Growth of Communication Sector

The Communication sector is amongst the fastest growing in the country. It work
in all major markets around the world. Communication technology’s products
and solutions are accepted globally. The first year of the new millennium has
been a year of turbulence, tragedy, terrorism and slow-down in the world
economy. The Indian Communication industry has weathered this storm well. It is
indeed creditable that the industry and services in India has reasonably
continued its robust growth in the year 2003-04
This sector has emerged as one of the fastest growing sectors in the economy
History of communication in India
A major reorganisation of the department took place in April, 1925. The accounts
of the Indian Posts and Telegraphs were reconstituted to examine the true fiscal
profile of the department. The attempt was to find out the extent to which the
department was imposing a burden on the taxpayers or bringing in revenue to
the Exchequer, how far each of the four constituent branches of the department,
the postal, telegraph, telephone and wireless were contributing towards this
result. It was further examined whether the rates charged from the public for the
various services were inadequate or excessive.The Posts and Telegraphs, like all
public and private undertakings, was a victim of the universal financial and
economic depression which crashed on the world in 1930. During 1931,
numerous economy measures had to be introduced according to the advice of
the Posts and Telegraphs Sub-Committee to the Retrenchment Committee
presided over by Sir Cowasjee Jehangir Jr. Naturally, the adoption of the various
measures of retrenchment could not but have an adverse effect on the
emoluments and interests of the personnel of the Department.
From the beginning, P&T set up was run on welfare lines. Profit was not the
motto. The annual report of the department for 1931 said "It is the accepted
policy of the Government that the department should be so administered that
there should be neither any substantial profit nor any substantial loss on its
working under normal conditions. As has already been indicated, the
achievement of this ideal has not proved possible owing mainly to the
exceptional economic and trade conditions of recent years. One of the main
contributory causes was the revision and improvement of pay of the great bulk
of the employees of the department in recent years. This was undertaken with
the approval of and indeed under pressure by the Legislative Assembly. While
the department is commonly spoken of as a 'commercial' one and though as far
as possible it is guided by the commercial considerations in the regulation of its
business, it must be realised that in many directions it is debarred from
observing strict business principles. Many of the purposes which it is required to
serve are unremunerative and notably, in matters relating to the employment
and control of staff, the department is bound by a large volume of statutory and
other rules, doubtless necessary for the regulation of a public service, but which
in the aggregate involve many restrictions of a kind unknown to private
commercial concerns.
After the implementation of the Federal Financial Integration Scheme of 1st April,
1950, the administration of the entire network of telegraph and telephone
systems of the nation, including those that previously existing in the former
princely states became a major adventure. In 1950 the number of Telephone
Exchanges absorbed from princely states was 196. These systems which were
working with different degrees of efficiency could fit into the general
telecommunication network. The installed capacity of these 196 exchanges was
13,362 lines with 11,296 working connections. Soon after the absorption an
attempt was made to improve their technical efficiency by replacing obsolete
and unserviceable equipment and lending well-qualified and experienced staff.
Simultaneously, isolated exchanges were integrated with the general pool. The
more complicated task was acquisition of the staff. Their final absorption into the
different cadres of service in Posts and Telegraphs was a major step.

FROM P&T TO DoT

Till 31st December, 1984, the postal, telegraph and telephone services were
managed by the Posts and Telegraphs Department. In January 1985, two
separate Departments for the Posts and the Telecommunications were created.
The accounts of the department, initially, were maintained by the Accountant
General of the P&T. However, by April 1972, the telecommunications accounts
were separated. Simultaneously the department also started preparing the
balance sheet annually. With the takeover of the accounts from the audit and
delegation of larger financial powers to the field units, internal Financial Advisers
were posted to all the circles and units.
Telecommunication
~
Stellar growth in cellular subscriber base
~

In June 2005, new basic services (fixed and WLL) connections showed a rise of
16.20% to 6.67 lakh over the corresponding month of the previous year
(10.38%). In the first quarter of the current financial year, new connections
showed a decline of 25.35% to 10.19 lakh over the corresponding period of
previous year. The outstanding connections in June 2005 were 583.66 lakh,
which showed a rise of 12.65% over the corresponding month of the previous
year, when they showed a rise of 18.97% to 518.13 lakh.

In June 2005, the new switching capacity showed a rise of 109.9% to 6.15 lakh
over the corresponding month of the previous year (318.57%). In April-June
2005, the new switching capacity showed a decline of 3.68% to 11.24 lakh over
the corresponding period of the previous year. With this addition, the tele-
density has increased from 7.49% in June 2004 to 9.37% in June 2005.

