jtd wrote:
On Sunday 09 July 2006 12:36 pm, Saswata Banerjee & Associates wrote:
jtd wrote:
*** deleted to keep size down **** That is a virtual monopoly. There is no restriction on anybody setting up an Internet service. It is not commercially viable outside limited pockets to provide "propah" internet services. PC densities are abysymal and usage patterns even worse. Moreover it is going to stay that way until voice and voip is unshackled by babudom. At that point small players will start creating the infrastructure neccessary for a decent service.
Ok, at this point, I cant resist putting an accountant's input.
snip Agree Kompletely.
- The small players can not set up decent infrastructure.
Nope not with the newer wireless routing technologies available on gnu/linux. Infact with proper wipop deployments the cost and performance will exceed ADSL.
Even in so called advance markets, there are only very large players in the internet access market.
That is what is published by the media. There are huge numbers of small providers charging $10 for 1 mbps pipe with unlimited access.
The ground realities are very different. Large parts of US and European markets (rural) are struggling for connectivity, with many places still depending on dial up. You will find it difficult to get an internet connection in USA below US$ 30 per month (exception - when they come up with launch offers and one time offers). Most of the people have no choice, either go with the local telco (they dont have much competition in local connections) or with the local cable buy. Few people are on wireless. That is why city municipal corps are trying to get city-wide wifi ips networks done at govt mandated price and service levels.
In any case, it has nothing to do with unbundling.
It has. One of the major revenue streams to the small player and a marginal pc user is voip - this market has all sorts of stupid restrictions on interconnectivity.
VOIP market is already open and available to you to use. The reason why it has not proceeded well is that VOIP rates are so low that they cant afford to pay interconnect charges for connecting to local telcos. Each call minute that terminates in a local landline or cell phone in India, the operator gets 30 paisa. If the VOIP operator is willing to pay that money to the telco, they will sign an interconnect agreement (there is also a annual socket fee of some amount). But at the VOIP rates, it is not viable.
You are already allowed to sell voip minutes and voip services in India. There are many VOIP providers here and you can call US, Canada and some European numbers through VOIP. What is not alllowed stilll is to connect the VOIP connection through your EPBX board to another external phone line. In fact, you are even allowed to connect a voip line to your internetal intercom network in the office. But the same network can not connect to a land line network in India.
The reason for this restriction is that the landline and cell operators in India have to pay a license fees, ADC and ESO fees which the VOIP operators naturally do not have to pay. If you allow these VOIP players to interconnect freely into the local landline and cell network, it removes the playing field. That is not correct.
The cost of international bandwidth in India is at least 4 times that of western countries. And there is very little local content, so you have to go all the way to USA for your data. Till 2010 when VSNL / Tata monopoly over major fiber landing rights ends, the matter will change only a little. (FYI, Reliance is ready for that, they have bought the company that owns most of the fiber cables between India, Europe and USA. I can only hope their corporate profit goals are same as India's). The only reason why bandwidth prices have reduced to some extent is that Bhartai laid fresh under-sea fiber cables from India to Singapore to take advantage of fiber pipes from SEA to USA. But the ocst of bandwidth for small players will remain prohabitive. Only the big players can gain from economy of scale and volume pricing leverage.
That too is a completely artificial restriction. There is such a surefeit of internationl fibre capacity that many players wound up - which led to RI buying them up at basement bargains. Remove voice monopolies and the revenue pie breaks up substantially, which will force the flattening of the market. And proly RI dumping it's buys.
The problem is that FLAG signed a legal agreement with VSNL when it was a govt company and the monopoly operator to be the only company to which it will sell bandwidth. And there was also an agreement on the quantum of bandwidth it will buy. After Tata bought VSNL, they are using that agreement (valid till 2020) to prevent FLAG from selling bandwidth directly to Reliance and Bharati. The matter is in court, but unfortunately by the time the court decides the matter, the agreement will not longer be valid.
Reliance is smart. They got the fiber at throw-away prices. With that pricing, they can wait for looooong time for the market and demand to rise and then benefit from it. Too much under-sea fiber was laid down due to easy funding during the internet boom and all on some really stupid and exegarated expectation of growth in video and interactive tv demand ACROSS CONTINENTS !!!.
The voice monopoly is already gone. You can now buy international voice lines (Called IPLC) from anyone who is ready to sell to you. That is how bharti was able to set up its own landing station on the east coast. Reliance is also doing it, but is stuck on account of the old FLAG Agreement. I hear they went ahead and built the new landing station anyway assuring the court that they will pay the compensation if the decision goes against them (not sure if that is true). But voice is more profitable, they will not risk that with data.
That is my input. Hope it educated some people, and appologies to those who are bored by it.
That was definetly interesting.