Internet access getting cheaper in India

MUMBAI, MARCH 18: Internet rates are dropping rapidly as subscriber base grows. On Thursday, the first free nationwide internet service, c...

MUMBAI, MARCH 18: Internet rates are dropping rapidly as subscriber base grows. On Thursday, the first free nationwide internet service, caltiger.com, became operational. Backed by big venture capital money, the internet service provider ISP is planning to go 200 cities in the country, by 2000 end.

The ISP also has ambitious plans to set up an optical cable fibre network connecting 40 cities and cover the rest in the next year. Indications are the service will not be inferior to paid internet service being offered by other providers. However, it is still too early to draw any definite conclusion about service quality.

More important, even with paid services, subscribers do not often get quality connections. Existing players who cannot offer significant advantages over the free ISP will now suffer rapid erosion in customer base. Players like Satyam, Mantra, Videsh Sanchar Nigam Limited VSNL and Mahanagar Telephone Nigam Limited MTNL will have to work twice as hard if they want to grow or even retain their subscribers. Caltiger.com has also taken a strategic decision by launching first at Mumbai, which has country8217;s largest internet subscriber base in the country, and Bangalore, which has a large technology savvy population.

VSNL, which has been enjoying the largest internet subscriber base for years currently at 3.5 lakh, may be hard hit because it is present only in six cities. If caltiger.com8217;s services are as good as VSNL8217;s, users will see no reason to continue with VSNL. Indications are VSNL has already realised this. Director operations Amitabh Kumar was quoted as saying tariffs would come down to Rs 3 to Rs 4 per hour in the near future at a press conference held after caltiger.com launched at Mumbai. Until now, it has been accusing MTNL of cross subsidising internet services with access revenue and triggering price-wars.

However, while both MTNL and VSNL are in a position to introduce free internet services, it remains to be seen how private players face the challenge. Bharti Telenet is already offering free internet in Madhya Pradesh where it operates basic services under the Airtel brand. All Airtel subscribers can access its internet service, Mantranet, for free.

However, Bharti8217;s free internet is limited only to Madhya Pradesh and is more of strategy to increase its basic service subscriber base. Caltiger.com8217;s service has no strings attached. In that sense, it is the country8217;s first free national ISP.

Cable ISPs like Hathway and Pacific Internet which has tied up with the Hindujas for internet through cable may not face any immediate threat because their USP is high bandwidth. But it is only a matter of time of time before these tariffs start dropping too.

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IDC India forecasts the internet subscriber base will cross 10 lakh by the year end. Under the existing scenario, this figure might be reached even before 2000. According to estimates, the total number of internet subscribers currently stands at around 7 lakh. IDC has projected a 95 per cent compounded annual growth in subscriber base during 1999 to 2003. The commercial segment will have a growth of 57 per cent, and the home segment a whopping 163 per cent, it said.