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The pure-play Internet access retail business might not be attractive for
ISPs, but they are certainly bullish about cyber cafés. Today, at least in the
cities, the cyber café is becoming more than a place to surf the Net.
For a Share of the Pie
The big names, Sify and VSNL, are doing brisk business in terms of usage
through the cafés, and with the entry of Reliance Infocomm into the arena,
through their Web World, the café war just got hotter.
Sify was one of the few ISPs who realized that real money would not be in the
retail dial-up segment and started with company-owned as well as
franchisee-owned iWays. The current split is 34 for company owned and rest of
the 2004 are with franchisees. The brightly colored cafés with swanky cubicles
have caught the surfers' fancy. With its 2004 iWays in 67 cities, Sify is a
business leader in the segment.
VSNL increased its presence after the acquisition of Dishnet. After
consolidating the Internet services under one brand name, Tata Indicom, VSNL is
also trying to emerge as a branded cyber café company. Currently, the company
gives connectivity to 700 cafés in 32 cities and owns 50 of them.
Reliance Infocomm is following the franchise model for its Web Worlds. These
double up as the sales and service channels for Reliance Infocomm's products
and also have coffee bars and offer broadband Ethernet connectivity. The company
is planning to double the number of 250 Web Worlds. At present they are present
in 110 cities. However, their broadband applications are available only in 14
cities and will go up to 100 by the year end.
The incumbents, BSNL and MTNL, have not entered the cyber café business
directly but in many places the private café owners use their connectivity.
BSNL is also involved in the Sanchar Dhaba project of DoT. These public tele-info
centers fulfill communication needs, including Internet services, of the
villagers. At present, all the district headquarters have been connected under
this scheme.
The Changing Face
The focus is now on how to provide more value-added services and
applications. From the pure-Internet-access days, cyber cafés are now
concentrating on applications like video chat and conferencing, multiplayer
multi-city online gaming, digital music and movies, and digital imaging. For
some users, they also double up as virtual offices. This change will drive ISPs
to take their business forward. The experience in the new cyber cafés is good
and the user is also ready to shell out more money for new apps.
Already some of the ISPs are creating Wi-Fi zones for mobile executives and
are provisioning for IP-telephony booths in their café for the retail users.
The idea is to offer complete, one-stop, end-to-end broadband applications to
the users. There are many ways to approach it. For example, Tata Indicom's
expansion plan would be to consolidate on the current services and develop
broadband services and content application for various target segments, rather
than opening more cafés.
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The ISPs will also look to branch out certain applications like gaming, which
have been a major driver of Internet services in countries like South Korea and
Japan, as a separate business. Sify would probably be the first company to come
out with a separate business model with its gaming dromes. The company already
has three of these in Chennai and would be the first ISP to offer exclusive
gaming cafés, as distinct from cyber cafés.
What Makes Them Click?
The success of the cyber cafés can be attributed to the high call charges
and slow connectivity of retail dial-up connections. Cyber cafés offer better
speeds at cheaper rates. The business would be threatened only if the broadband
recommendations of TRAI are accepted in full by DoT; and cost of access is
brought down drastically, more desktops reach Indian homes, and retail
connectivity improves dramatically.