It8217;s a dot, dot, dotty world

Currently, Net access is expensive in India. It requires a Rs 40,000 computer, a Rs 5,000 modem, a phone, plus an Internet connection costing an average of Rs 2,000 for 100 hours. Combined with a minimum of Rs 16 an hour for local phone charges, one hour of daily surfing in Delhi can set you back by a hefty Rs 800 a month. But once a TV set begins to substitute for a computer screen and a cable connection for a phone line, India8217;s current one million Internet connections will spiral as India8217;s 28 million cabled TV homes wired up at very little cost.

This is beginning to happen already. Cable TV subscribers in the steel town of Jamshedpur no longer need a phone to access the Net. They are connected by cable. Meanwhile, Net access through cable being many times quicker than a phone line, surfing will become swifter even as it becomes virtually free.Things are moving fast because India is on the brink of being criss-crossed by fibre-optic cable which will offer immense bandwidth. The state-owned telecom giant VSNL is talking to Mumbai8217;s three top cable majors to set up Net access in homes and offices. India8217;s largest TV manufacturer, BPL, is laying fibre-optic cable along India8217;s rail tracks. And Bharti Telenet has decided to give free Internet access to subscribers of its basic phone services in Madhya Pradesh. So the quadrupling and quintupling of India8217;s Net users every year is a certainty.

Exactly the same thing happened in the world8217;s developed economies. Net access is free in many European countries where the cost of the Internet Service Provider ISP is paid through a rebate on the phone bill.In the US too, Net access costs virtually nothing a mere 20 a month for unlimited surfing. This is the reason for a huge 35 per cent of US homes having Net access.

In retrospect, it8217;s understandable for Indians to be perplexed by the Internet, dotcom companies, or e-commerce. New Internet sites pop up every day. Bababazaar.com sells vegetables and fruits. Batchmates.com puts you in touch with your school and college friends. Pitara.com brings together children under 13. Many sites offer a surfer everything from a wife, girl-friend, to flowers, Bollywood gossip, second-hand cars, and even fish food, as jaldi.com does. How will these sites make money? Nobody knows, but they are getting a torrent of venture capital funds.

The world8217;s top venture capitalists are active here, including companies belonging to Microsoft and to Australian billionaires Kerry Packer and Rupert Murdoch. Also floating or funding dotcom companies are a horde of India8217;s financial institutions, banks and top and medium-level companies.It is a world of absurd expectations, however. America8217;s biggest e-commerce company, Amazon.com, has never made a profit but is valued at US 40 billion. Fortune magazine wryly comments that a dotcom company8217;s market valuation rises with its losses. What sense can one make of this?

One rule of thumb, however, is that the worth of something is what someone is willing to pay for it. In that sense, the purchase of Nirmal Jain8217;s IndiaWorld by Satyam Online was a pointer. Satyam8217;s needs matched Jain8217;s. Jain had 13 million NRI 8220;eyeballs8221; a month but no money. Satyam Online had money but no NRI eyeballs. A deal was struck and market rewards came in Nasdaq where Satyam immediately gained more than the Rs 499 crore it had paid to Jain.

What lies in the future is hard to say. Capitalism is unpredictable. Each Net adventurer sees an Alladin8217;s cave ahead. What may finally happen is a replay of the 80:20 principle. Eighty per cent of Net businesses will collapse or end up being acquired. But the 20 per cent which remain will command 80 per cent of Net revenues.

There8217;s nothing wrong with that. If we see consolidation in every industry from automobiles, aviation, to telecom and car manufacture, why should the Net business be any different?