A

Project Report

On

Macro Analysis

of

Internet Service Provider

In partial fulfillment of the requirements for the subject

Strategic Management

MBA Semester- III (Marketing Elective-2009-11)

Submitted To:

Prof. Preeti Salvi

Submitted By:

Name Roll No:

Ami Bhavsar M-12

Varun Dave M-17

Viraj Shah M-1

NehaVyas M-09

Jatan Shah M-10

S.V Institute of Management

Gujarat Technological University

INDEX

Chapter

No.

Content Page

No.

ACKNOWLEDGMENT I

PREFACE II

EXECUTIVE SUMMARY III

1 Research Methodology 1

2 Introduction 2

2.1 Types of Access 3

2.2 Trends in the ISP market 6

2.3 The Physical Structure of an ISP 9

2.4 What Services do ISPs Offer? 10

3 PEST Analysis 20

3.1 Political 22

3.2 Economic 23

3.3 Sociological 24

3.4 Technical 25

4 Five Force Analysis 26

4.1 Rivalry within Industry 27

4.2 Threat of Substitute Products 29

4.3 Threat of New Entrants 30

4.4 Bargaining Power of Suppliers 30

4.5 Bargaining Power of Buyers 30

5 Driving Forces of ISP 33

6 Key Success Factors 35

6.1 The technical edge 35

6.2 Financial sustaining power 35

6.3 High marketing and promotional budgets 36

6.4 Strategic alliances with ancillary service providers 36

6.5 Lobbying power with central and state Governments 36

7 Strategic Group Mapping 38

8 OT Analysis 40

8.1 BSNL SWOT Analysis 45

9 Major issues confronting industry 51

10 Conclusion 54

11 Appendix 56

11.1 Statistics 56

11.2 Guidelines for ISPs 57

Table of Figure

Chapter No. Name of Figure Page No.

Chapter 2 Introduction

2.1 ISP Specialization 8

2.2 Structure of an ISP 9

2.3 Group company wise Market Share 18

2.4 ISPs having all India licence 19

Chapter 3 PEST Analysis

3.1 ISP PEST Analysis 21

Chapter 4 Five Force Analysis

4.1 Porter’s 5 Forces Model for the ISP Industry 27

Chapter 7 Strategic Map Grouping

7.1 Strategic Map Grouping 39

Chapter 8 OT Analysis

8.1 ISP OT Analysis 40

8.2 Threats to ISPs 42

I

ACKNOWLEDGEMENT

We take this opportunity with great pleasure to present before you this project report on

Macro Analysis on Internet Service Provider which is a result of co‐operation, hard work and

good wishes of many people.

No words can adequately express our sincere thanks to all those who have helped us in making

this project a success. Also we acknowledge our deep sense of gratitude towards our guide

Prof. Preeti Salvi. We are also grateful to Prof. Bhavin Pandya, Head of the Department,

S.V. Institute of Management, Kadi.

Our debt to those who have helped us in one way or the other is heavy indeed. We would like to

appreciate contribution of friends who have extended their complete support in completion of

this project.

Our thanks also goes to our faculty members, seniors and also SVIM library staff for extended

their help; co-operation and support which have greatly ease our work and also for providing us

literatures which helped us to complete our assignment work.

Lastly, no words can adequately express our debt of gratitude to our parents for generating in us

perennial interest in higher studies. We are thankful to the Almighty for giving us strength,

courage and patience to complete this project.

Ami Bhavsar

Varun Dave

Viraj Shah

Neha Vyas

Jatan Shah

II

PREFACE

“Experience is the best teacher”. The saying has played a guiding role in the infusion of our

practical work and learning from it .Person can’t learn by merely reading hundreds of books on

it. He/she requires practicing his hand at the helm of it. Similarly management learning remains

incomplete without a test of real business life. Thus theoretical knowledge is not enough for

management students; practical study holds an important place. Our knowledge remains

incomplete without practical aspect like this assignment. “True learning is born out of experience

and observation.” Practical experience is one of the best types of learning that one can remember the

aspects of administration and management.

In Strategic Management we have chosen Internet Service Provider industry for which we have

analyzed importance of doing industry or company analysis as a base for matching strategy to

organizational resources, capabilities etc. We have also learnt the different analysis like SWOT, Five

forces as well as driving forces, Strategic map grouping key success factors for Internet Service

Provider. In short we have evaluated industry’s external environment as well as competitive position.

It is indeed a golden opportunity for us to present this report and indeed a matter of esteem honor

itself.

III

Executive Summary

An Internet Service Provider (ISP) is an industry that provides individuals and companies access

to the Internet and other related services. This report aims to introduce the reader to the idea of

Internet service provision, the services offered, the main players in the industry, and its current

state and its trends. It details the different types of types of access, and the physical structure of

an ISP. It also describes the services offered by ISPs, both basic services and premium services.

There is looks at the ISP market, analyzing the market forces and the influential environment and

also looks at the main players in the market, examining each individually, and identifying their

characteristics. Four general areas of threats to ISPs are outlined in following portion. It also

identifies the main trends in the ISP market and suggests emerging trends.

At last it sums up the main ideas of the report. Internet users access and send information either

through individual connections or through organizations such as universities or businesses. Users

are either those who use the Internet primarily to receive information, or content creators who

use the Internet to distribute information. ISPs connect those end users to Internet backbone

networks, which interconnect with other backbone providers.

Mergers and acquisitions have shown to be popular methods of growth, both in geographic terms

and in terms of customer base. These have been occurring not just among ISPs, but among many

companies entering the market. In spite of the large amount of mergers, the total number of ISPs

has stabilized due to the huge number of new entrants.

Telcos, cable companies and others have entered the market, either by mergers and acquisitions,

or by creating ISPs themselves. These companies, amongst others, are proving to be an immense

threat to existing ISPs. There has been a tremendous emphasis on value-added services and on

content. Basic services have become commodities and customers are looking for new services to

add value. ISPs securing deals with popular entertainment and information companies will have

a great advantage in winning customers.

IV

Additional offerings such as quality of service, bundled services, banking, e-commerce etc. are

also becoming attractive to customers. There is a clear change of strategy both within an ISP and

between ISPs. Pricing models are changing, as are service offerings. It is predicted that many

companies may wish to specialize in one part of the market rather than trying to provide

everything involved with service provision.

1

Chapter 1

Research Methodology

Research Objective

Primary Objective :

To study the Industry Analysis of Internet Service Provider in India.

Secondary Objective :

To know the size and growth rate of the industry and to analyze various industry

structure.

To study various Key players operating in the industry and their various

strategies.

To Perform PEST, FIVE FORCE, and OT Analysis on Internet service Providers.

To identify various Driving forces and Key Success Factors effecting ISP

Industry.

To study various major issues confronting ISP Industry.

Research Design :

Causal Research

Research Type

Basic Research

Data Collection

Internet

2

Chapter 2

Introduction

An Internet Service Provider (ISP) is an industry that provides individuals and companies access

to the Internet and other related services. This report aims to introduce the reader to the idea of

Internet service provision, the services offered, the main players in the industry, and its current

state and its trends. It details the different types of types of access, and the physical structure of

an ISP. It also describes the services offered by ISPs, both basic services and premium services.

There is looks at the ISP market, analyzing the market forces and the influential environment and

also looks at the main players in the market, examining each individually, and identifying their

characteristics. Four general areas of threats to ISPs are outlined in following portion. It also

identifies the main trends in the ISP market and suggests emerging trends.

At last it sums up the main ideas of the report. Internet users access and send information either

through individual connections or throughorganizations such as universities or businesses. Users

are either those who use the Internet primarily to receive information, or content creators who

use the Internet to distribute information. ISPs connect those end users to Internet backbone

networks, which interconnect with other backbone providers.

The users receive Internet Protocol Suite (IPS), theInternet equivalent of dial tone, which routes

traffic between ISPs. ISPs fall into three broad groups: backbone providers, national providers

and local providers. Backbone providers are nationwide or multinational organizations that

control Internet routing. They often own significant pieces of the backbone itself.

National providers buy capacity and routing services from backbone providers and run Points of

Presence (POPs, locations of access points to the Internet) across the country (or the world).

National providers are often described as resellers since they are simply reselling bandwidth that

they have purchased from the backbone provider. Local providers operate in the same way as the

national group, but on a smaller scale. Usually they work within a smaller geographic area.

3

Accessing the Internet by means of an ISP

To access the Internet, generally a user must periodically pay an ISP and pay any applicable set-

up fee to connect to that ISP. Most ISPs charge a flat monthly fee, and some impose a per-hour

charge above a certain monthly threshold. The vast majority of users (mainly domestic users,

who make up approximately 98% of all accounts) reach their ISP today through their telephone

network, using a dial-up connection. Many businesses lease lines or use ISDN connections.

2.1 Types of Access:

2.1.1 Analogue Dial-Up

From a commercial perspective, dial-up access has a lower potential margin than dedicated

access. This is because dial-up cost of service is high, while the revenue per customer is low.

Service cost is high because modems and terminal servers (also know as access servers) are

expensive and dial-up billing can be complicated. Dial-up equipment can account for over 10%

of an ISP‘s total costs1. Per usage billing is expensive, but it encourages users to make more

efficient use of the resources. Flat-rate billing is cheap and easy. Customers also seem to favor

flat-rate billing, even if it means paying more than they would under the per-usage scheme. It is

easier to budget when you know exactly how much you will spend, plus customers seem to enjoy

the idea of ‗all you can eat‘. In spite of the advantages of flat-rate billing, typical user behavior is

to log on and then stay online for long periods of time, even if they are not using the internet.

This leads to a great inefficiency profits in the analogue case. And a degraded service, as users

may becontending for resources (e.g. modems bandwidth).

2.1.2 ISDN Digital Dial-Up

ISDN (Integrated Services Digital Network) dial-up has two main uses: as a fast pipe for

individual users, and as a low-budget LAN Internet connection. When used by an individual

user, it is just like analogue dial-up but the transmission is faster as it is over a digital line. When

used for LAN connection, it is just like a leased line connection, except that the line is not

1 Refer ‗Internet Telephony: Costs, Pricing and Policy‘, McKnight and Leida,MIT Internet Telephony Consortium,

1998 for more details

4

dedicated – it is only brought up when there is data to be transmitted or received. As far as the

ISP is concerned, equipment costs are reasonably low for ISDN, but transport costs are relatively

high compared to analogue. However, profits are significant, as compared with marginal profits

in the analogue case.

2.1.3 Dedicated Access

An ISP typically has a number of ports on a router through which it offers dedicated access. The

goal is to connect as many customers to these ports as possible. Although set-up costs can be

high for dedicated access (price being proportional to the distance from the ISP to the customer)

profits are high, generally bringing in over a quarter of an ISP‘s revenues, even though they may

only account for 1% of actual account numbers. Other traditional transmission methods are also

finding their place in the world of Internet access. Cable companies have already started offering

Internet access over theirnetworks.

Hybrid Fiber Coax (HFC) is used to provide this service. HFC uses cable modems. It employs

analogue fiber to a node that will serve a few hundred houses, and coaxial cable to the premises.

Because mobility has been an issue ofsuch importance in recent years, the combination of mobile

and Internet services will be of great importance to customers.

At present, the technology required for high-speed wireless access is unavailable. Wireless

Internet access will grow rapidly once the technology is available at a reasonable price2. Many

new last mile (i.e. from the telephone exchange or ISP to the customer) technologies are

emerging and it is likely that they will have a significant impact on Internet provision. If using

the telephone network to access an ISP, whether dial-up or dedicated, there is usually room for

complaint in terms of speed and reliability. This is for a simple reason - the telephone network

was designed to carry voice traffic and not high-speed data traffic. Therefore, many new

technologies are being developed for local loop data delivery.

2 Refer ‗Combining Mobile and Internet Services‘, Griffiths, N., Dataquest, June 1998

5

2.1.4 Digital Subscriber Line

DSL is the family of Digital Subscriber Line (DSL) technologies that has been developed to

provide high-speed links over twisted-pair copper telephone lines. Because long copper loops

distort signalquality, repeaters and amplifiers are installed on copper pairs at prescribed intervals

to restore signal quality. What DSL technologies do is use sophisticated modulation schemes to

pack data ontocopper wires, and do so without repeaters or amplifiers. DSL leverages the

telephone companies‘ investment in twisted-pair copper to nearly every home or business by

providing the ability to send voice and large amounts of data over existing lines. ADSL

(Asymmetric DSL) is the form of DSL with the most potential for Internet provision. It is

intended for the last mile into a customer‘s premises.ADSL technology consists of a pair of

modems on either end of a twisted-pair copper line, which provides symmetric transmission of

data up to 8Mbps downstream and 800kbps upstream.