In June 2005, the new cellular subscribers showed a rise of 49.04% to 15.73 lakh
over the corresponding month of the previous year. In the current financial year
till June 2005, the new cellular subscribers showed a rise of 27.65% to 38.94
lakh, which was 23.95% in the corresponding period of the previous year.

The total outstanding cellular subscribers in June 2005 showed a rise of 53.81%
to 449.20 lakh over the corresponding month of the previous year (92.79%).
Bharti Tele-Ventures had the highest market share in the all-India GSM cell
subscriber base, followed by BSNL and Hutch.

The total additional phones in the first quarter were 51.71 lakh. But due to the
negative growth in basic phones, the net addition was only 49.13 lakh. In the
first quarter of the current financial year, the private sector played a major role
in expansion; it contributed around 86% of the total additions.

In the rural areas, only BSNL has provided direct exchange lines and village
public telephones (VPTs) BSNL provided 80,928 telephones in April-June of 2005-
06. about 1,182 VPTs were also provided by BSNL in the past three months. The
cellular customer base of BSNL and MTNL has expanded to about 102 lakh and
11 lakh, respectively.

To boost their subscriber base, direct commercial international GSM roaming was
launched by BSNL and MTNL with four networks in Hong Kong, Thailand and
Turkey. GSM international roaming agreement was signed with nine GSM
operators from Hong Kong, Indonesia, Congo, Kuwait, Uzbekistan, Guyana,
Denmark and Bahrain.

Market Capitalisation
The market capitalisation of the telecom industry showed a rise of 23.16% over
the month to Rs. 85101.59 crore as on 29 July 2005. In July 2005, the share
prices of telecom sector companies showed an upward trend, except three
companies. The highest gainer in this month, was ITI, which showed a rise of
83.08% over the month, followed by Videsh Sanchar Nigam, which rose 80.16%.
Bharti Tele-Ventures, which has the highest market capitalisation, showed a rise
of 16.36% over the month.

In the three months ended 30 June 2005, the market capitalisation of telecom
companies showed a rise of 39.50% over the period. The highest gainer in this
period was ITI, which showed a rise of 130.77%.

In July 2005, the market capitalisation of the telecom industry showed a rise of
84.60%, over the corresponding month of the previous year. In this period, share
prices of all the companies showed an upward trend. (Market Capitalisation Table
on Next Page).

Market Capitalisation of the Telecom Industry

COMPANY LATEST MCAP AS ON 29 JULY 05

RS.CR LATEST PRICE RS. CHANGE IN MARKET CAPITALISATION (%) OVER
1 MONTH 3 MONTHS 6 MONTHS 12 MONTHS
Total 85101.59 23.16 39.50 29.84 84.60
BSNL 53037.65 283.10 16.36 37.74 30.02 89.45
Videsh Sanchar Nigam 11894.48 417.35 80.16 99.69 99.93 133.94
Mahanagar Telephone Nigam 8401.05 133.35 14.12 14.51 -10.50 2.81
Tata Teleservices 4594.22 30.70 18.76 22.70 9.59 76.50
ITI 1900.80 66.00 83.08 130.77 788.89 1293.55
HFCL Infotel 1608.09 30.60 -2.86 -13.44 -28.00 303.38
Astra Microwave 1207.49 22.74.00 65.13 97.84 250.52 591.50
GTL 774.80 101.40 4.27 5.16 -6.17 22.61
Avaya GlobalConnect 505.24 355.05 -2.39 -10.09 -2.51 38.26
Shyam Telecom 279.34 86.75 2.97 7.30 -0.74 89.41
NELCO 119.35 52.30 27.57 37.63 17.80 42.51
Vital Communication 11.16 2.94 -6.38 127.76 57.18 325.95
Source: Capital Market Indian Economy Review – July 2005

Bharat Sanchar Nigam Limited (BSNL) is India's leading telecommunications

provider and the country's largest public-sector firm. BSNL provides local-
exchange access and domestic long-distance services through a network of more
than 45 million access lines covering most of India. It also offers wireless
communications, data and Internet services, as well as business voice and data
services. The company is still controlled by the government, as is India's other
dominant phone company Mahanagar Telephone Nigam Limited (MTNL). Plans to
merge the two companies are in the works.

