The glass floor

With a price war breaking out between MTNL and VSNL, Internet users are about to sample the first fruits of competition in the sector. Jus...

With a price war breaking out between MTNL and VSNL, Internet users are about to sample the first fruits of competition in the sector. Just the first fruits, mind, because the private Internet services providers ISPs are still in no position to push access prices as far down as they would like to.

So long as all calls are still routed through the Department of Telecommunications network, the glass floor will remain intact. The private providers, of whom so much was expected when the ISP market was opened up, are still constrained by government pricing. All the hopeful talk of India emerging as an information age power is so much hot air because of the persistence of traffic monopolies.

We are, of course, grateful for the 15 per cent tariff rebate announced by MTNL, but we should also remember that access is now free, or nearly free, in markets with a liberalised telephony network. In fact, a handful of ISPs in the US and the UK are now operating commercial services which even pick up the user8217;stelephone costs. It is low-rate access that has driven the market over there, and India still has a long way to go.

Cheap access is of crucial importance to India on two counts. In purely commercial terms, it will determine the time needed for the Indian market to reach critical mass the minimum subscriber base needed to sustain growth in the industry. More importantly, it will determine how soon the Internet can become a mass-access medium. If our present policy-makers persist in treating the Internet as just another broadcast commercial medium with e-mail thrown in, future generations will look back on them as the most abject fools. The real opportunity for India lies in leveraging the Internet for social ends. It can be used for roles like keeping farmers updated about market prices, making expert medical consultancy available in small towns and villages, and obviously for distance education.

It is already being used to a very limited extent to connect the people with government, but the task willremain incomplete so long as it leaves out the majority of people, who are either illiterate or techno-illiterate. The bottomline is that the whole Internet project will be a damp squib unless the market reaches critical mass, only after which entrepreneurs and government will be in a position to think creatively. And critical mass is predicated on affordable access costs.

The current rebate is very welcome, but it is only the beginning. The final price war will be fought in the private sector, but if the state agencies set the ball rolling by using their deeper pockets, it is most welcome. But if the government is interested in increasing Internet usage, it should actively try to increase the number of access options available to the consumer. At present, users access the Internet only through PCs which call for a total investment of close to Rs 50,000. Cheaper diskless devices suitable for people with low purchasing power are available overseas. There is also the option of community Internet access, anidea which was earlier spoken of but never developed. If the government is willing to slash access prices, it should also be thinking of these options on the hardware side.