2.1.5 WebTV

WebTV allows use of the Internet through a television set. A set-top box is installed and a

special WebTV ISP must be subscribed to. It is controlled by a handheld control or by a wireless

keyboard. Although the TV is used as the output device, the information arrives through a

telephone line and modem.

2.1.6 Digital Power line

Digital power line technology involves the utilization of the electricity distribution network as a

means of providing both power and telecommunications services to the home. An

implementation of power line communications has been developed in which an electricity

distribution network may be conditioned such that it can simultaneously carry two or more

electrical signals. The advantage of this method is that it uses an existing infrastructure that is a

system connected to almost every home and business.

2.1.7Fibertothe Curb

Fiberto the Curb (FTTC) refers to the installation and use of optical fiber directly to the curbs

near homes or anybusiness environment.This method uses digital fiber to a node serving 16-32

homes. The short link tothe customer is through any number of transmission technologies -

6

twisted pair,coaxial cable, optical fiber, microcellular microwave etc., depending on

thebandwidth of the services required.

2.1.8 Satellite

Satellite Internet access is likely to be usedfor customers in geographically

isolatedregions.Provision of two-way higher bandwidth capability over satellite is not common

inresidential markets because of the highcost, but hybrid solutions have recentlybeen developed

to deliver a highbandwidth capability via satellite with areturn path to a service provider

usingconventional PSTN technology. Thismethod is being used to provide interactive television

services and may beused in the future to provide fast InternetAccess3.

2.1.9 Radio Local Loop

In the UK, radio spectrum in the 10GHz region has been allocated for the deliveryof high

bandwidth services. Internetaccess by radio local loop would have itsadvantages and

disadvantages. It isflexible in the building of its accessinfrastructure, but it has practical

problemsof reach and interference, and costs ofterminal equipment can be high.

2.2 Trends in the ISP market

As the industry is maturing, differentiationand financial performance are becomingincreasingly

important. This is driving five major trends in the market:

Consolidation: mergers andacquisitions

Introduction of enhanced/value addedservices

Company to company interconnectionand peering agreements

Differentiation based on content

Web hosting

Consolidation

The trend of consolidation has beenevident over the last 18 months, withmany partnerships

arising between ISPs,and between ISPs and other companieswishing to enter the market.Large

3 Refer ‗Access to Bandwidth: Bringing Higher Bandwidth Services to the Customer‟

http://www.oftel.gov.uk/competition/l lu1298.htmfor more details

7

companies have been merging with other large companies, and have beenacquiring medium-

sized and smallcompanies.

This is a quick way toincrease geographic scope and subscriberbase, and hence to increase both

the financial value and customer value of thecompany. To most of the largercompanies, small

rural ISPs are not seenas worth acquiring

Content providers and large ISPs are partnering and merging in order toenter each other's market

as quickly as possible. They are entering the marketquickly by acquiring ISPs and

makingpartnerships with them.

Move to Usage-Based Pricing

The original pricing model which cameabout in the US was flat rate pricing – asubscriber paid a

flat fee and was entitledto unlimited usage. Because local calls tend to be charge-free, many

subscribershave taken advantage of this.

They will stay online for long periods of time, evenif they are not using the Internet, and

thushold up resources that other users arecontending for. Some ISPs have begun totime these

users out after 15 minutes of inactivity, but this is still causing muchinefficiency.

Specialization and Service Positioning

The term ISP is used very loosely. Anycompany supplying access or services fallsunder the

description ‗ISP‘.The present strategy of offering access,content, services etc. has a lack

ofstrategic focus, and therefore may lead one to believe that companies focused on just one

aspect of Internet service provision,working together, may be able to providean end product of

high quality to the user.

If this were to occur to some extent, ISPs would fall into two broad categories: network-focused

and content-focused.

8

Fig.2.1 ISP Specialization

Network-focused companies would focuson connectivity for businesses and otherISPs. They

would be able to offerbusiness packages with service-levelagreements.

For the consumer, these ISPs wouldintegrate technologies to offer premiummultimedia access to

the Internet.Content-focused companies, in their purestform, would have no network at all.

Theywould manage customer accounts andoperate services, while the connectivityservices

would be provided by a network focusedISP.Premium information would be provided to

business customers, and premiumentertainment to consumers.

It is believed that, with such strategicfocus, these companies, working together,would offer a

better service, both in termsof content and network quality, than acompany trying to cater for

everyone.

9

2.3 The Physical Structure of an ISP

Fig 2.2 shows a brief schematic showing thebasic physical structure of an ISP.The ISP server is

the computer program(and computer) that serves requested Webpages or files.The DNS server

contains information toresolve Internet names and addresses.

Fig. 2.2 Structure of an ISP 4

The news server receives and processes Usenet news, and although this is just one function, it

can take up an entire computer system on its own. It is not recommended that any other functions

run on thismachine. The subscriber-service server is provided to authorize service, maintain

billing records, and keep other administrative details. The terminal server is a device that allows

connection of modems to the internal network, and thus out to the Internet. The Data Services

Unit (DSU) takes data from the router and translates it into the format required by the leased line

that runs to the carrier POP. The router looks at packets in an internal network, finds the ones

4 Refer 'ISPs: From Protocols to the Market', McPhillips, E., University of Strathclyde, September 1998 for more

details

10

that are destined for the Internet, and sends them out. This is a simple function, but has to be

extremely high-speed. For traffic outwith the internal network, the router is used to send it to the

carrier‘s closest POP. This is usually done over a T-1 line (1.544Mbps, used in the US), or a DS-

1 line (2.048Mbps, used in Europe). A leased line is usually provided by atelephone company to

connect with the carrier at their POP. Enterprises such as universities and largebusinesses often

have a T-1 (or DS-1) direct private-line connection to the carrier pop.

The carrier then concentrates the traffic from many ISPs and enterprises and forwards that traffic

over a set of higher speed links (usually 45Mbps, but now as high as 155Mbps) to the closest

NetworkAccess Point (NAP) for connection to the Internet.

2.4 What Services do ISPs Offer?

Basic ISP services include E-mail, World Wide Web access and Bulletin Board Systems. Over

the past couple of years, Internet services have gathered much greater value and scope, resulting

in manypremium services, which may be priced accordingly. Below are detailed the principal

Internetservices provided.

2.4.1 E-mail

E-mail is the electronic sending, storage and retrieval of messages. Messages are addressed and

sent to the computer where the destination e-mail account resides, and is stored there. An e-mail

message consists of three parts:

The header gives information about the message (who sent it, when, who it was

addressed to, carbon copies, how it got there, etc.)

The body is the actual message itself.

The signature is the part where the sender personalizes the message and gives further

information aboutthem.

Because most PCs are not left on 24 hours a day, connected to the Internet, with their own host

names etc, most e-mail accounts are usually on a host somewhere else. The e-mail reader

contacts this host (using Post Office Protocol, or POP) to handle the email when the user logs in.

11

Once the email is on the user‘s PC, then all the email activities are local (folders, lists, etc.) POP

is a client-server application designedto transport e-mail messages between a network server and

a PC based client computer.

The WWW is, like Telnet and FTP, a tool for accessing the information available on the Internet.

It is composed of a collection of web pages residing on computers, called web servers. A web

page author creates a document and encodes links (called hypertext links) into the document. By

following these links, the reader can move from the original document to another document,

which might be locatedon that same computer or on another web server anywhere in the world.

Web software is designed around distributed client-server architecture. A web client (called a

web browser if it is intended for interactive use) is a program which can send requests for

documents to any web server. A web server is a programthat, upon receipt of a request, sends the

document requested (or an error message if appropriate) back to the requesting client. Because

the task of document storage is left to the server and the task of documentpresentation is left to

the client, each program can concentrate on those duties and progress independently of each

other.

2.4.2 Bulletin Boards

Bulletin Board Systems (BBS) are on-line services which allow users to read and post messages,

usually organized around a single topic. The best example of an Internet BBS is Usenet, the

world‘s largest newsgroup. It contains more than 40,000 different topic groups (January 1999).

There are various ways you can read or take part in discussions on the Internet. One way is to

subscribe to list servers. Another is to join a newsgroup. The main difference between the two is

that you sign up for a list server and the messages go to your e-mail box, while you must visit a

newsgroup and read the messages. Newsgroup messages are posted publicly, available for

anyone to read and respond to. Programs exist to allow a user and another person to be on-line at

the same time, trading real-time messages to simulate a conversation. It is also possible to chat

with many more than one person at once. The most popular chat program is Internet Relay Chat

(IRC). On IRC, several people can simultaneously participate in a discussion over a particular

channel, or even multiple channels. There is no restriction on the number of people that can

participate, or on the number of channels that can be formed over an IRC. With the growing

12

familiarity with the Internet, and the explosion in the number of ISPs in the market, both access

and primary services are becoming commoditized. Although it is human nature to be fascinated

with a new service or product when first presented with it, it is equally natural to grow

accustomed and demand more. As consumers become familiar with what is currently available

and with what are possible, their service expectations will grow. Customers are no longer willing

to pay a premium for basic access and services, so ISPs have to offer more. They will compete to

deliver more technically sophisticated and cost effective services to meet the ever-increasing

needs of educated customers. In a short time, the market has gone from one being fought over

access, to one in which more must be offered, in the way of new value-added services and

benefits, technological or other.

2.4.3 Voice and Fax Services

Because of the idea of ‗pay local, speak global‘, voice over the Internet (or Voice over IP, VoIP)

has been a point of great interest over the last couple of years. Internet telephony users can speak

with someone anywhere in the world, often for the price of a local telephone call. It has been the

centre of much attention and optimism because it has the potential to significantly reduce the

cost of longdistancetelephone communication. At present it is rather cumbersome to make a

telephone call over the Internet, as computers were not designed to support it. The other main

disadvantage is that quality, although improving is not as good as that of the PSTN (Public

Switched Telephone Network).

The PSTN is a circuit-switched network that has been optimized for real-time or synchronous

voice communication with a guaranteed QoS (Quality of Service). It guarantees the QoS by

dedicating a full duplex 64kbps circuit between the parties of a telephone conversation. Since the

bandwidth remains constant whether or not the involved parties are speaking, the cost of a call

on the PSTN is based ondistance and time. The Internet is based on packet-switched technology,

so no dedicated circuit is set up. Because of this, the quality of VoIP is degraded somewhat

compared to PSTN telephony. In spite of this disadvantage, many callers are more than willing

to tolerate a slight reduction in quality inexchange for inexpensive calls. As traffic prioritization

schemes improve, it is hopeful that VoIP will improve to such a level as to be indistinguishable

from traditional telephony. Because of the interest channeled towards VoIP, the provision of this

13

service by ISPs will be essential in order to attract many customers. The threat of this service to

Telco‘s (telephone companies) has seen the entry of many of them, often by ISP acquisition, into

the service provision market.. The use of FaxoIP (Fax over IP) is already well underway.

Although fax is generally closely associated with the telephone network, it does not require real-

time transmission. Because of this, there is no reason why FaxoIP should not be used. It is the

simple transmission of data (which need not have a dedicated channel) over the Internet, and can

be much cost efficient compared with traditional fax.

2.4.4 Integrated Voice/E-mail/Messaging

A number of mobile telecommunications companies have already begun to offer some sort of

integrated system, allowing customers to check their e-mail over their mobile phones. These

services may also allow the sending of messages from the Internet to a mobile phone directly.

The Short Message Service (SMS) allows users to send short e-mails or to notify the recipient to

log into their e-mail account in order to receive an urgent e-mail or file. Many companies,

including Vodafone, Deutsche Telekom, and T-Mobil (partnered with T-Online) will

automatically notify their customers when they have received an e-mail, usually giving date,

sender and subject, provided they have the right software installed on their PC.Deutsche

Telekom have an extension of the above, by way of their NOVICE system, which uses voice-

synthesis software to convert the e-mail messages into speech, and customers can have their

messages read over the phone to them. Other companies provide services whereby information

such as football results or stock market quotes can be obtained on mobile terminals via SMS.