Company Type Private

Fiscal Year-End March
2004 Sales (mil.) $5,200.0
1-Year Sales Growth (4.3%)
Chairman, Managing Director, and Director, Planning and New Services V. P.
Sinha
(Subscribers see complete biographies -- view sample)

Director, Finance S. D. Saxena

Director, Operations S. D. Choudhary

Top competitors
• Mahanagar Telephone Nigam Limited
• Sify
• VSNL

GSM / GPRS NETWORK EXPANSION

Bharat Sanchar Nigam Ltd (BSNL) is one of the largest telecommunications

companies in India covering both mobile communications and fixed
infrastructure. The company was formed in October 2000 when the Indian
Government Department of Telecom Operations was floated as a company. The
success of the company shows in that it has over 38 million fixed line
subscribers, 6.9 million GSM / GPRS subscribers and 1 million CDMA subscribers.
The company's Cell One network (GSM/GPRS) was launched in late 2002 and
within six months had attracted 2.4 million subscribers. BSNL then decided to
halt further network capacity expansion, as it believed it could not sustain the
rate of growth. Subscriber numbers did not fall off, but neither did they increase
at the same rate.
The BSNL board later realised its mistake and in November 2003 authorised
capacity enhancement for their cash cow Cell One network (the company has
also been affected by SIM card and GSM handset shortages). The expansion
process is currently ongoing, increasing the capacity to accept 15 million more
subscribers. The network expansion includes the biggest ever GSM tender for 11
million lines, worth $863 million (although the total investment may eventually
reach $2.18 billion). This is scheduled to be in place by March 2005, giving BSNL
capacity for 31.25 million subscribers. The company target is to reach a total of
25 million GSM subscribers (21.46% of the mobile market in India) by December
2005 from just 6.9 million subscribers in November 2004. BSNL has three major
rivals in Bharti, Reliance Infocomm and Hutchinson.

Leading a revolution
Bharat Sanchar Nigam Ltd. can rightly claim to be leading India's information
revolution and is expected to play a stellar role in the future as well.

BSNL Chairman and Managing Director V.P. Sinha conducts a video-conference

between Bangalore and Chennai in the presence of Som Mittal, managing
director, Digital Global Soft Ltd., left, and K. Padmanabhan, CGM (Telecom),
Karnataka Circle.

On October 1, 2000, the Department of Telecom Operations, Government of

India, became a corporation and was christened Bharat Sanchar Nigam Limited
(BSNL). Today, BSNL is the number one telecommunications company and the
largest public sector undertaking in the country, with an authorised share capital
of $3,600 million and net worth of $13.85 billion. It has a network of over 45
million lines covering 5,000 towns with over 35 million telephone connections.
With the latest digital switching technology and an extensive transmission
network, including synchronous digital hierarchy (SDH) systems up to 2.5 gbps,
dense wavelength division multiplexing (DWDM) systems up to 80 gbps, web
telephony, direct Internet access systems (DIAS), virtual private networks (VPN),
broadband and more than 400,000 data customers, BSNL is geared to play a
stellar role in the information revolution in the country.
Its responsibilities include the improvement of the quality of telecom services,
the expansion of the telecom network, the introduction of new telecom services
in all villages and increasing customer confidence. BSNL has managed to
shoulder these responsibilities deftly.

A WLL phone comes in handy at the Pushkar ghat in Bhadrachalam.

