Indian Net: Stopping Dollar Outflow

No
one could ever imagine before the wheel was invented that distances would not
matter. Advent of Internet has just managed to strike the death knell on
distances. Internet has brought the prospects of business without geo-political
boundaries.

Over the last few years, India too has
been witnessing hyperactivity, in IT industry and, of late, Internet has become
the booming market "to be". There has been a tremendous growth of
Internet users in India, almost touching the one million mark. In addition,
there are 80,000 Indian web sites and the number of such sites is growing
exponentially. India ranks 10th in the world, in terms of number of domain name
registrations.

While to the Internet user there is no
perceived "distance cost", the reality is that "death of
distance" does not mean the "death of the cost of distance".
Instead with the Internet the cost of the network is distributed equally amongst
all users and is buried in their basic access fee. As a result, Internet packets
have an intrinsic value that will vary for every packet, based on the distance
the packets have travelled from the point of origin.

This article tries to explore the
reasons for the "cost of distance" and then analyzes the options
available to trim it down to make it technically feasible and economically
viable. The attempt is to bring to the notice of ISPs and other stakeholders in
Internet, the alternatives to cost effective Internet access for the Indian
user.

The Bottleneck

The average Internet user as he/she
embarks on a web surfing voyage encounters many a monster. To start with he/she
wrestles with other users to catch hold of a free dial-in port. Then on he
helplessly waits for the web to unfurl info-bytes on his terminal. What ails the
Internet in India? Why is no ISP able to give a decent quality of service? Why
does everything have to be so pathetically bad?

Even though India has massive Internet
users there is no "Indian Internet Backbone" and, to add to this,
India does not have world-class hosting services/facilities. This has been the
root cause of ISPs opting to connect to the US Internet backbones.

Indian ISPs–Bearing the Cost of Distance

Indian and other international
web-surfers had little choice but to go to US sites–that was where the content
was. Of course, all this traffic did not go unnoticed by the big US carriers,
which decided to charge international telcos with the data-carriage costs in
both directions. This financial arrangement amounts to offering subsidy to US
web surfers (by international carriers). Since US ISPs don’t pay data-carriage
costs for their own outbound international traffic, they can offer lower rates
to their US customers.

The Indian ISP networks are thus
designed today to give extended access to the US Internet network. Each service
provider is trying to land into a US ISP for connectivity to the US Internet.
This is costly: a 2 Mbps connectivity to a US ISP will cost an Indian ISP around
Rs 25 million a year, of which more then 90 percent is the cost is of
transporting the packets. A similar 2 Mbps port for a US ISP would cost
one-tenth.

In order to provide
"reasonable" service to its users, an ISP in India would have to spend
up to 70 percent of costs on its international segment, and this really loads up
the domestic cost structure. Whereas, for ISPs in the US, cost of accessing the
international bandwidth is comparatively much lower, due to which they are able
to "subsidize" the rates of Internet usage. In effect, ISPs in India
(and other countries) are actually subsidizing the Internet usage rates for the
US users.

Exploring Possibilities

In order to overcome the bottlenecks
for ISPs and Indian Internet users in India, and to bring the cost of Internet
access lower, we need to explore the options/alternatives available. The
"Top of Mind" alternative is the increase in bandwidth to get better
access. This notion that only an increase in bandwidth can give Indian Internet
users a better access needs to be shattered. The alternative that is now slowly
catching up is putting in place the right "eFrastructure" in India. A
detailed discussion on the merits and demerits of these alternatives is
necessary to demystify these for better/effective service delivery for the
Indian Internet user.

Increasing Bandwidth—Is It the Answer?

Increased bandwidth is necessary to
handle the increased amount of traffic growth and to ensure that ISP networks
and web server performances do not degrade. It is difficult, and sometimes
impossible, for network infrastructure to expand quickly enough to accommodate
end-user traffic requests, that typically double every six to nine months.
Hence, the stakeholders of the ISP community must recognize and address the
challenges ahead. That is, ISPs must ensure that they provide cost-effective and
efficient services, as well as stand behind comprehensive service level
guarantees.

The
need for more efficient bandwidth and server utilization transcends any single
protocol such as ftp, http, udp, or other protocols that may become popular in
the future. While increasing bandwidth helps, it is

only part of the solution.

Free ISP services tries to amass
eyeballs, which implies subscribers. The objective is to attract advertisers to
their portals or to sell off their network along with subscribers. The costs are
borne by the advertisers, who in turn will try to convert the eyeballs into
revenue, by using e-commerce.

The user, growing multifolds every
year, connects to their favourite ISP and do what? Download content from the web
sites hosted on the Internet. Browse through the trillions of web pages. These
web pages today are hosted somewhere in the US, where there are the datacenters
like Globix, Exodus, Global Center, Uunet, Rackspace, and Verio dishing out
hosting facilities to the web sites.

Baring a few hundred web sites hosted
in some of the Indian ISPs, most of them at VSNL, almost the entire population
of 80,000 Indian web sites are actually hosted on the US datacenters. Thus, the
Indian ISPs will end up spending hundreds of millions of dollars, as dotcom
companies either set up overseas or fail to get off the ground domestically.
Figure 1 illustrates the present flow of Indian Internet traffic.

Action needs to be taken to ensure that
its adverse effect on the Indian information economy, including on e-commerce
and the hosting of content in India, doesn’t continue.

Creating eFrastructure–Beckoning the Frontiers of
Future

It is of prime importance to realize
that we need to build the Indian Internet. Build content hosting repositories
with full life cycle services, front-end and back-end integration to give a
value proposition of ready-to-move-in platforms for e-Businesses.

What is needed here is to build
infrastructure and services to attract content to India and build the Indian
Internet backbone, rather then spending tons of money to connect to the US
Internet backbone. Indian content building is happening, but they are all
sitting in the US, because of lack of world-class quality hosting facilities in
India.

Once the India-centric content starts
moving in to India, ISPs can optimize on their international Internet bandwidth
requirement. The India-centric dotcoms will prefer having their web sites in
India, as they will be closer to the "clicks"–end users. The
international portals with Indian viewership will mirror India-centric content
in India.

The ISPs from then on will need pipes
to these content repositories, which will come in at a fraction of the cost of
international bandwidth, as the data-carriage costs will be cut down.

Next, Internet exchanges and access
points need to connect the content repositories to the ISPs, and ensure
efficient traffic flow. Figure 2 illustrates the advantages of developing the
Indian Internet backbone.

Although the Indian entrepreneurs have
started investing in creating Internet infrastructure in India, they need to
quicken their pace to cater to the ever-increasing needs of the users.

eBusiness Infrastructure

e-Business infrastructure includes the
hardware, software, and services that make up an eBusinesses Internet

presence.

Conclusion–Unleash the Future

Indian users would no longer have to
wait endlessly for getting connected to sites hosted in the US if there were
sites hosted in India that offered similar content. The time has come when the
users shall start demanding better service delivery for the money they spend.
This would increase with more of India-centric e-commerce sites starting
operations. The future lies in gearing up and creating eFrastructure, else all
the projections about booming Indian Internet market would remain confined to
the shelves of the entrepreneurs.

Abhijit Barua

is vice president, business development, Euclid India Ltd