The demands of the mobile user are readily listened to, as the mobile telephony market is already

so large, and is probablythe fastest growing market in the world. The integration of mobile and

Internet services is likely to grow rapidly, particularly when affordable wireless broadband

technologies are available. It is presently possible to use a mobile phone to access the World

Wide Web, but is painfully slow and extremely expensive. Cisco Systems and Motorola recently

announced a joint project to deliver a reasonable wireless Internet service, investing up to $1

billion over the next 4-5 years5. This was announced the same day (8 February 1999) as

Motorola, Nextel Communications, Unwired Planet and Netscape Communications gave details

5 Refer ‗Motorola, Cisco in Pact‘ http://abcnews.go.com/sections/business/DailyNews/cisco990208.htmlfor more

details

14

of their plans to offer a wireless telephone package combining voice, data and Internet services6

2.4.5 Web Hosting

The idea of web hosting can be broken down into two areas: web page hosting, and the actual

hosting of networks attached to the Internet.

Web page hosting, where an ISP will offer server space to a customer, is not a new idea. Some

ISPs have been offering small amounts of web space, either at a price or for free, for a few years.

However, it now appears that all ISPs will offer a reasonable amount of space (usually about

10Mb) in any initialpackage offered to a customer. Residential users may wish to set up their

own homepages for recreational or educational purposes. For businesses, the availability can be

very much more important. While many businesses may require Internet services merely for e-

mail and browsing capabilities, most businessesnow want a web presence, which involves a

number of company web pages. Although some establishments (in particular universities and

large businesses) choose to set up their own servers, it is more economical for residential users

and small businesses to acquire or lease space on an ISP‘s server.

The other area of web hosting is more complex, and adds much value for the customer. An

intranet is a network (usually belonging to a business) that is connected to the Internet in such a

way that its users can use the Internet, but other users on the Internet cannot access the network.

This security is usually accomplished by a technique known as firewalling. The main advantage

of an intranet using the Internet is that a company with many sites can use the Internet to connect

these sites, rather than leasing lines expensively from the telephone company to ensure privacy.

An extension of the idea of an intranet isan extranet. If a company wishes to allow a customer

onto its network, an extension can be made to the intranet to enable this. The customer‘s

computer is then allowed access to the intranet, and that extension is known as an extranet. A

Virtual Private Network (VPN) is a private network that makes use of the Internet, maintaining

privacy through the use of a tunneling protocol and security procedures. Companies today are

6„Nextel, Netscape Go Wireless‟ http://abcnews.go.com/sections/business/DailyNews/nextel_netscape990208.html

for more details

15

looking at using a virtual private network for both intranets and extranets7. Because leased lines

tend to be very expensive, particularly in Europe, there is huge benefit to the company in using

the Internet to connect their sites. From the ISP‘s perspective, intranets, extranets and VPNs are

reasonably easy to set up, and can reap significant profits.

2.4.6 Web Page Design and Consultancy

Many business customers choose to outsource the design and maintenance of their web pages, at

least until they believe it is reasonable to employ someone fulltime to do the job. Many ISPs

will, at subscription, offer to maintain a company website for a price. This does not just involve

hosting the web pages, but designing, coding and updating them as is necessary. It is reasonably

easy to create a simple webpage, but many businesses do not want to allocate that job to a

member of staff, lest it interfere with their other work. In the early stages, the work involved

does not merit an entirely new member of staff, so it is left to the ISP to create a page with

necessary company information, news and whatever else the company deems important. The ISP

is then responsible for updates to these pages whenever the clientrequires this. The amount an

ISP charges for this service is dependent on how complex the pagesare to be. A simple static

page of text and images, requiring infrequent update, will cost relatively little. However, a

complex page with Java applets, other dynamic content, forms and complex layout will

bereasonably costly to the customer. It is when such pages become necessary that businesses

tend to consider employing someone in-house to do the job.

2.4.7 Bundled/packaged services

Bundled services can be enticing to the customer who does not wish to go to the trouble of

dealing with a separate company for each service or utility they require. ‗One-stop shopping‘ has

the potential to be an important area of the future, giving the customer the ease of having one

provider for many services. Bundled e-commerce might involve a package deal comprising web

access, Internet services, banking and home shopping along with other services. Although this

may not appeal to all, the idea of one bill for many services is often seen as a huge convenience.

Similarly, bundled utilities can be of great convenience. CableTel already offers cable TV,

telephone and Internet access for a bundled price, and only one bill is necessary. Because of

7 Refer 7] „What Is?‟ http://whatis.com/for more details

16

reduced overheads and administration costs, this type of dealcan also be more economic, for

instance, CableTel can offer the above bundle for the same price as BT line rental. Although

these deals are attractive, they are usually restricted to certain ISPs – those with the resources to

provide them. Telcos that have acquired, merged with, or become ISPs can offer Internet access

and services, but for the time being small ISPs cannot offer bundle services unless they set up

certain contracts with telcos. When digital power line technologies are available, power

companies will be able to offer power, telephone and TV services, and there is no reason to

believe that they will not enter the ISP market to offer a total bundled service.

2.4.8 Quality of Service and Reliability

For many Internet users, particularly business users, the quality of service given by the ISP is of

particular importance. When using real-time applications such as VoIP and video, it is important

that delays are minimized so as not to degrade service. Although the Internet often causes

unpredictable delays, new protocols can minimize the delays encountered and ISPs are in a

position to be able to guarantee a certain Quality of Service (QoS). The current version of IP, IP

version 4, does not allow for the prioritization oftraffic. The newer version, version 6, has a class

field to distinguish traffic types. Although version 6 has been standardized, it has not yet been

deployed. Used with IP version 6 will be a higher layer protocol known as RSVP (Resource

Reservation Protocol). A host uses RSVP to request a certain QoS from the network, on behalf of

a data stream. For those customers requiring real time services, QoS is to be of great importance.

There are some concerns regarding the use of reservation protocols, the first being the capacity

required for the protocols. In many instances, the capacity required will cause overload of

switches and be detrimental to carriage. There is also the idea that many customers are requiring

capacity reservation over the same pipe, and thus contending for capacity. If the required

reserved capacity exceeds the actual capacity, Service-Level Agreements (SLAs, the concept that

service providers give their customers a contract for guaranteed level of network traffic delivery)

cannot be kept.

17

Who are the Key Players?

In an industry that involves so manyplayers of all sizes, for the purposes ofanalysis it is difficult

to define exactlywho the key players are.In a huge generalization, traditional ISPshave been

broken down into two keygroups: large and small ISPs. Althoughmany factors (revenue,

geographical scope, partnerships, customer base,and growth) may influence the perceived sizeof

an ISP, it has been decided to definesize merely on the basis of customer base,with a bias

towards number of businesscustomers.

Although revenue can be an indicator ofsize, an ISP with few, but lucrative,business customers

may generate morerevenue than a company with significantlymore, but residential,

customers.Generally the larger ISPs have a widegeographic scope, but specialistcompanies may

have only one POP ineach country, and so the mostgeographically diverse ISP may notactually

have a great customer base.

An ISP may be in a number ofpartnerships in order to increasegeographical scope, but may not

be such abig company itself.The growth of an ISP can be indicative ofthe potential of the

company to succeed,but it is not really an indicator of its size.Therefore, in the following

discussion, thesize of an ISP is defined in terms ofcustomer base. Because of the profitassociated

with business customers, a biashas been given towards businesscustomers in determining the size

of anISP.

At present, ISPs of practically every sizeranging from a few hundred customers upto many

millions of customers exist.However, medium-sized ISPs are beingacquired by larger companies,

or aremerging to become larger. There is ageneral move in the ISP market towardsbig or niche,

suggesting that within a fewyears, we will have a market that has asmall number of large

companies and alarge number of small companies, cateringfor specialized markets.

For the above reasons, and for simplicity,the traditional ISP market has been brokendown into

two categories: large and small.A small ISP could be considered as onewith less than, say,

10,000 customers, anda large ISP, one with more than 300,000customers. As mentioned, it

appears thatintermediate companies will disappear. The major key plyers for internet service

providers are BSNL,Reliance, Vodafone, Airtel, Idea, Tata, MTNL etc.

18

Group company wise market share are shown as below:

Fig. 2.3Group company wise market share

19

Following fig. 2.4 shows list of ISPs having all India licence

Fig 2.4 ISPs having all India licence

Conclusion:

ISP is basically internet service provider industry that provides individuals and companies access to

the Internet and other related services. ISP provides their services in numerous ways.

i.e.

Analogue Dial-Up

ISDN Digital Dial-Up

Dedicated Access

Digital Subscriber Line

WebTV

Digital Power line

Fiber

Satellite

In India Internet access is mainly being taken through ISDN & DSL by various internet service

providers.

20

Chapter 3

PEST Analysis

The External Environment – APEST Analysis

P – Political

This can be formal or informal. Formalrefers to government and regulation. Informal refers to

areas outside of government where political activity occurs (such as the media).

E – Economic

This refers to the nature and direction of the economy in which a business operates. It can be

basic up/downswings in thegeneral level of economic activity, or changes related to structural

change within relevant sectors.

S – Sociological

This can refer to demographics, lifestyles, social values, culture and the like.

T – Technological

This relates to research, development and operations. The emergence of a new technology can

dramatically impact upon an industry.

ISP PEST Analysis

There are many areas in which the regulator may have an effect. Presently, ISPs are not

responsible for content on their networks up to a certain point. If a customer stores offensive

material on their web site, the ISP has noobligation to know of its existence or to remove it. If

another user complains about this material, then the ISP can remove it without the compliance of

the owner, or it is seen as a publisher of the material, and then becomes responsible.

Because there is no censorship of the Internet, and many users are concerned, it is possible that

in the future ISPs willwork in conjunction with the regulator to try to eliminate some content.

Presently free access is given to schools,universities, libraries and hospitals. It is the choice of

the government which establishments to grant free access to.If any of the above are denied

access in the future, a whole new target group will open up to ISPs. Similarly, if another group is

21

granted free access, many ISPs may lose important clients. The idea of universal service is one

that has not really been discussed in relation to the Internet. Because the Internet is growing at

such a fast rate, it is likely that it will soon be seen as so important thatInternet to flourish

without being stunted. Low regulation of ISPs has meant low barriers to entry, and hence

intenseA PEST (Political, Economic, competition in the market.Sociological and Technological)

analysis is a scan of the outside environment to try to spot changes that might impact upon

business. These changes might be seen as opportunities or threats.

Political

Low regulation now

Responsibility for content

Access to schools, libraries, hospitals

Universal service

Economic

GDP

Structural change since telecoms

Deregulation

Recession: Fewer computers bought?

Less spent by consumers and providers?

Sociological

Language barrier

Reluctance to accept new/foreign technology

Demography: age (changing), ethnic mix

Geography: urban/rural

Technological

Rapidly changing technologies & services

Fuelled by the internet:

Transport, switching, backbone, local loop

Disruptive technologies

Reliance on technology

Fig. 3.1 ISP PEST Analysis

22

P – Political

This can be formal or informal.Formal refers to government and regulation. Informal refers to

areas outside of government where political activity occurs (such as the media).

E – Economic

This refers to the nature and direction ofthe economy in which a business operates.It can be basic

up/downswings in thegeneral level of economic activity, orchanges related to structural change

withinrelevant sectors.

S – Sociological

This can refer to demographics, lifestyles,social values, culture and the like.

T – Technological

This relates to research, development andoperations. The emergence of a newtechnology can

dramatically impact uponan industry.

3.1 Political:

the regulation of theInternet and associated businesses hasalways been low. This has allowed for

the Internet to flourish without being stunted.Low regulation of ISPs has meant lowbarriers to

entry, and hence intensecompetition in the market.There are many areas in which theregulator

may have an effect.Presently, ISPs are not responsible forcontent on their networks up to a

certainpoint. If a customer stores offensivematerial on their web site, the ISP has noobligation to

know of its existence or toremove it. If another user complains aboutthis material, then the ISP

can remove itwithout the compliance of the owner, or itis seen as a publisher of the material,

andthen becomes responsible.Because there is no censorship of theInternet, and many users are

concerned, itis possible that in the future ISPs willwork in conjunction with the regulator totry to

eliminate some content.Presently free access is given to schools,universities, libraries and

hospitals. It isthe choice of the government whichestablishments to grant free access to. Ifany of

the above are denied access in thefuture, a whole new target group will openup to ISPs.