Today, with a line capacity of over 45 million, a nationwide network management
and surveillance system (NMSS) to control telecom traffic and over 4,00,000
route kilometres of optical fibre cable (OFC) network, and with 99.9 per cent of
its exchanges being digital, BSNL is a name to reckon with in the world of
telecommunications. Like its customer base, BSNL's financial and asset bases too
are vast and strong. Consider these figures:
The telephone infrastructure alone is worth about Rs.1,00,000 crores ($21.2
billion) and the turnover is Rs.25,000 crores ($5.2 billion). Add to this BSNL's
nationwide coverage and reach and comprehensive range of telecom services.
A CellOne network tower in Chennai.
The turnover of the company for the year 2001-02 was Rs.24,299.8 crores, which
on an annualised basis implies a 5 per cent growth over the previous year. This
growth took place in spite of a 62 per cent reduction in long-distance tariff during
the last quarter of the year. The profit after tax was at a comfortable level of
Rs.6,312 crores. In terms of extension of coverage, the percentage growth of
telephone lines during that year (53 lakhs) was the highest ever in the history of
telecommunication in the country. Another remarkable achievement was that
this phenomenal growth was financed solely through the internal resources of
the company, without having to resort to any market borrowing. After making
adequate provision for a higher wage bill for the employees absorbed from the
erstwhile Department of Telecom Services, the wage bill as a percentage of the
turnover is still at a manageable level of 15.84. The net asset value has risen to
Rs.58,922 crores. The capital outlay for the expansion and development of rural
telephony was Rs.7,946 crores, which is approximately 50 per cent of the total
capital expenditure of the company. The debt equity ratio also improved from
that of the previous year, from 0.25 to 0.20. The strong fundamentals of the
company will enable it to grow from strength to strength. The company plans to
expand further its value-added services by introducing new technologies.
CellOne, its cellular service, is the biggest in India and covers the entire country.
THE formation of BSNL was one of the landmark events in the history of
telecommunications in India. Today, it has an awesome task of improving the
quality of telecom services, expanding the telecom network, taking telecom
services to all villages and instilling confidence in its customers.
A mobile tele shop in Tamil Nadu
Driven by the best of telecom technology from chosen global leaders, BSNL
connects every part of the nation to different corners of the globe. "Connecting
India", BSNL's slogan, is no empty claim. The company says it is communicating
hopes, happiness, aspirations, dreams and much more.
Here is an overview of the world class services offered by BSNL:
Basic telephone services: The plain old countrywide telephone service through
32,000 electronic exchanges and the digitalised Public Switched Telephone
Network (PSTN), with a host of Phone Plus value additions.
Internet: Accessing the global network of networks, the countrywide Internet
services of BSNL under the brand name Sanchar Net, includes Internet dial-
up/leased access service for web browsing and e-mail applications. An Internet
telephony service was launched under the brand name Webfone recently. ISDN
(Integrated Service Digital Network Service) of BSNL utilises a unique digital
network providing high-speed and high-quality voice, data and image transfer
over the same line. It can also facilitate both desktop video and high-quality
video conferencing. Intelligent Network Service (In Service) offers value-added
services, such as Free Phone Service (FPH), India Telephone Card (pre-paid card)
Account Card Calling (ACC), VPN, tele-voting Premium Rate Service (PRM),
Universal Access Number (UAN) and more.
An advertisement on the move.
I-Net: India's x.25 based packet Switched Public Data Network is operational in
104 cities of the country.
Leased lines and datacom: BSNL provides leased lines for voice and data
communication for various applications on a point-to-point basis. It offers a
choice of high-, medium- and low-speed leased data circuits as well as dial-up
lines. Bandwidth is available on demand in most cities. Managed Leased Line
Network (MLLN) offers flexibility of providing circuits with speeds of nx64 kbps up
to 2 mbps, useful for Internet-leased lines and International Principle Leased
Circuits (IPLCs).
Countrywide cellular service, pre-paid card: BSNL's project of GSM cellular mobile
service envisages a customer base of over four million and supports applications
like voice mail, e-mail, short message service (SMS), cell broadcast service,
international roaming, IN Services like pre-paid card, premium rate, free phone,
UAN, split charging and VPN.

A Chennai Telephones hoarding.

Wireless in Local Loop: This is a communication system that connects customers
to the PSTN using radio frequency signals as a substitute for conventional wires
for all or part of the connection between the subscribers and the telephone
exchange.
Countrywide induction of WLL is under way for areas that are non-feasible for the
normal network. It will help relieve congestion in the normal cable/wire-based
network in urban areas, connecting the remote and scattered rural areas and
limited mobility without any airtime charge.
Growth Plan

BSNL's future plan include a fast expansion programme of increasing the present
34 million lines to twice that number by 2005 and some 120 million lines by
2010.
The shift in demand from voice to data domination, and from wireline to wireless,
has revolutionized the very nature of the network. BSNL has already set in place
several measures that should enable it to evolve into a fully integrated multi-
operator by 2005 and its incumbent status, size, infrastructure and human
resource should certainly, give it a distinct advantage.

Consolidation of the network and maintaining high quality of service comparable

to International standards is the key aim of the Growth Plan. Objective of the
plan are:
The telephone connection shall be provided on demand and it shall be sustained.
The Network shall be made fully digital. All the technologically obsolete analog
exchanges will be replaced with digital exchanges.
To provide digital transmission links up to all SDCAs.
Digital connectivity shall be made available to all the exchanges by 2007.
Extensive use of Optical fiber System in the local, Junction and long distance
network so as to make available sufficient bandwidth for the spread of Internet
and Information technology.
ISDN services shall be extended to all the district headquarters, subject to
demand.
To provide Intelligent Network Services, progressively all over the country (major
cities have already been covered).
To set up Internet Nodes progressively up to District headquarters level.
Upgrading existing STD/ISD PCOs to full fledged Public Tele-Info Centers (PTIC)
for supporting Multi media capability and Internet Access.
Replacement of life expired, analogue coaxial and radio systems.
Introduction of Wireless technology (Supporting Internet Access) and optical fiber
technology in subscriber loop.
Introduction of latest telecom services like National directory enquiry,
computerization etc.
Cellular Mobile Service 'Cell One' of BSNL was launched on 19th October 2002 .
The scheme will cover 4 million customers in two phases. Phase-I will cover
about 1.5 million customers covering about 1000 cities during 2002-03, which
will be expanded to 4 million in phase-II.
What is the Internet?

