present, broadband supply doesn’t meet demand).

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