Similarly, if another group isgranted free access, many ISPs may loseimportant clients.

23

The idea of universal service is one thathas not really been discussed in relation tothe Internet.

Because the Internet isgrowing at such a fast rate, it is likely thatit will soon be seen as so

important thatevery citizen should be granted cheap andeasy access, as they are to the

telephonenetwork.

Due to the breakdown of the NAPs, ISPs areentering into private agreements regardingthe

carriage of traffic from otherproviders.Small ISPs tend to serve rural areas. Thisis because large

companies seem to seethese areas as ‗not worth bothering with‘,even though a high proportion of

smallcompanies are making profits. Becausesmall companies do not own their ownnetworks,

they have to lease capacity fromothers, and pay premium rates for this.The power of large

companies may besuch that high charges to use theirnetworks will have a severe effect onsmaller

companies, and oust them fromthe market. If this begins to happen, it is likely that there will be

some interventionfrom theregulator. The regulator will notbe concerned about the well-being

ofsmall ISPs, rather the ability of users inrural areas to connect to the Internet. Ifsmall companies

are put out of business,then the only opportunity for the rural userwould be to connect long-

distance, whichwould be too expensive – not considered auniversal service.

Because there has been so little regulationof the Internet, it cannot accurately bepredicted how

regulation will impact whenit arrives. There are areas where manycompanies have lobbied for

regulation.

3.2 Economic:

In any market, the GDPcan be an indicator of the potential uptakeof a product or service.

However, a highGDP has not necessarily meant highInternet penetration.

Since telecommunications liberalization (1996 in the US, 1998 in most of Europe),there has been

structural economic changewithin the sector. There are many newentrants in all involved

markets, andincumbents have begun to lose out to newentrants that have been granted use of

theincumbents‘ networks.

24

Upswings and downswings in the level ofeconomic activity may or may not have aneffect on the

ISP market.

3.3 Sociological:

A language barriermay be a deterrent to many from theInternet. Although other languages

arenow making their place on the Internet,there is still a strong bias towards English,as the

Internet has its origins in the US.

As other languages become commonplaceon the Internet, the ISP market will growin many

countries.The reluctance to accept new and foreigntechnologies has stunted Internet growthin

some countries with high GDP. Forexample, Japan is a very wealthy countrywith an excellent

telecommunicationsinfrastructure, but Internet penetrationthere has been slow. The

Japanese,although at the forefront of technologicaldevelopment, are not very accepting offoreign

technologies, and this couldexplain why there is no strong desire toconnect to the Internet.

Similarly, theFrench tend to avoid foreign inventions,and penetration there has been low.

Thiscan also be attributed to the fact that theFrench have their own internetinformation system,

Minitel. Before the Internet can be seen as a worthyalternative, it will have to provide muchmore

than Minitel does.

The community of Internet users, in thecourse of a few years, has turned from oneof computer

scientists and academics toone comprised of a diverse mixture ofcultures, ages and occupations.

Access isfreely available in most developedcountries, and ease of use has becomesuch that

anyone owning a computer and atelephone can connect to the Internet withrelative ease.

Demography and geographydo not play the role they used to indetermining who uses the

Internet, andwho would be a likely target for an ISP.

25

3.4 Technological:

Internet technologiesare developing and improving at anenormous rate. In a feedback loop

ofsorts, new technologies are fuelling newservices, which in turn are fuelling newtechnologies.

Each part of the Internet (backbone pipes,routers, local loop) is becoming faster,temporarily

satisfying customer demand.Although many new technologies havebeen hailed as the ‗killer

application‘(Asynchronous Transfer Mode (ATM),videoconferencing, VoIP), these have

notshown the uptake expected of them.The phenomenon of the Internet could nothave been

predicted, and so it would befolly for an ISP to assume that a newtechnology capable of totally

restructuringthe industry may not appear. Such atechnology would be regarded asdisruptive.

Disruptive technologies can beseen as those that initially present apackage of performance

attributes that, atthe outset, are not valued by existingcustomers. Although the product areamay

be established, the disruptivetechnologies‘ value proposition is usuallyvery different from that

which waspreviously available. When launched,they will be targeted towards a whole new(and

non-existing) customer base, one thatis happy to pay a lower price and iswilling to settle for

lower quality.

Conclusion:

If we consider the political environment for any new entrant, it is very difficult to get the spectrum now

onwards as there is a speculation of scam in 2G spectrum allocation.

In economical environment as per the budgetary guidelines the taxes & duties are decreasing on

the chips & semiconductors which make computers & laptops cheaper day by day which demonstrate an

easy going way for the ISP industry as computer is an essential need for the internet connection.

As far as sociological environment in concern, language barriermay be a deterrent to

many from theInternet. Although other languages arenow making their place on the

Internet,there is still a strong bias towards English,as the Internet has its origins in the US.

Internet technologiesare developing and improving at anenormous rate. In a feedback

loop ofsorts, new technologies are fuelling newservices, which in turn are fuelling

newtechnologies.

26

Chapter 4

Five Force Analysis

The ISP Market – the Near and External Environments

The nature of competition in an industry is a huge determinant of strategy, especially business-

level strategy. The profit potential of an industry is determined by competitive interactions.

Where these interactions are intense, the profit earned is lessened by the activities of competing.

Where they are mild, profit tends to be high. Michael Porter of the Harvard Business School has

identified five basic forces, which together describe the state of competition in an industry8:

1. The intensity of rivalry among competitors

2. The extent to which substitute products present a threat

3. The threat of new entrants to the market

4. The bargaining power of the industry‘s suppliers

5. The bargaining power of the industry‘s buyers.

In the ISP market, all these forces exist, some more intensely than others.

8 Refer „How Competitive Forces Shape Strategy‟, Porter, M., HarvardBusiness Review, Volume 57, Issue2, 1979

[9] „@Home, Excite for more details

27

Following fig. 4.1 shows these forces diagrammatically.

Fig. 4.1 Porter‘s 5 Forces Model for the ISP Industry

4.1 Rivalry within the Industry

The centre area represents the rivalry in the industry. On the left are the main traditional players

in the industry, with an indication that there is a large amount of consolidation occurring between

these companies. On the right are the areas in which the market is being fought. As in any

industry, there is competition based on price. If one company can do something as well as

another, and for a cheaper price, then the former will have an advantage and thus be successful in

competition. In the basic access/basic services arena, many companies are offering the same deal

– access and basic services, and so those that are doing it more cheaply than others will attract

customers. Otherwise, ISPs will have to offer something special to differentiate them from

others. As discussed already, guaranteed quality of service is of great importance where real-time

traffic is concerned. The availability of service-level agreements will soon be ubiquitous, and

28

acquisition of customers will be fought over price of QoS rather than availability. The speed of

access, although improving with each new technology, is still far from being satisfactory.

Internet can be seen as a series of bottlenecks, with delays occurring at each junction. Services,

as described previously, are the main area in which the market is beingfought now. Basic

services have become commodities and customers want more fortheir money. ‗Value-add‘ is the

key customers will not pay for it. Emerging in all industries in the recentpast has been the need

and desire for good customer service. Because customers may want to be online at any time,

there is a distinct need for a 24 hour/7 day customer Communications by America

Online(November 1998) and the recent merger of @Home Network and Excite Inc. (January

1999)9 are indicative of the fact that ISPs are moving into the content market. At the same time,

content providers andportals are looking to join the ISP market, and partnerships and acquisitions

are the easiest way for them to join each other‘smarket. Lycos, which has been in talks with

potentialsuitorssuchasNBC, Bertelsmann, Microsoft and Time Warner, will most likely be

acquired in the near future. Although nearly as popular as Yahoo! (in terms of usage), its market

capitalization is just $ 5.5 billion compared to $33 billion for Yahoo!For business customers,

security is a big issue. A business connecting to the Internet does not want its integrity to be

compromised, and so will shop around until it finds an ISP that can as-good-as guarantee

security. No matter how securea connection appears to be, there is alwaysphoneservice.

Many ISPs offer some chance of an unauthorized user substantial online help, which may be of

use,andconvenient, to customers. However, if a connection cannot be made, online support is of

no use. There has also been an emphasis on customer support in the last year, when many

computer-illiterate users joined the making his way over the connection. The only way to ensure

absolute security is not to connect to the Internet atall. Although the market is much segmented,

there are an enormous number of companies providing Internet services. An explosion Internet

As computer familiarity in the number of ISPs over the last few decreases, the requirement for

customer support increases greatly. Prior to last year, most ISPs focused largely on providing

access-oriented services and have left content-related services to the online providers. The

problem ISPs have with content is that their network engineering skills have little relevance

9 Refer „@Home, Excite Announce $6.7 Billion Merger‟

http://www.internetnews.com/ispnews/1999/01/1901-merger.htmlfor more details

29

when it comes to building content. However, it has been established that content is to be one of

the main differentiators in the ISP market. Those years has meant intense rivalry within the

industry. Because there is such an enormous growth in the customer base, the market is still far

from saturation. This is an attraction to still more companies wishing to enter the market.

4.2 Threat of Substitute Products

There is a tremendous attraction for companies other than ISPs to offer Internet access and

services, especially if they know they can enter the market at a high level.They are also aware of

the threats of not being a part of this industry, and are entering at atremendous rate, either by

acquisition, merging, or simply becoming ISPs. They can provide similar services, and

sometimes at a reduced rate. They can offer bundled services which are most convenient to

some customers.

Non-technical companies have seen the opportunity to develop a web presence beyond just web

pages. Companies such as Tesco have entered the ISP market, but not necessarily to make

money from provision. As with Freeserver, Tesco enjoys the ease of information gathering

regarding their customers. There is also the opportunity to develop an online storefront. Tesco

has also recently begun to offer a free service to its clubcard holders10

. Supermarkets tend to

have a name people know and respect. They have customer awareness and experience dealing

with a large customer base.There also tends to be a great customer loyalty towards supermarkets,

which is why they are moving towards banking, and now Internet service provision. A portal is a

gateway to the World Wide Web that is, or proposes to be, a major starting site for users when

they get connected to the Web. Portal companies have started to show an interest in service

provision. Because there is to be a great differentiation based on content, portals are setting up

partnerships with ISPs, or becoming service providers as well as content providers. Yahoo! has

launched a free access service in an attempt to win market share. It has also acquired GeoCities,

a provider of free web sites, for $4.6 billion (January 1999)11

.

The above entrants are capable of providing the same services as ISPs, usually at a discounted

10

Refer TescoNethttp://www.tesco.net/index.htmfor more details 11 Refer „Yahoo! to Buy GeoCities ‟http://www.geoworld.com/ResearchT riangle/6551/ for more details

30

price or for free. Although they may not have the experience of established ISPs, they still

pose a significant threat, particularly as access and basic services become commoditized.

4.3 Threat of New Entrants

Due to the nature of the ISP market, the threat of new entrants is reasonably strong. There are

low barriers to entry - all that is needed to become an ISP is a small amount of capital and some

technical know-how. Much of the ISP‘s activity canbe outsourced, which can reduce initial costs.

Regulation in this area is low, meaning that anyone wanting to enter the marketcan do so easily.

Due to the concept of interconnection, companies need not own any sort of network – they can

use other networks at a price. There have been, and continue to be many new entrants to the

market. In the last 18 months, the number of ISPs has leveled off. However, there have been a

tremendous number of mergers and acquisitions within that time, suggesting that for every

merger or acquisition there has been a new entrant. Although many of these new companies will

fail to survive in the long run, those that find a niche market and provide a satisfactory service

will always have a sufficient customer base to continue.

4.4 Bargaining Power of Suppliers

The suppliers to ISPs are those that own the networks. Backbone providers generally own what

is the absolute backbone of the Internet, and control routing and switching of traffic. Telcos own

the local loop copper pairs, which most customers use to connect to their ISP,the lines that ISPs

lease to connect to the Internet, and much of the Internet backbone. Large ISPs are often the

suppliers of capacity to smaller companies. Because it is impossible for every ISP to build their

own entire network, it isnecessary that companies use the existing networks.They have to do this,

which gives the suppliers some power. However, because there are many suppliers offering the

same service, this competition has led to their power being lessened.