Today, the Internet is an enormous network of millions of computers allowing

constant communication throughout the world. It includes: the World Wide Web,
electronic mail (e-mail), File transfer Protocol (FTP), Internet Relay Chat (IRC) and
USENET (news service)

The World Wide Web

Is the part of the Internet that most users see and use and which has made it so
popular. The web continues to grow at an absolutely incredible rate. Technology
has improved to such an extent that the web is now considered to be
indispensable for education, business and enter tainment. There are billions of
pages on the web and thousands more are added every hour.
E-Mail
Anyone can apply for an e-mail address and send and receive messages from
their computer. The main benefit is the almost instantaneous delivery of
messages. An e-mail to the other side of the world takes a few seconds. You can
also sign up to automatically receive newsletters and other information,
delivered directly to your computer.

File Transfer Protocol

Web pages are transferred between computers using the HTTP protocol, with
other types of files sent using FTP. Users can share files, such as music and
videos between themselves and the rest of the world by uploading them to a
server and then allowing others to download them to their own computers.

Internet Relay Chat

IRC is a service allowing you to connect to your chosen channel and talk to
others with the same interests. By downloading an appropriate programme, you
can start chatting right away.

USENET
USENET (Unix User Network) is a system of bulletin boards whereby messages
and points of view can be posted to be read and replied to. Similar to IRC, all
sorts of topics are discussed and a wide range of groups take part.

There is no doubt that the Internet will have an increasing influence on the world
in future.

Development of the Internet

The Internet didn't just happen overnight - rather it was the end result of a
search that had been in place since the late 1950s.

By the time the world started to get online in the mid 1990s, the Net had been
almost 40 years in the making.

ARPANET is born (1960) : an Internet is conceived

In 1969 the Pentagon commissioned ARPANET for research into networking. The
following year, Vinton Cerf and others published their first proposals for protocols
that would allow computers to 'talk' to each other. ARPANET began operating
Network Control Protocol (NCP), the first host-to-host protocol.
In 1974 Vint Cerf joined Bob Kahn to present their 'Protocol for Packet Network
Interconnection' specifying the detailed design of the 'Transmission Control
Program' (TCP) - the basis of the modern Internet. In 1978 TCP was split into TCP
(now short for Transmission Control Protocol) and IP (Internet Protocol).
TCP/IP defined : the foundation of the Internet
In 1982 TCP/IP was established as the protocol for ARPANET. This provided one of
the first definitions of an internet as a connected set of networks using TCP/IP,
but defining 'the Internet' as all connected TCP/IP internets.The launch of the
Russian satellite Sputnik in 1957 threw the American military and scientific
establishment into near panic with visions of Soviet weapons in space striking a
helpless America. As part of the response, in 1959 the Advanced Research
Projects Agency (ARPA) was formed within the Pentagon to establish an
American lead in military science and technology.
By the early 1960s the first theories of computer networking were starting to be
shaped and in 1965 ARPA sponsored a study on 'co-operative network of time-
sharing computers'.
The first such plan was shaped by Lawrence G. Roberts, of the Massachusetts
Institute of Technology (MIT) in October 1966. Designs for such a network were
put forward the following year and in 1968 the Pentagon sent out requests for
proposals for ARPANET - a computer network to unite America's military and
scientific establishments.
The World Wide Web is invented (1991) : anyone and everyone
By the end of the 1980s the European Particle Research Laboratory CERN in
Geneva was one of the premier Internet sites in Europe. CERN desperately
needed a better way of locating all the files, documents and other resources that
now threatened to overwhelm it.
A young British scientist, Tim Berners-Lee, working as a consultant for CERN, had
the answer. His 'World Wide Web' system assigned a common system of written
addresses and hypertext links to all information. Hypertext is the organisation of
information units into connections that a user can make, the association is called
a link.
In October 1990 Berners-Lee started working on a hypertext graphical user
interface (GUI) browser and editor. In 1991 the first WWW files were made
available on the Internet for download using File Transfer Protocol (FTP).
By 1993 the world was starting to wake up to the World Wide Web. In October
that year there were around 200 known HTTP servers. Within a year there would
be thousands.
May 1994 saw the first International WWW Conference - at CERN in Geneva. The
event was heavily oversubscribed, with 800 applying to attend and only 400
allowed in.
By now the load on the first Web server at CERN was 1,000 times what it had
been three years earlier
The search for speed (1965) : waiting for the progress bar
The Post Office's first computer modem in 1965 ran at a maximum speed (or
data transfer rate) of 600 bits per second. Today's modems run at 56kbit/s,
nearly 100 times faster.
So why does the Internet experience seem so depressingly slow at times?
One reason is file size. Files took less time to cross the system in 1965 simply
because they were smaller and were plain text, with no formatting. We pay for
rich data in longer file transfer times.
Users also generally share a node (entry point) to the Internet, meaning you may
have to wait a while for your turn to come round.
Furthermore, if you're hitting a popular site, you'll be competing with hundreds
or thousands of others for the attention of that site's servers.
What can you do? Not a lot. You could try changing the time of day you go
online, remembering that America accounts for easily half the traffic on the Web
- and they're between five and eight hours behind.
The Internet price war : when ISPs collide
Just as the saying goes about there's no such thing as a 'free lunch', there is also
no such thing as free Internet access - with nobody as yet finding a way to
provide the telephone or data connections involved completely free of charge.
That said, prices have fallen with some Internet Service Providers (ISPs) offering
unlimited dial-up access, faster connections through broadband technology, virus
scanning and lots more lot for a fixed monthly charge.
Originally, many ISPs made money by taking a proportion of the call costs. There
was no monthly subscription but users had to pay local call rates, meaning the
bill grew with every extra minute spent online. Complaints that this was holding
back Internet use coupled with pressure on margins and it was this that spurred
most ISPs into offering tariffs that now give unlimited use for a fixed price.
Making internet access available to everyone in the UK is also firmly in the minds
of our politicians with the three main parties continually stressing its importance
in our lives.

