PRIVATE ISPs: One Year of Internet Privatization

p>8 November 1998, the long awaited privatization process of Internet services in India took off with the issuance of ISP licences to MTNL, Ortel, and Surevin Consultants. The monopoly of VSNL ended on the day and till December 1999 nearly 190 ISP licences had been issued by the DoT. The number was set to cross 200 when the sun set on the year 1999.

Just a Tip of the Iceberg 



It is an interesting revelation that the maximum number of licences has been issued in Category ‘C’. It shows that there is not only potential and a pent up demand that ISPs seek to address, but in terms of sheer coverage Internet will penetrate most of the important towns and cities of the country.

The subscriber base for Internet services has risen from 2,50,000 to

anything between 5,70,000 to 600,000–approximately 70 percent growth achieved in one year. The subscriber base is shared among nearly 50 ISPs who have reportedly been able to launch their services. The bulk of the subscriber base continues to belong to VSNL, partly

because of the legacy, and mostly due to improved services and customer satisfaction levels. Credit may be given also to their improved infrastructure, which is indicated by several users who have

reported better connectivity rate then ever before. 

Satyam dominates the private sector with nearly 30 Points of Presence (PoPs) and over 1,00,000 subscribers. It also made news for being the first Indian ISP to get listed on the NASDAQ and its market cap is currently in the vicinity of $3 billion.

The above market play basically 


reflects the trend in so far as the plain vanilla Internet access is concerned, with some applications and consumer-oriented content thrown in. Whether this uneven trend in Internet access market share will continue or not remains to be seen. One would think not, given the increasing number of players gearing up to join the Internet bandwagon.

A distinct category of niche players, focussing on business applications and servicing the creamier corporate segment, is also emerging. Though the

numbers they address will be limited, they would be offering a vast gamut of services such as Virtual Private Networks (VPNs), Electronic Data Interchange (EDI), and such other corporate networking solutions with the ultimate aim of tapping into the nascent

e-commerce market, especially the B2B segment. Prominent players include Global Electronic Commerce Services Ltd, WiproNet, Sprint RPG, and a few others who will make their presence felt in times to come. 

Talking of the Indian e-commerce market, with a current volume of just

Rs 131 crore (according to Nasscom) and expected to go up to Rs 6,000 crore by the year 2004, ISPs in India will play the most crucial role, because it will all

happen using Internet as the platform.