4.5 Bargaining Power of Buyers

Although an individual consumer has little or no say about how much an ISP charges, due to the

rivalry within the market, ISPs generally have to offer their services at reasonable prices. They

will lose their customer base if they charge more for a service someone else provides more

cheaply. Switching costs are low.

31

Businesses have a little more bargaining power, particularly if they are a significant client of the

ISP. However, if a business is happy with its ISP it is unlikely to change, and because there is

essentially no ability to backward integrate; the customers tend to have little bargaining power.

Conclusion:

Rivalry within the industry

In the basic access services arena, many companies are offering the same deal, and so those that

are doing it more cheaply than others will attract customers.Otherwise, ISPs will have to offer

something special to differentiate them from others.

i.e. Introduction of WiFi service by Spidigo by connecting whole Ahmedabad City under

WiFi zone.

Threat of Substitute Products

There is a tremendous attraction for companies other than ISPs to offer Internet access and

services.They can provide similar services, and sometimes at a reduced rate. They can offer

bundled services which are most convenient to some customers.

i.e. Telecom industries giants provides internet services which are not part of ISPs

ex. Idea, Vodafone, Tata DoCoMo

Threat of New Entrants

Due to the nature of the ISP market, the threat of new entrants is reasonably strong. There are

low barriers to entry - all that is needed to become an ISP is a small amount of capital and some

technical know-how.

Bargaining Power of Suppliers

The suppliers to ISPs are those that own the networks. Backbone providers generally own what

is the absolute backbone of the Internet, and control routing and switching of traffic.

Bargaining Power of Buyers

Although an individual consumer has little or no say about how much an ISP charges, due to the

rivalry within the market, ISPs generally have to offer their services at reasonable prices. They

32

will lose their customer base if they charge more for a service someone else provides more

cheaply.

33

Chapter 5

Driving forces for ISP

The various driving forces for the internet service provider industry are as following:

1. Growing use of the internet and emerging new internet technology applications.

The internet and the adoption of internet technology application represent a driving force of

historical and revolutionary proportion. Companies can use internet to reach beyond their

borders to find the best suppliers and further to collaborate closely with them to achieve

efficiency gains and cost savings. Companies across the world are using a host of internet

technology application to revamp internal operations and squeeze out cost savings. The

challenges here are to assess precisely how the internet and internet technology application

are altering a particular industry‘s landscape and to factor these impacts in to the strategy-

making equation.

2. Increasing globalization of the industry.

Competition begins to shift from primarily a regional or national focus to an international

or global focus when industry members begin seeking out customers in foreign markets or

when production activities begin to migrate to countries where costs are lowest.

Globalization of competition really starts to take hold when one or more ambitious

companies precipitate a race for world wide market leadership by launching initiatives to

expand into more and more country markets. The forces of globalization are sometimes such

a strong driver that companies find it highly advantageous if no necessary to spread their

operating reach into more and more country markets.

3. Changes in the long term industry growth rate.

Shifts in industry growth up or down are a driving force for industry change, affecting the

balance between industry supply and buyers demand, entry and exit and the character and

strength of competition.

34

4. Changes in who buys the product and how they use it.

Shifts in buyer demographics and new ways of using the product can alter the state of

competition by opening the way to market an industry‘s product through a different mix of

dealers and retail outlets; prompting producers to broaden or narrow their product line. The

growing percentage of households with PCs and internet access is opening opportunities for

banks to expand their electronic bill-payment services and for retailers to move more of their

customer service online.

5. Technological change and manufacturing process innovation.

Advances in technology can dramatically alter industry‘s landscape, making it possible to

produce new and better products at lower cost and opening up whole new industry frontiers.

Technological development can also produce competitively significant changes in capital

requirements, minimum efficient plant sizes, distribution channels and logistics, and

experience or learning-curve effects.

6. Marketing innovation.

When firms are successful in introducing new ways to market their products, they can spark

a burst of buyer interest, widen industry demand, increase product differentiation and lower

unit cost.

7. Changes in cost and efficiency.

Widening or shrinking differences in the cost among key competitors tend to dramatically

alter the state of competition. Shrinking cost differences in producing multifeatured mobile

phone is turning the mobile phone market into a commodity business and causing more

buyers to base their purchase decisions on price.

8. Regulatory influences and government policy changes.

Government regulatory actions can often force significant changes in industry and strategic

approaches. Deregulations have proved to be a potent pro-competitive force in the

telecommunication and electric utility industries.

35

Chapter 6

Key Success Factors

The key factors for success of a Private ISP will be a technical edge, financial capability to

sustain losses over at least two years, high marketing and promotional budgets, strategic

alliances with ancillary service providers, and lobbying power with the central and state

governments. These can be further examined further:

6.1 The technical edge:

The track record of ISPs in India, VSNL and the others before it, has been badly marred by poor

service quality. Many Internet users would happily switch to a new private ISP if given a

guarantee of reliability. "95% Uptime" and "Quality of Service" (available bandwidth)

guarantees, while commonplace in the developed countries are non-existent in India so far.

Serious Internet users, especially those who depend upon it for business eagerly await such

guarantees. Once credibility is established, pricing can even be higher than competitors‘. This

technical edge can only be established and maintained by proactive, aggressive network design

by experienced consultants, coupled with a 24 hour Network Operations Centre manned by well-

trained experts in all aspects of ISP operation. Further, consultants must be available on 24-hour

standby retainers. Close association with the ERNet and NCR-IP ISPs has shown that

customers are extremely sensitive on issues of service outage and unavailability of latest

technologies.

6.2 Financial sustaining power:

The private airline industry in India makes a suitable parallel to what is likely to happen with

Private ISPs. Many private airlines started up, but with high levels of competition and price wars,

coupled with changing government regulations, several could not continue sustaining losses. The

recent closing down of several of the new private airlines has made the market much more

lucrative for those airlines which survived, so profit margins have shot up, and huge returns on

investments are expected in the next few years. The same will happen with Private ISPs, since

the scrapping of license fees for Private ISPs will allow many Private ISPs to set up services.

Those that survive stand to gain excellent financial returns in 3 to 4 years.

36

6.3 High marketing and promotional budgets:

The opening up of ISP services without a license fee by the DoT will result in many service

providers in each region, and therefore inevitable cannibalization of each other‘s market share by

these providers. The only way to gain an edge in market share is by developing a larger audience

base through regular Internet technology awareness seminars and workshops, coupled with

aggressive marketing, promotional campaigns and schemes. Every potential customer converted

by a competitor would potentially recommend that competitor to other customers too. This is

especially true in this industry as the newness of the field makes any user with even a month‘s

experience a relative expert for the novices.

6.4 Strategic alliances with ancillary service providers:

Potential customers will look for additional services besides Internet access, such as technical

consulting, training, assistance in seeking information from the Internet, Web site design

services, Internet advertising consultants, and newsletters about Internet resources. It is

nonviable for the ISP to maintain full time staff for all these services that would be required from

time to time. However, these services will be a source of additional significant revenue, for the

ISP and third party service providers it is allied with. Within a year or so of operations, revenue

from this sector would be 25% or more of total revenue.

6.5 Lobbying power with central and state Governments:

Again drawing a parallel with the private airline industry in India, this would be an important

factor for any realistic ISP business plan. Going by track records, the ground rules for the

industry will be changed repeatedly through unilateral policy announcements by various related

Government departments. Like in the airlines, those start-ups who are able to get prior

knowledge of upcoming changes in policy, and have the power to influence these changes, will

have better chance of survival as well as the possibility of eliminating competition. This is a

reality in Indian Telecom that cannot be ignored.

37

Conclusion:

The key factors for success of a Private ISP will be a technical edge, financial capability to

sustain losses over at least two years, high marketing and promotional budgets, strategic

alliances with ancillary service providers, and lobbying power with the central and state

governments.

38

Chapter 7

Strategic Group Mapping

Strategic groups are sets of firms within an industry that share the same or highly similar

competitive attributes. Strategic group maps provide a useful way to identify and assess strategic

groups using selected competitive attributes. Form most managers, significant value is resident in

creating and analyzing strategic groups as an element of their strategy formulation activities.

Main Thoughts:

An insightful way to conduct industry specific analysis is through the identification and

analysis of strategic groups. Strategic groups are sets of firms within an industry that

share the same or highly similar competitive attributes. These attributes include but are

not limited to: pricing practices, level of technology investment and leadership, product

scope and scale capabilities, go-to-market strategy and product quality. By identifying

strategic groups, analysts and managers are better able to understand the different types

of strategies that multiple firms are adopting within the same industry.

Strategic Group Maps

A useful way to analyze strategic groups is through the creation of strategic group maps.

Strategic group maps present the various competitive positions that similar firms occupy

within an industry. Strategic group maps are not difficult to create; however, there are a

few simple guidelines managers want to use when developing them.

Identify Key Competitive Attributes

As mentioned previously, many firms share similar competitive attributes such as pricing

practices and product scope. The first step in developing a strategic group map is to

identify key competitive attributes that logically differentiate firms in a competitive set.

This is not always known in advance of creating the map so it is important to be ready to

create multiple maps using different variables.

39

Create Map Based Upon Two Key Attribute Variables

For the variables selected, assign each variable to the X and Y axis, respectively. Also,

select a logical gradation value for each axis so that differences will be readily

observable. When complete, plot each firm‘s location on the map for the industry being

analyzed. As each firm is plotted use a third variable—such as revenue—to represent the

actual plot size of each firm. Using a variable like revenue helps the reader understand

the relative performance of each firm in terms of the third variable.

Identify Strategic Groups

Once all of the firms have been plotted, enclose each group of firms that emerges in a

shape that reflects the positioning on the strategic group. At this point, assess whether or

not the differences between each group are meaningful or whether other variables must

be selected from which another set of strategic groups can be drawn.

40

Chapter 8

OT Analysis

An OT (Opportunities and Threats) analysis isused to identify where a company shouldplace

them in an industry, wherethey can improve, and what they shouldlook out for from their

competitors.

Each of the four ISP groups to bediscussed (large, small, telco and Cable Company) have their

distinct strengths,weaknesses, opportunities and threats.Some factors, such as

technologicalchange (e.g. the introduction of advancedlocal access mechanisms) will act

asgeneric opportunities or threats to all ISPs.Many others apply to one or more of themain

groups.

8.1 ISP OT Analysis

Opportunities

Relationships with telcos

Mergers with content providers

Buyout

Acquire smaller enterprises

Development of web applications

Threats

Entries of telcos/ cable companies

Some Market Squeeze

Saturation of the market

Fig. 8.1 ISP OT Analysis

41

Opportunities:

There are massiveopportunities in this industry for allcompanies.For large ISPs, relationships

with telcosare becoming manifold. Telcos want to enter the market, and ISPs do not want torun

the risk of losing out to the telcos, somany partnerships arise.

Mergers with content providers are alsooccurring. This is the easiest way for bothtypes of

company to make their way intothe other‘s market.Those who set up an ISP before the ‗gold

rush‘may wish to be bought out.

Example, An acquisition of Infotel (ISP) by Reliance Industries and took part in the

bidding process of 3G spectrum allocation & grab the highest number of spectrum

nationwide.

Therefore, if anISP acquires a number of smallercompanies, its increase in value faroutweighs

the price of the companiesalone. As there are many small companiesthat may wish to be bought

out, there isopportunity here for those that can buythem.

Because large ISPs have the resources andthe know-how, they may wish to developweb

applications as well as new Internettechnologies. Certain applications couldprove to be very

attractive, particularly ifthey were provider-exclusive.There are usually opportunities for

largecompanies to branch out into otherindustries. Large ISPs may wish toconsider related

industries in the generalarea of computing. When moving into arelated area, brand name and

customerbase can be invaluable.

Threats:

The largest threat to large ISPs isthe entry of other established companies, such as telcos and

cable companies intothe market. These companies have goodexperience, may have large

resources, andmay have the ability to buy ISPs out. There is to be some market squeeze,

whichwill result in only those that are providingsomething special surviving. ISPs canmerge,

acquire and partner, but there isstill the threat of losing out in animmensely competitive market.

Eventually the market will becomesaturated. This may not happen for someyears, but small ISPs

that have found aniche will survive, and large ISPs thathave sufficient power will survive

andthere will be no place for others.Large ISPs are in a position now wherethey can grow and

42

make a profit, but thereare still areas in which they can improve,and they are still at a great risk

of losingout to new entrants.