INTERNET SERVICES INDUSTRY - AN OVERVIEW

Introduction
The state-owned Videsh Sanchar Nigam Limited (VSNL) launched Internet
Services in India in August 1995. For the first four years, VSNL was the sole
provider of Internet Services in the Country. In November 1998, the Government
ended VSNL’s monopoly and allowed provisioning of Internet Services by Private
Operators. The Terms and Conditions of the ISP’s License were unusually liberal
with no License Fee and allowed unlimited number of players. ISPs could set their
own tariffs and even their own International Gateways.
DoT issues three types of licenses – Category ‘A’ for all-India operations;
Category ‘B’ for metros and state - level circles, and Category ‘C’ for medium
and small cities (SDCAs). Presently there are 390 License holders, 64 in Category
‘A’ and 135& 191 each in Category ‘B’ and ‘C’. About 189 licensees have started
their operations.
The Internet is certainly a major phenomenon in India today. Everywhere one
looks, the signs of its arrival and adoption are visible. In fact it is being
universally recognized that as the Internet proliferates, so will E-Commerce and
E-Governance and E-Business. It is, therefore, in our National interest to boost
the expansion of Internet Services in the Country. This will not only help our
country to become a part of emerging global E-economy, but will also enable the
citizens to avail of the benefits arising out of IT enabled services.
Initiatives by the Government
The New Telecom Policy, 1999 (NTP ’99) stipulates targets in terms of
establishing Telecom Network with a view to achieve tele-density of 7 per 100 by
the year 2005 and 15 per 100 by the year 2010. The NTP ’99 also stipulates
targets for providing Internet Access to all District Headquarters by the year
2002. In addition, the Government has initiated various pro-active measures in
the proliferation of the Internet Services in the Country. Some of the important
initiatives are as under :
• ISP License is one of the most liberal License, wherein no License Fee has been
levied on the ISPs till 31st October 2003.Thereafter, a token license fee of Rs.
One per annum is payable w.e.f. 1st November 2003.
• There is no restriction on the number of Service Providers in all the three
categories i.e. ‘A’, ‘B’, ‘C’.
• ISPs have been permitted to set up International Gateways by having business
arrangement with Foreign Satellites Providers and Collaborators.
• ISPs have been permitted to provide last mile access using Radio and Fiber
Optics.
• ISPs have been permitted to provide ISP Services through Cable T V
Infrastructure / Operators.
• The Government has initiated an ambitious plan to developed National Internet
Backbone (NIB) in the country.
• 100% FDI allowed through automatic route to the ISP (without gateways), 74%
in case of ISPs setting up International Gateways.
• ISP's permitted to set up Submarine Cable Landing Stations either singly or
jointly in collaboration with International Undersea Bandwidth Carriers.
• National Long Distance Services opened to private sector on non-exclusive
basis.
• International Long Distance Services opened up to private sector on non-
exclusive basis w.e.f. April 1, 2002
• Implementation of IT Act, 2000.
• Internet Telephony Services opened up to ISPs w.e.f. April 1, 2002.
• De-licensing of W-LAN in 2.4 Ghz band using IEEE 802.11b technology
• Reduction of Performance Bank Guarantee by 50% for Category A & B ISPs and
33% for Category C ISPs.
Since 1995, a number of countries have permitted VOIP as a technology option
to the classical PSTN as well as Internet Telephony so as to provide a cheaper
alternative to classical PSTN calls. In India, the ISPs were allowed to offer Internet
Telephony Services with effect from April 1, 2002. With the choice availability of
Toll Quality (PSTN) and Non-Toll Quality options, Internet Telephony has thrown
open Long Distance Telephony to those sections of Society, which could not
afford the same earlier. Further, Internet Telephony is proving to be a key driver
for local entrepreneurs to set up Community Information Centers / Cyber-kiosks /
Internet Dhabas, etc even in small towns and villages. In fact it has made
distance learning, Tele-medicine and e-governance etc a reality in Indian
context.
More than 90 ISPs have been granted license for offering Internet Telephony
Services. There has been a substantial growth in the Cyber Café / Cyber Dhabas
offering Internet Telephony Services. It is expected that Internet Telephony will
provide fillip to the demand for network facilities including bandwidth, last mile
access and other connectivity resources and bridging the digital divide within the
Countr. However, an important issue needing immediate attention is tackling the
Internet Telephony Grey Market which is estimated to be about 90 per cent of
the total Internet Telephony market in India and requires concerted efforts by
Government and industry. It is imperative that all leading ISPs including VSNL,
BSNL and MTNL join hand to tackle the menace.
Some Interesting Findings By Survey on Internet
• Over 78% of the Internet Users are in the age group 18 – 39 years and 75% of
the Internet Users are Males.
• The Capital Cities (New Delhi and Other State Capital) accounts for 79% of
Internet Connections of the Country.
• More than 86% of top Corporate Houses have endorsed that Internet and E-
Commerce is an integral part of their corporate strategic framework.
• Over 76 % of the Internet Users use E-mail Services
• Over 61% of the Users Access Internet from school, colleges, place of work and
Cyber Cafes while 27% access Internet from homes.
• Among the career conscious and education driven middle class, Internet is
seen as critical to success in professional life.
• There are approx 59 million telephone connections (including Mobile) and 8.5
million PC base in India.
There are approx. 47 million Cable T V Connections out of 92 million TV Sets in
the Country.
Open the floodgates of innovation

