Estel Communication--VSNL’s Soon-to-be Bete Noire?

Raj Hajela has already bought a small piece of land in Gurgaon, 25 kilometres from Delhi. This piece of land, now just like any vacant property in the “town of the future”, is not an ordinary one though. If Raj doesn’t bite his words, in the coming months this strip of land will house a unique hub of Internet traffic–Estel Communication’s private international gateway–one of the first private international Internet earth stations in India.

When this happens, Hajela, director, Estel Communication, will be one of the bravest persons for he will be directly taking on VSNL. Most ISPs who have applied for permission to set up gateways are doing so for the purpose of bypassing the bandwidth bottleneck created by VSNL’s oversubscribed gateway. Hajela is different in that he sees the gateway from a pure business point of view. His aim clearly is to feed ISPs and corporates with quality and high-speed Internet access up from the skies. Individuals and homes are not his target segments. “This project is an infrastructure project,” he insists. 

Estel has a number of bandwidth packages lined up already. It will start off with Skydirect in mid-January. Skydirect is a receive-only Internet service by which a C-band VSAT will receive Internet access broadcast from a Europe-based teleport (up-link station). Teleglobe will be the Internet backbone that users will connect to. The satellite to be used for this purpose belongs to Lockheed Martin Intersputnik (LMI). Customers will have to spend about Rs 2.2 lakh on the receiver antenna and indoor unit. The second product will be Internet bandwidth through its
gateway. Called Net Plus, it will target the ISPs and top 10 percent of the corporate market.

Three international gateways are planned, one each in Delhi, Mumbai, and a southern city.
Customers within the radius of 40-50 kilometres of its gateways will have an option of bypassing the local landlines as well, by putting up microwave radio antenna, which will connect to Estel’s gateway. Though pricing of this product is not disclosed, it will be much cheaper than the rate of VSNL. But, it is not price but service guarantees that Hajela will bet on. SLAs and QoS will be the promises that will draw the present VSNL customers to Estel. “We will make our routing transparent and customized and have an additional entire set of equipment as a back-up to bring in redundancy into the gateways. We will surely give VSNL a beating in its IPLC services,” says the confident director. 

Future plans include managed bandwidth services, an Internet exchange, and an under-sea cable landing facility. Initial investment is pegged at Rs 32 crore. Started six years back as Suman Syscom Pvt Ltd, Estel Communication has a diverse background. It was into calling card business, became marketer of paging company RPG Paging, then shifted to pre-paid solutions for telcos, and now is finally venturing into the Internet business. Estel will own at least 51 percent in this new venture. Its international financial partners include Fusion Telecom, which is operating gateways in the US, the Philippines, and China; and IFC, a World Bank institution. 

The gateway business being an infrastructure project, profits will be not easy to come. But, Hajela is already confident that his company will probably breakeven by the end of its third year. He believes there will be only about two-three serious bandwidth providers, apart from in-house gateway operations. “Gateway is a very complicated business. It is a risky venture”. Hence, investments are to be cautiously made. But, the mild and focused young man is willing to take the risk. And mind you, he is not after the oft-discussed dot.com market capitalization. He is simply after real cash.