Broadly speaking, ISPs face threats/challenges in four inter-related areas: customer relations,

technology, regulatory framework, and resources

Customer Relations

Volatile customer satisfaction

Customer churn, customer trust

Need for differentiated services

Technology

Integrating ever changing technologies

Delivering new services in real time

Developing and managing rapidly expanding

Infrastructure

Resources

Telcos have more resources

Acquiring capital investment for

Infrastructure

Hiring experienced employees

Regulatory Framework

Censorship of the Internet

Responsibility for content

Possible charges for services such as VOIP

Uncertainty

Fig. 8.2 Threats to ISPs

All four areas are of significant importance.

Customer Relations

From a service point of view, good customer relations are necessary. Theretends to be volatile

customer satisfaction of ISPs, and no matter what technologyand services are available,

customers willnot stay with a provider they aredissatisfied with.

Customer churn is a huge problem, particularly among large ISPs, and can be over 30%. Because

it costs so much towin customers, it is very important that anISP holds on to the customers it has.

Because customer demands are onlytemporarily gratified by new technologies,there is always a

need for new services inorder to keep the customer satisfied.

43

Technology

For obvious reasons, technology is ofsignificance.ISPs have to figure out how to integratethe

available technologies and providethem in a satisfactory way. This is an on-going challenge, as

technologiescontinue to change.

As new services emerge, ISP must come to terms with delivering these in real time.They must

always be aware of thedevelopments and management associatedwith a rapidly expanding

infrastructure.

Resources

Large ISPs, particularly those which are part of another company such as a telco,have large

amounts of capital. Thisgenerally enables them to acquirenecessary resources. Issues such

asupgrading technology may be a hugechallenge to small ISPs who, although they may be

efficient and profitable,cannot afford to make large investments.

Acquiring capital investment for infrastructure will be a great challenge formany ISPs.The lack

of experienced employees mayalso be a problem. In such a new area, itis not surprising that the

number of totallyqualified potential employees is low. Thiswill, of course, change.

Regulation

The intervention of the regulator will raisenew issues and challenges. Because theInternet is so

unregulated, it is hard topredict what effects regulation will have,but it will probably result in

some sort ofcollaboration between ISPs and regulatorsregarding content control and other issues.

Charging above that of today is also likely to result, associated with value-addedservices such as

VoIP.

44

Conclusion:

Opportunities

Relationships with telcos, Mergers with content providers, Buyout, Acquire,

Example, An acquisition of Infotel (ISP) by Reliance Industries and took part in the

bidding process of 3G spectrum allocation & grab the highest number of spectrum

nationwide.

Smaller enterprises, Development of web applications

Threats

Entries of telcos/ cable companies, Some Market Squeeze, Saturation of the market.

Customer Relations

Technology

Resources

Regulation

45

BSNL SWOT Analysis

Bharat Sanchar Nigam Ltd (BSNL), the corporate version of erstwhile DOT, came to existence

on 1st October 2000. Ever since the formation of BSNL, the Indian telecommunications scenario has been

transforming itself into a multi-player, multi-product market with varied market sizes and segments.

Within the basic phone service the value chain has split into Basic services, long distance players, and

international long distance players.

BSNL’s positioning in telecom industry

To understand and suggest – how strategic management can help BSNL – the first thing is to

understand the Telecom industry environment and the stakeholders involved. Apart from

having to cope with the change in structure and culture (government to corporate), BSNL has

had to gear itself to meet competition in various segments – basic services, long distance (LD),

and International Long Distance (ILD), and Internet Service Provision (ISP), and Mobile

services. With the advent of competition the private operators have been impacting the

strategic matrix by influencing regulatory bodies, adopting intelligent media strategies, and by

targeting the creamy layer of customers. While, political control over the public sector remains

a contentious strategic issue in the country; with the formation of a company, the internal

strategy of the BSNL board will be of gaining considerable autonomy. Labour unions are

powerful internal stakeholders, as are the middle managers/ other staff that have the primary

responsibility for customer care. The following stakeholders diagram gives an insight about

the changing telecom industry environment for BSNL

BSNL’s SWOT ANALYSIS

Environment BSNL definitely requires redefining its strategies. What is required is to identify the

potential opportunities and threats implied by this changing environment for the BSNL. In changing

trends, situations, and events gaining an accurate understanding of BSNL‘s strengths and limitations

will help in better strategic management of organization. The SWOT analysis for BSNL is as follows –

46

BSNL – SWOT ANALYSIS

STRENTHS WEAKNESSES

Pan-India reach

Experienced telecom service provider

Total telecom service provider

Huge Resources (financial & technical pool)

Huge customer base

Most trusted telecom brand

Transparency in billing

Easy deployment of new services

Copper in last mile can be used for easy

broadband deployment

Huge Optical Fibre network and associated

bandwidth

Non-optimization of network capabilities

Poor marketing strategy

Bureaucratic organizational set up

Inflexibility in mindset (DOT period legacies)

Limited number of value added services

Poor franchisee network

Legacy of poor service image

Huge and aged manpower

Procedural delays

Lack of strategic alliances

Problems associated with incumbency like

outdated technologies, unproductive rural assets,

social obligations, political interference,

Poor IT penetration within organization

Poor knowledge Management

OPPORTUNITIES THREATS

Tremendous market growing at 20 lac customers

per month

Untapped broadband services

Untouched international market

Can capitalize on public sector image to grab

government‘s ICT initiatives

Diversification of business to turn-key projects

Leveraging the brand image to source funds

Almost un-invaded VSAT market

Fuller utilization of slack resources

Can make a kill through deep penetration and

low cost advantage

Broaden market expected from convergence of

broadcasting, telecom and entertainment

industry

Competition from private operators

Keeping pace with fast technological changes

Market maturity in basic telephone segment

Manpower churning

Multinational eyeing Indian telecom market

Private operators demand for sharing last mile

Decreasing per line revenues due to competitive

pricing

Private operators demand to do away with ADC

can seriously effect revenues

47

Having analysed the external environment and assessed the internal strengths and weaknesses of

BSNL, the key issues can be summarized as follows:

1. Innovative products based on convergent technology in order to acquire dominant market

position. BSNL can achieved by –

Replacement of all the outdated technologies

Redeployment of unutilized capacities should be considered first.

Early deployment of cost effective Wi fi/Wi max Technologies

Migrating to NGN (Soft Switch) on large scales, which will unable seamless integration of

upcoming technologies.

Increasing the capital investment in convergent technologies even if it renders certain in use

technologies redundant.

2. BSNL should initiate Customer Orientation Strategy to retain existing customers as well as

to attract new customers by –

Creating a Service-Oriented culture within the organization by linking incentives to

customer satisfaction.

Introducing flexible Registration Terms so that new customers are attracted.

Promoting/Introducing user-friendly service systems such as Electronic Clearing system,

internet or E-seva for bill payment

Educating the customer about services in detail and respective tariff structure

Introducing service at door-step.

3. Extensive use of IT can not only improve operations but can add to greater customer satisfaction.

Despite being a technology intensive organization IT penetration in BSNL is not commensurate.

Presently, the use of IT in BSNL is restricted to –

DQ (Directory Enquiry), IVRS (Interactive Voice Response System)

Accounting and billing systems

Commercial & Fault Repair System package

Telephone Directory on CD ROM and on the Internet.

4. Shorten the purchase-decision cycle; BSNL should redefine procurement processes to which is

critical in project implementation to any telecom service provider. BSNL should enter in long

48

term supply contract with world-class players to come out of L-1 mantra of tendering process.

This will help BSNL to counter the strategy of its competitors to stall the very procurements of

critical items.

5. BSNL-MTNL merger. Strategic alliance to get pan-India footprints through The

combined operations will also ensure several other sustainable advantages such as

deeper and stronger pockets and greater marketing clout. These synergies would

obviously help BSNL by way of volumes to engage in prolonged tariff wars for a whole

range of value-added services and give private telecom companies a run- for- their

money. The merger of BSNL with MTNL can also give some respite to BSNL by

expanding its resource kitty with which it can fulfill its responsibility of providing rural

connectivity all across the country.

6. Diversification strategy BSNL should have strategic alliance with content providers,

international long distance operators and cable operators as a. Turnkey projects for

providing total solutions to corporates /governments should be undertaken as a business

proposition by entering into partnerships.

7. Marketing strategy needs to be redefined and should focus around Value Added

Services, building strong distribution chain and differential treatment to

premium/corporate customers.

8. Human Resource Management BSNL need to overhaul its Human Resource Management

strategy and should focus on –

Tie up with top business schools in India for training their managers at various levels.

Redeploying its manpower from bigger cities to smaller ones

Coming out with VRS/CRS for manpower above the age of 50.

Creating value through employee motivation and should develop reward and punishment

system

Effective knowledge management within organization

Preventing manpower churning

The VRS/CRS scheme is likely to be opposed by the unions and the implementation may be difficult

in the politicized environment. However, rightsizing the organization is of paramount importance for

the long run interests.

49

9. Restructuring of organizational on business type model BSNL‘s organization

structure still remains more or less functional in structure. The with each

product/segment considered as a separate business will help in

a. Better management

b. Improved segmental efficiencies

c. Improved organizational communication

d. Better performance monitoring

e. Develop focus on revenue

10. Revenue Maximization Strategies: The telecom sector is the most competitive sector post

liberalization. This has resulted in a movement from growth based business model that

emphasized growth in numbers or even ARPU to profit-based model where the success is

measured by margins. BSNL as part of the transition has to adopt both cost reduction and

revenue enhancement measures, which would directly impact profitability. The key concerns for

BSNL for effective revenue realization are –

The delay in customer billing after activation

Time lag between calls generated and billed

Scope of fraud

Non-availability of uniform database.

11. Pricing strategy – Tariff fixation is crucial in a competitive scenario where it is required to offer,

“value based”, top down convergent services are being provided by the competitors instead of

cost based, bottom up pricing. The focus has been on acquiring profitable customers, however,

for BSNL, it is equally important to target the old (by number of years of association) customers

to ensure retention. Revenue figures indicate that ARPU is higher for that category of subscribers.

Loyalty programmes serve as an excellent platform for such strategy. The customers‘ feedback

should be incorporated to assess the attractiveness and economic viability of such programmes. A

successful loyalty programme becomes the driving force in customer relationship management

strategy.

12. Cost Management Strategies: As a result of slow growth in revenues and declining market

share, focus is simultaneously required on cost control measures like –

Integrated financial software is essential for the management to be able to monitor costs.

BSNL‘s liability in terms compulsory operational expenses is very compared to industry

standards, primarily due to excess manpower. Though a high percentage of employees

50

will retire in three years time , however in order to expedite the process, voluntary

retirement schemes have to be introduced.

BSNL is also burdened with legacy technology, which needs to be phased out, and

replaced with cost-effective technology alternatives.

There is need to assess the core competencies of BSNL and outsource the non-core

activities like bill printing, call enter management etc. by transformational cost control.

Summary

BSNL should change its strategy of acting as follower to that of leader. Instead of reacting

to other operators move it should start acting proactively. BSNL should adapt greater

standardization and flexibility in systems. Only then new service rollouts will be faster, and

ideas will be converted into revenue streams. The overall strategy of BSNL can be of

concentrating on the mobile and broadband business in near future and to immediately

phase out loss making businesses like telegraph, VSAT communication etc. BSNL can

leverage on its pan India reach and economies of scale to achieve overall cost leadership. At

the same time capital investments can be made in next generation networks where stress

should be on Wi-Max, content based data service and VOIP. Emphasis on organizational

restructuring coupled with customer orientation and operational efficiency can help BSNL

find place in Asian Telecom market.

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Chapter 9

Major issues confronting industry

Broadband as Key Infrastructure

Broadband should classified as ―Key Infrastructure‖

Income Tax benefits u/s 80(I) (A) should be allowed to ISPs and other licensees

authorized to provide Internet/Broadband.

Cyber café‘/ public kiosks should be exempted from the Service Tax as they are

helping in spreading the usage of Internet Broadband in the places where it is

difficult to afford PC/Internet.

Support from USO Fund

Must be provided to All Operators / Service Providers offering Broadband

Services to Rural Areas;

Limiting the same to voice telephony alone mean higher dependence on

subsidiaries.

Let broadband network offer a cheap voice service to rural people along with

other services/applications.

Bandwidth Prices

International bandwidth and domestic leased lines contribute about 60-70% of the

cost in the provision of Broadband.