By Sabeer Bhatia
In the early 70s, the Internet had a humble beginning in a US defence research
organisation called DARPA. Then on, the Internet has grown into a truly
ubiquitous network that touches the life of every human being, directly or
indirectly.
The growth in Internet usage did not happen in a steady manner. The inflexion
point happened in the late 90s precipitated by two innovations—the availability
of the ubiquitous Web browser and e-mail services such as Hotmail. Since then,
the Internet has evolved into a platform for free speech that is now accessed by
nearly a billion users worldwide, and its influence and impact on
communications, commerce and intellectual freedom is unprecedented.
In India too, the Internet has taken root and grown along many fronts in the past
decade. But it has been like the proverbial curate’s egg—good in parts, bad in
others. It opened up opportunities for consumers—the medium could be
leveraged to achieve social, business and development objectives—and for
software creators to craft technology solutions based around the Internet to
establish India as a powerhouse for innovation.
India’s performance on the first front has been middling. The Internet user
population in India is estimated at around 25 million. While this might seem a
large number, relative to the global Internet population and to India’s total
population, it is an anaemic figure. Also, this growth is concentrated almost
exclusively within large cities.
There are several reasons for this low penetration. The first, I believe, is the role
of the government. Contrary to popular belief, the Internet is not a development
that came out of R&D labs. It was the US government that took the lead in
establishing the Internet. But, once the diffusion of the Internet was precipitated
and the industry stepped in, it reduced its hold and stepped back.
Historically, the Indian government has impeded the Internet with a combination
of studied indifference and myopic government monopoly policies. For instance,
in the matter of allowing Internet Telephony—the policy in India allows only the
ISPs to offer Internet Telephony and that too in a very restricted manner. This is
detrimental to the interests of consumers because it does not allow them to
enjoy the full benefits of innovation in technology.
In my travels around the world, I am often asked a question: "Could you have
done Hotmail in India?" And my answer has inevitably been, "No!" Had I
attempted to create Hotmail in India, somebody would have come to me
claiming that I was taking away the revenues of phone or fax companies!
The Internet can be a powerful democratising force, offering greater social,
economic and political participation to communities that have traditionally been
overlooked.
There have been a few instances of state governments and corporates taking
initiatives to reach out to these stakeholders—the e-Choupal initiative and a
successful e-governance experiment using Wi-Fi in Tiruvarur—but they have
been sporadic and insufficient. People cite, mistakenly, a number of reasons to
explain the lack of penetration. These range from the high cost of PCs to the lack
of connectivity in villages. I do not believe these are limiting factors.
While there have been several attempts to bring down the cost of PCs to an
affordable level, these efforts have been largely misplaced. I do not believe that
bringing down the cost of a PC, to say Rs 10,000, would magically facilitate a
‘tipping point’ that would unleash wide adoption.
The growth in cellular phones in India is a heartening phenomenon and the price
and pervasiveness of these devices throw up the possibility of adapting them as
Internet access devices, obviating the need for PCs.
Mobile networks, that are increasingly pervasive in India, will provide the last-
mile channel for individuals to access the public Internet network and these will
increasingly be broadband in nature. To boot, Internet access can be provided by
upgrading the many privately-run public telephone offices in the country today.
To achieve success in terms of pervasive Internet diffusion, endemic illiteracy
should be tackled. We must facilitate literacy to harness the collective
intellectual potential of our country. We cannot merely depend on the
government to tackle this problem. NGOs such as Room to Read and Round
Table India work to solve the illiteracy problem and I urge each one of you to
contribute your time and money towards allying with such organisations and
make a difference.

