The Indian Techonomist: bulletin

Copyright (C) 1996, Rishab Aiyer Ghosh (
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2 FEBRUARY 1996:

DoT to license Internet service providers

January 29: In an informal discussion with the press last week, R K Takkar, India's Telecom Secretary, announced that the government was about to provide licences for Internet Service Providers (ISPs). At present, Internet connectivity in India is available through networks for the research community; at secluded Software Technology Parks used for software exports; and through satellite links to providers abroad. The only option for the public at large has been the Gateway Internet Access Service from VSNL, a public-sector company using its government-decreed monopoly of overseas communications to provide Internet connectivity (at relatively reasonable rates). This would change dramatically if the government allowed the entry of the private sector.

Or so it would have appeared from press reports, which even suggested a final announcement this week. Mr Takkar was reported to have said that the DoT was "not considering blocking access" to portions of the Internet for moral or security reasons, and that prices would not be regulated but left to market forces. Impressively liberal for a tight-fisted monopoly.

However, the Techonomist's sources indicated that the annual licence fee for Internet providers, was likely to be between Rs 5 and 10 million (US$ 150,000 to 300,000). As this would go very much against Mr Takkar's own opinions in favour of low licence fees, as expressed to this newsletter last year, the Techonomist spoke to him about the need for low barriers to entry for Internet providers. Mr Takkar was himself surprised at the rumoured high licence fees, perhaps because he was not very familiar with his department's existing regimen for datacom, apparently relatively unimportant topic. Consequently, Mr Takkar invited the Techonomist to present a more enlightened proposal for a new datacom policy.

This has been presented to him, and will be made publicly available on the Internet sometime next week (see Appeal: help to free Indian datacom).

India says No to Personal Handyphone Systems

February 2: India's Department of Telecommunications (DoT) ruled out separate licences for Personal Handyphone Systems, the Japanese wireless multi-purpose communications service similar to American PCS. Japan's Association of Radio Industries (ARIB) had organised a seminar for govenment telecom officials to explain PHS technology and its uses.

The DoT felt that PHS could be used as an alternative to wireless in local loop (WLL), which is included in the licences for basic telecom services. DoT sources said that PHS could complement mobile cellular communications, but that the government was not interested in bringing in separate providers for PHS. This could perhaps create a backdoor for basic service providers to get into mobile services; on the other hand, the WLL included in basic services is for fixed communications.

There are already a fair number of competing providers of paging services throughout the country, and two competing private cellular services in the four "metro" cities - Delhi, Bombay, Madras and Calcutta. The government received bids worth over $90 billion for its tender for nationwide basic services (one in each region, to compete with the DoT's own service) and cellular services outside the metros (two private providers per region). The bidding process and the government's selection of the winners are currently being challenged in the Supreme Court.

Verifone-Netscape package to be developed in India

January 30: Verifone Inc, which recently announced a tie-up with Netscape Communications Corp to develop a comprehensive package for Internet commerce, will develop much of the software in India. Verifone has a three-year-old research centre in Bangalore, the software capital of India, run by its wholly-owned subsidiary Verifone India Ltd. The research centre takes advantage of India's large English speaking technical workforce - paid far less than similar staff in the US - as well as its tax structure full of benefits for software exporters.

However, Verifone is also targeting the Indian market for financial security products, as it believes there is a potentially enormous market for smart cards and the like and has been talking to a number of Indian banks about the possibilities.

Meanwhile, India's Department of Posts has announced that several of its huge network of postal savings banks (located in most post offices, particularly in rural and remote areas) will accept smart cards. They will be used for savings, cash withdrawals, and as a passbook, storing all account information on a chip on the card.

Possible legislation to protect sport broadcasts

February 2: The Indian government, in yet another legal battle over rights to sport broadcasts, has suggested resort to legislative action if it fails in court. At issue is the 1996 Cricket World Cup, which is expected to have a global TV audience of two billion viewers, and will involve matches in India, Pakistan and Sri Lanka. The government broadcasting monopoly, Doordarshan, had bought both terrestrial as well as satellite and cable rights for India. However, it allegedly failed to pay the third installment of the fee in time (it claims the payment was only delayed by two days), and the rights were immediately granted to Rupert Murdoch's STAR network. STAR would like to broadcast the match over its Prime Sports channel, but does not have the permission (or infrastructure) for terrestrial broadcasts over India.

WorldTel, which owns the all the rights through an arrangement with the World Cup organisers, is willing to negotiate a sale of terrestrial rights to Doordarshan. Doordashan finds this galling; it may lose the considerable amount it has already paid (some $30 million). Besides, it was buying satellite rights as well to thwart STAR's competition.

The case is now with the Supreme Court, which is likely to rule against Doordarshan as the breach of contract, however minor, appears clear. In that case, the government may issue an ordinance to protect major sport events from exclusive coverage on satellite channels, similar to moves being planned in Britain (again, perhaps not coincidentally, against Mr Murdoch). In another cricket-related case a year ago, the Supreme Court had judged the government broadcasting monopoly unconstitutional, and ordered a liberalising of broadcasting, in the public interest. The government has prepared some very progressive legislation, although it has not come into effect yet. But in this latest case, Doordarshan will argue that keeping this major event from 400 million terrestrial TV viewers in India will not be in the public interest, after all.