Though prices for Int‘l as well as Domestic leased lines came down substantially,

however, it is still high comparing to many countries where broadband penetration is

quite high.

Check on Predatory Polices & Practices

Time to time ISPAI has been taking up the matter with TRAI about the predatory

policies and practices by Incumbent as well as other UASL operators.

52

ISPs should be treated as bulk customers and be given whole sale prices. TRAI

should ensure and keep an eye on the same.

Incumbent and other UASL operators should not deny provision of any resources to

ISPs just because some resources have been provisioned from other service provider.

Internet Telephony - Level Playing Field

ISPs Vs foreign service providers such as Net 2 Phone, Vonage, Dialped, Impetus,

Novanet, Euros, Skype, Yahoo etc are providing I..T. to SMEs, Corporate,BPOs,

Call Centres without having register in India and without any license.

Whereas ISPs providing similar services have to pay 12.36% Service Tax and 6%

AGR.

It is loss of revenue to Govt as well as loss of opportunity for Indian ISPs. It is also

serious security threat to the nation as they do not come under any Indian regulatory/

policy framework. It may not be possible to obtain any data such as CDRs from

them.

Restricted Internet Telephony :

Hurts Consumers and

Government Revenue

Help flourishing Gray Market

Loss of opportunity for legitimate ITSPs

IPTV :

Is not a technology per se, rather it is a value added services which can be

provided on the broadband network.

ISPs are in a position to provide triple play.

Rs. 100 cr. Net worth has kept most of the standalone ISPs out of the business.

53

Accelerating the speed of e-Governance :

Govt. should encourage states to accelerate the pace of e-governance process and

put more and more public utility information and services on the Internet.

Content Development

Broadband infrastructure is meaningless without appropriate content. Govt. (Both

Central & State) should provide more content in the local languages.

Spectrum for Broadband

Spectrum policy favour Voice against Data

ISPs are being neglected which are the major stake holder in Wi-Max and

Wireless Broadband

Auctioning of Spectrum will translate in to increase of prices for Broadband

services in the country which is a price sensitive market.

ISPs will be out of the business.

At least 3 frequency bands must be reserved for ISPs which will help increasing

penetration in the rural areas.

54

Chapter 10

Conclusion

The above has discussed the structure ofthe market, looking at competition,regulation,

introducing its main players,and looking at its trends, both those thatare occurring and those that

look likely toemerge.

Mergers and acquisitions have shown tobe popular methods of growth, both ingeographic terms

and in terms of customerbase. These have been occurring not justamong ISPs, but among many

companiesentering the market. In spite of the largeamount of mergers, the total number ofISPs

has stabilized due to the huge numberof new entrants.

Telcos, cable companies and others haveentered the market, either by mergers andacquisitions,

or by creating ISPs themselves. These companies, amongstothers, are proving to be an

immensethreat to existing ISPs.There has been a tremendous emphasis onvalue-added services

and on content.

Basic services have become commodities and customers are looking for newservices to add

value. ISPs securing dealswith popular entertainment andinformation companies will have a

greatadvantage in winning customers.

Additional offerings such as quality of service, bundled services, banking, e-commerceetc. are

also becomingattractive to customers.There is a clear change of strategy bothwithin an ISP and

between ISPs.

Pricing models are changing, as are service offerings. It is predicted that many companies may

wish to specialize in onepart of the market rather than trying toprovide everything involved with

serviceprovision.

Between ISPs, agreements regarding carriage of traffic have arisen due to thebreakdown of the

NAPs. Theseagreements will convenience somecompanies, but may put others at adisadvantage.

55

All in all, Internet service provision is an extremely complex and dynamic area anddetailed

investigation of any part of it is beyond the scope of this report.

56

APPENDIX

STATISTICS

ISP Market Share (as on mar '10) BSNL 56.76 MTNL 14.29

Bharti Airtel Ltd. 8.07 Reliance Commn. Infra. Ltd. 7.56

Hathway Cable & Datacom Pvt. Ltd. 1.94

Growth of Internet Subscribers Including Broadband

Year Subscribers (in lakhs) Growth (%) Mar-03 36

Mar-04 45 25 Mar-05 56.5 26 Mar-06 69.4 23 Mar-07 92.71 34 Mar-08 110.09 20 Mar-09 135.4 22 Jun-09 140.5 4 Sept-09 146.3 4 Dec-09 152.4 4.21 Mar-10 161.8 6.17

Internet Subscribers Technology wise

Type As on Mar'10 DSL 48.98%

Cable Modem 4.39% Leased Line 0.19% Ethernet LAN 3.74%

Fibre 0.22%

Radio 6.88%

Dialup 35.32%

Others 0.27%

1

Government of India

Ministry of Communications & IT

Department of Telecommunications

Sanchar Bhavan, New Delhi

No.820-1/2006-LR Dated: 24th

Aug, 2007

GUIDELINES AND GENERAL INFORMATION FOR GRANT OF LICENCE

FOR OPERATING INTERNET SERVICES.

Internet service sector was opened for private participation in 1998 with a view to

encourage growth of Internet and increase its penetration. The sector has seen

tremendous technological advancement for a period of time and has necessitated

taking steps to facilitate technological ingenuity and provision of various services.

The Government in the public interest in general, and consumer interest in particular,

and for proper conduct of telegraph and telecom services has decided to issue the

following new guidelines for grant of licence of Internet services on non-exclusive

basis with immediate effect:

1. The applicant must be an Indian company, registered under the Indian Companies

Act’1956.

2. The applicant company shall submit the application in duplicate in the prescribed

Application form enclosed as (Annex-I), for each Service Area separately.

3. The applicant company can apply for Licence in more than one service area

subject to fulfillment of all the conditions of entry.

4. The applicant company shall pay a processing fee along with the application (Two

copies) of Rs. 15,000/- in the form of Demand Draft/Pay Order from a Schedule

Bank payable at New Delhi issued in the name of Pay and Accounts Officer (HQ),

2

DOT , Sanchar Bhawan, New Delhi and the same shall not be refunded for any

reason whatsoever.

5. SERVICE AREA :

For the purpose of licence, the country has been divided into separate service

areas in two categories as mentioned below:

Category A: This covers the territorial jurisdiction of the Union of India except

specified areas that may be notified to be excluded from time to time.

Category B: Any of the twenty three territorial service areas as per Annex-II.

6. There shall be no limit on number of Licences that can be granted in a particular

service area.

7. Foreign Direct Investment (FDI):

(i) FDI ceiling in the Licensee Company shall be 74%.

(ii) Both direct and indirect foreign investment in the licensee company shall

be counted for the purpose of FDI ceiling. Foreign Investment shall

include investment by Foreign Institutional Investors (FIIs), Non-resident

Indians (NRIs), Foreign Currency Convertible Bonds (FCCBs), American

Depository Receipts (ADRs), Global Depository Receipts (GDRs) and

convertible preference shares held by foreign entity. Indirect foreign

investment shall mean foreign investment in the company/ companies

holding shares of the licensee company and their holding

company/companies or legal entity (such as mutual funds, trusts) on

proportionate basis. Shares of the licensee company held by Indian public

sector banks and Indian public sector financial institutions will be treated

3

as `Indian holding’. In any case, the `Indian’ shareholding will not be less

than 26 percent.

(iii) FDI up to 49 percent will continue to be on the automatic route. FDI in the

licensee company/Indian promoters/investment companies including their

holding companies, shall require approval of the Foreign Investment

Promotion Board (FIPB) if it has a bearing on the overall ceiling of 74

percent. While approving the investment proposals, FIPB shall take note

that investment is not coming from countries of concern and/or unfriendly

entities.

(iv) The investment approval by FIPB shall envisage the conditionality that

Company would adhere to licence Agreement.

(v) FDI shall be subject to laws of India and not the laws of the foreign

country/countries.

8. Security Conditions:

(i) The Chief Officer In charge of technical network operations and the Chief

Security Officer should be a resident Indian citizen.

(ii) Details of infrastructure/network diagram (technical details of the network)

could be provided on a need basis only to telecom equipment

suppliers/manufacturers and the affiliate/parents of the licensee company.

Clearance from the Licensor (Department of Telecommunications,

Government of India) would be required if such information is to be

provided to anybody else.

(iii) For security reasons, domestic traffic of such entities as may be identified

/specified by the licensor shall not be hauled / routed to any place outside

India.

4

(iv) The licensee company shall take adequate and timely measures to ensure

that the information transacted through a network by the subscribers is

secure and protected.

(v) The officers/officials of the licensee companies dealing with the lawful

interception of messages will be resident Indian citizens.

(vi) The majority Directors on the Board of the company shall be Indian

citizens.

(vii) The positions of the Chairman, Managing Director, Chief Executive

Officer (CEO) and/or Chief Financial Officer (CFO), if held by foreign

nationals, would require to be security vetted by Ministry of Home Affairs

(MHA). Security vetting shall be required periodically on yearly basis. In

case something adverse is found during the security vetting, the direction

of MHA shall be binding on the licensee.

(viii) The Company shall not transfer the following to any person/place outside

India:-

(a) Any accounting information relating to subscriber (except for

international roaming/billing) (Note: it does not restrict a statutorily

required disclosure of financial nature) ; and

(b) User information (except pertaining to foreign subscribers using Indian

Operator’s network while roaming).

(ix) The Company must provide traceable identity of their subscribers.

However, in case of providing service to roaming subscriber of foreign

Companies, the Indian Company shall endeavour to obtain traceable

identity of roaming subscribers from the foreign company as a part of its

roaming agreement.

5

(x) On request of the licensor or any other agency authorised by the licensor,

the telecom service provider should be able to provide the geographical

location of any subscriber (BTS location of wireless subscriber) at a given

point of time.

(xi) The Remote Access (RA) to Network would be provided only to approved

location(s) abroad through approved location(s) in India. The approval for

location(s) would be given by the Licensor (DOT) in consultation with the

Security Agencies (IB).

(xii) Under no circumstances, should any RA to the suppliers/manufacturers

and affiliate(s) be enabled to access Lawful Interception System(LIS),

Lawful Interception Monitoring(LIM), Call contents of the traffic and any

such sensitive sector/data, which the licensor may notify from time to

time.

(xiii) The licensee company is not allowed to use remote access facility for

monitoring of content.

(xiv) Suitable technical device should be made available at Indian end to the

designated security agency/licensor in which a mirror image of the remote

access information is available on line for monitoring purposes.

(xv) Complete audit trail of the remote access activities pertaining to the

network operated in India should be maintained for a period of six months

and provided on request to the licensor or any other agency authorised by

the licensor.

(xvi) The telecom service providers should ensure that necessary provision

(hardware/software) is available in their equipment for doing the Lawful

interception and monitoring from a centralized location.

6

(xvii) The telecom service providers should familiarize/train Vigilance Technical

Monitoring (VTM)/security agency officers/officials in respect of relevant

operations/features of their systems.

(xviii) It shall be open to the licensor to restrict the Licensee Company from

operating in any sensitive area from the National Security angle.

(xix) In order to maintain the privacy of voice and data, monitoring shall only be

upon authorisation by the Union Home Secretary or Home Secretaries of

the States/Union Territories.

(xx) For monitoring traffic, the licensee company shall provide access of their

network and other facilities as well as to books of accounts to the security

agencies.

(xxi) In case of other service providers, the bandwidth can be provided only to

registered Other Service Providers.

9. The one time entry fee of Rs. 20 lakhs for Category-A Internet Service Licence &

Rs. 10 lakhs for Category-B Internet Service Licence is to be paid before signing

of the licence agreement.

10. An annual licence fee @6% of Adjusted Gross Revenue (AGR) subject to

minimum of Rs.50,000/- (Rupees Fifty Thousand Only) and Rs.10,000/- (Rupees

Ten Thousand Only) shall be charged for category A & B service areas

respectively per annum per licenced service area. The revenues accrued from pure

Internet services will be excluded from the definition of AGR for the purpose of

computing licence fee.

11. A Financial Bank Guarantee (FBG) of Rs. Ten Lakh for Category ‘A’ Service

Area Licence and Rs. One Lakh for Category ‘B’ Service Area Licence, valid for

one year, is to be provided before signing of the licence agreement (in prescribed

7

format) (Annex-III). Based on AGR, the amount of FBG shall be reviewed

annually by the Licensor.