WHAT IS BPO?

Business Process Outsourcing is the long-term contracting out of non-core

business processes to an outside provider to help achieve increased shareholder
value.

Many IT professionals are familiar with the term business process outsourcing
(BPO), but knowing how to distinguish it from other types of outsourcing requires
some scrutiny.

Though some forms of BPO may include both IT management and business
operations, the approach is primarily about turning over functions such as
payroll, accounting, billing or even real estate management to a third party.
Though these business processes may depend on IT, they are separate functions
from core IT operations, such as data center activities or network management.

1 Free Your Resources and Work On Your Strategy

An important aspect of business process outsourcing is its ability to free
corporate executives from some of their day-to-day process management
responsibilities. Traditionally, executives spend 80 percent of their time
managing details, and only 20 percent on strategy. Once a process is
successfully outsourced, the ratio can be reversed. Executives get more control
over their most valuable resource: time. Time to explore new revenue streams,
time to accelerate other projects, and time to focus on their customers.

2 Improve Processes - Save Money

Companies that outsource business processes are often able to reengineer those
processes and capture new efficiencies. Then they can reallocate resources to
other important projects and leverage their investment in technology. For
example, processes that are handled in a shared production environment for
multiple companies save everyone money. In most cases, high-caliber subject-
matter experts are brought in to design and manage these processes, bringing
with them best practices, innovation, and years of experience that most
companies don't have access to or can't afford on their own.
3 Increase Your Capabilities
With this expertise often comes increased capability. In addition to doing things
more efficiently, you can expand your ability to deliver new products and
services to your customers. Then there are the factors of scalability and scope.
Companies that want to grow internationally must continuously invest in
infrastructure and find talent around the world. Many outsourcing providers are
already established globally and can help make the growth process run
smoothly.
BENEFITS OF BPO

Improve productivity and operational efficiencies

Non-core business processes, such as human resources and finance and
accounting, are critical, but also resource-intensive, time-consuming, and costly.
Outsourcing improves operational efficiencies and drastically reduces costs
without large, up-front capital investments

Reduce costs
BPO provides quantifiable benefits through improved efficiencies, lower
overhead, reduced payroll and benefit expenses, and fewer capital investments.

Allow organizations to focus on their core business

BPO allows organizations to move non-core business processes to a services
provider so that they may focus on the more important strategic, revenue-
generating programs that create profitable growth and sustain business success.

Ensure best practices, skills, and technology

BPO provides access to proprietary workflow systems, process reengineering
skills, and innovative staffing and delivery models, combined with world-class
technology delivered by experts.

Provide access to scalable operations and on-demand resources

BPO provides the flexibility to respond to a rapidly changing marketplace and
scale operations up or down as conditions dictate. In a BPO engagement,
Go4BPO delivers access to global staff, processes, resources, and technology-
wherever and whenever they are needed.

Strengthen clients’ competitive position

Organizations must leverage a BPO strategy to improve their financial and
competitive positions and differentiate themselves from competitors. BPO results
in increased customer satisfaction, more efficient operations, access to global
capabilities, increased cash flow, and faster time-to-market.