12. A Performance Bank Guarantee (PBG) of Rs. Two crore for Category ‘A’ and

Rs. Twenty Lakh for each Category ‘B’ service area valid for two years from any

scheduled bank in the prescribed form (Annex-IV).

13. SCOPE OF SERVICE:

Following services can be provided within the scope of Licence for Internet

Service :

(i) Internet Access: Internet Access is use of any device/ technology/

methodology to provide access to Internet including IPTV. However, the

content for IPTV shall be regulated as per prevailing laws.

(ii) Internet Telephony: Internet Telephony is a service to process and carry

voice signals offered through Public Internet by the use of Personal

Computers (PC) or IP based Customer Premises Equipment (CPE)

connecting the following :

(a) PC to PC; within or outside India

(b) PC / a device / Adapter conforming to standard of any international

agencies like- ITU or IETF etc. in India to PSTN/PLMN abroad.

(c) Any device / Adapter conforming to standards of International

agencies like ITU, IETF etc. connected to ISP node with static IP

address to similar device / Adapter; within or outside India.

(d) Internet Telephony is a different service in its scope, nature and kind

from real time voice as offered by other licensed operators like Basic

Service Operator (BSO), Cellular Mobile Service Operator (CMSO),

Unified Access Service Licence (UASL), National Long Distance

8

Operator(NLDO), International Long Distance Operator (ILDO) and

Public Mobile Radio Trunk Service (PMRTS).

(iii) Except whatever is described in condition (ii) above, no other form of

Internet Telephony is permitted.

(iv) Addressing scheme for Internet Telephony shall only conform to IP

addressing Scheme of Internet Assigned Numbers Authority (IANA)

exclusive of National Numbering Scheme / plan applicable to subscribers

of Basic / Cellular Telephone service. Translation of E.164 number /

private number to IP address allotted to any device and vice versa, by the

licensee to show compliance with IANA numbering scheme is not

permitted.

(v) The Internet Service Licensee is not permitted to have PSTN/PLMN

connectivity. Voice communication to and from a telephone connected to

PSTN/PLMN and following E.164 numbering is prohibited in India.

(vi) Unified Messaging Services (UMS) without any additional PBG within the

scope of (i) to (ii) above can be provided.

(vii) The Licensee shall ensure that Bulk Encryption is not deployed by ISPs

connecting to Landing Station. Further, Individuals/Groups/Organizations

are permitted to use encryption upto 40 bit key length in the symmetric

key algorithms or its equivalent in other algorithms without having to

obtain permission from the Licensor. However, if encryption equipments

higher than this limit are to be deployed, individuals/groups/organizations

shall do so with the prior written permission of the Licensor and deposit

the decryption key, split into two parts, with the Licensor.

9

(viii) Internet Service to any VSAT subscriber (who could be served by a shared

hub commercial service provider or captive private VSAT network) can be

provided, if the VSAT is located within the service area of the ISP. For

this purpose, a direct interconnection of VSAT or VSAT-hub through

leased line obtained from an authorised provider to the ISP’s node/server

shall be permitted only for the flow of Internet traffic. The existing licence

for Closed Users Group Domestic (CUG) / Domestic Data Network via

INSAT Satellite Systems does not grant long distance carrier rights to the

licensee. The ISP shall provide to the Licensor a monthly statement of

VSAT subscribers served with their locations and details of leased line

interconnection with the VSAT hub. The VSAT hub, however, need not be

located in the service area of the ISP.

14. The licensee shall provide service within 24 months from the date of signing of

the licence agreement. Commissioning of service will mean providing

commercial service to customers.

15. The company having ISP licence and a net worth of Rs. One Hundered crore or

more can only offer IPTV services subject to approval from Licensor. A

certificate from Company Secretary or Auditor (certifying the net worth of the

company) is to be submitted.

16. Appointment of franchisee (directly or indirectly) outside licensed service area is

not permitted.

17. For the purpose of providing the SERVICE, the licensee shall install, test and

commission his own suitable equipment within the geographical limit of the

service area so as to be compatible with the other service providers’ equipment

10

and connect the same to a Gateway owned by a Licensed Internet Gateway

Provider / ILDO for routing International Internet Traffic. ISPs are also allowed to

set up International Internet Gateway after obtaining security clearance/approval

from Authority. ILDOs and International Internet gateway providers providing

International Internet bandwidth to ISPs has to install suitable device/devices for

blocking of Uniform Resource Locator (URL).

18. Operation of Internet service requires IP address which can have up to 128 bit

binary address or higher in future. This address is required for connection on

Internet. Typically, it is required for the ports of the routers, other ISP equipments

for the lease line connection and for the user end equipments / devices.

19. All subscribers except dial up subscribers have to be within the service area.

20. Direct interconnectivity between two separately licensed ISPs shall be permitted.

21. The licensee may obtain the transmission link on lease from any licensed service

provider. If the LICENSEE has in addition, leased or rented other

telecommunication resources from any other Telecom Service Provider authorized

by the Government of India, purely for the purposes of providing the service and

networking its geographically dispersed equipment, such resources will be a

matter between the ISP and the service provider(s). The licensee may also

establish its own transmission links within its service area for carrying traffic

originated and terminated by the subscriber.

22. Resources required for interconnecting the licensee’s network to the network of

upstream internet access providers or any other service provider licensed by the

Authority including time frame for provision of the same, will be mutually agreed

between the parties concerned subject to regulation / directions / orders of TRAI /

Licensor. The resources may refer to include but not limited to physical junctions,

11

PCM derived channels, private wires, leased lines, data circuits other network

elements. The licensee shall apply for and obtain the network resources from the

concerned parties. The tariff of such network is outside the scope of this licence

agreement. Licensor will have no obligation for such resources from other parties.

23. The validity of licence is initially for a period of fifteen years unless otherwise

terminated. If requested by the licensee, extension may be granted by the

LICENSOR on suitable terms and conditions for a period of five years or more at

a time. The decision of the LICENSOR shall be final in this regard.

24. Access to internet through authorised Cable Operator shall be permitted to ISPs

without additional licensing subject to applicable Cable Laws (The Cable

Television Networks (Regulation) Act, 1995) as modified from time to time.

25. ‘Last mile’ linkages shall be freely permitted within local area either by fibre optic

or radio communication or underground copper cable for ISPs. In case of radio

links, clearance from WPC wing of the DOT shall be required to be obtained by

the ISPs.

26. The quality of service shall be as prescribed by TRAI/ Licensor from time to time.

27. Flow of obscene, objectionable, unauthorised or any other content infringing

copy-rights, intellectual property right and international & domestic Cyber laws in

any form over the ISP’s network is not permitted and the ISP is supposed to take

such measures as to prevent it. Any damages/claim arising out of default on the

part of the licensee in this respect shall be the sole responsibility of the licensee.

28. The ISP should make available all the billing details of any subscriber on demand

by Licensor for upto one year.

29. Monitoring facilities.

12

(a) At each - International Gateway location and / or ISP node with a

router/switch having an outbound capacity of 2 Mbps or more:

(i) Every international gateway location and/or the ISP node with a

router/switch having a capacity of 2 Mbps or more shall be equipped with

a monitoring Centre at the cost of the ISP. Suitable appropriate monitoring

system is to be set up by ISPs carrying traffic through their Internet

gateways and /or ISP nodes at their own cost, as per the requirement of the

security agencies and the cost of maintenance of the monitoring equipment

and infrastructure at the monitoring centre located at the premises of the

licensee shall be borne by the ISP.

(ii) Office space of 10 feet x 10 feet with adequate uninterrupted power supply

and air-conditioning which will be physically secured and accessible only

to the monitoring agencies will have to be provided by the ISP at each

location, free of cost.

(iii) In addition to the equipment, one local exclusive telephone line is to be

made available by the ISP at the monitoring centered, the cost to be borne

by the ISPs.

(iv) The cost of maintenance of the equipment and infrastructure mentioned

above at monitoring centre located at the premises of the ISP is to be borne

by the ISP.

(v) Each router/switch of the ISP should be connected by the LAN operating

at the same speed as the router/switch, the monitoring equipment will be

connected to this network.

(vi) For a national ISP or an ISP having multiple nodes/point of presence, a

central monitoring centre to monitor the traffic in all the Routers/switches

from a central location would be acceptable. However, in such a case, the

ISP has, at the outset, to demonstrate to the Licensor that all routers /

switches are accessible from the central monitoring centre. Moreover, the

ISPs would have to inform the Licensor of any change that takes place in

their topology /configuration, and demonstrate that all routers/switches

continue to be accessible from the central monitoring centre. The decision

of Licensor will be final on the issue.

13

(b) At location where the ISP node router/switch has an outbound capacity

less than 2 Mbps :

At locations where the ISP node has router/switch with outbound capacity less

than 2 Mbps, the ISPs shall provide (i) a LAN, (ii) office space of 10 feet by 10

feet and (iii) a local exclusive telephone line, all at the cost of the ISP. The

monitoring equipment will be provided by the monitoring/ security agencies.

30. LICENSOR shall have the right to take over the SERVICE, equipment and

networks of the LICENSEE either in part or in whole of the Service Area as per

directions if any, issued in the public interest or national security by the

Government in case of emergency or war or low intensity conflict or any other

eventuality. Provided any specific orders or direction from the Government issued

under such conditions shall be applicable to the LICENSEE and shall be strictly

complied with.

31. The Government reserve the right not to grant a Licence without assigning any

reason.

32. It will be the responsibility of the licensee to obtain IP address, domain name etc.

from the competent authority.

33. The Licensor or personnel authorized by the Licensor reserves the right to carry

out surprise inspection.

34. The ISP licensee shall block Internet sites and individual subscribers, as identified

by Licensor.

35. The LICENSOR reserves the right to modify at any time the these guidelines and

terms and conditions of the LICENCE, if in the opinion of the LICENSOR it is

necessary or expedient to do so in public interest or in the interest of the security

14

of the State or for the proper conduct of the telegraphs. The decision of the

LICENSOR shall be final and binding in this regard.

36. All existing Category ‘C’ ISPs are encouraged to migrate to Category ‘B’ or

Category ‘A’ by providing additional FBG and PBG. In case they do not migrate,

they will be allowed to continue in Category ‘C’ till the expiry of the existing

licence which will not be renewed in Category ‘C’.

37. The entry fee is not applicable to existing ISPs.

38. The surrender of Licence shall be governed as detailed below:

(a) All ISPs who have completed the allocated period to roll out Internet

services counted from the date of issue of the ISP license and have not

yet rolled out their services have option to surrender the license paying

5% of PBG as surrender charge within six months of such notification.

(b) All ISPs who have not rolled out services and want to surrender ISP

licenses may be permitted to do so within six months form date of such

notification by paying 2.5% of PBG as surrender charges provided

they have not yet completed allocated period for roll out of services.

(c) All ISPs who have already started Internet services and want to

surrender ISP license will be permitted to do so without any surrender

charges provided it gives due notice to its subscribers.

39. The Licence shall be governed by the provision of Indian Telegraph Act, 1885,

Indian Wireless Telegraphy Act, 1933 and Telecom Regulatory Authority of India

Act, 1997 as modified or replaced from time to time.

40. The detailed terms & conditions will be available in the draft Licence Agreement.

41. International Gateway for Internet using Satellite Medium

15

(a) An ISP can set up International Gateway Station using satellite medium for

Internet with prior approval of the Licensor by applying in the prescribed form

as per Annex-V with a processing fees of Rs. Forty Thousand payable to Pay

and Accounts Officer (HQ), DOT, Sanchar Bhavan, New Delhi.

(b) The ISP has to apply to the Licensor for bandwidth (transponder capacity in

case of satellite access) giving the detailed requirement. (both short term and

long term).

(c) Gateway will be used only for carrying Internet Traffic.

(d) The ISP should provide information about all ISPs that would be connected to

the gateway. Any change should be intimated immediately to the Licensor.

(e) The details of the topology should be provided including the details of how

the monitoring equipment will be fitted. Any change in the topology should be

informed to the Licensor immediately.

(f) Details of types of services that are proposed to be provided should be given.

Any change in the same should be informed to the Licensor immediately.

(g) The permission to set up Gateway is subject to other clearances/permissions

that are required as per the laws of the land and it will be the responsibility of

the licensee/company to obtain these clearances/permissions.

(h) Gateway shall be permitted to be set up in security sensitive areas subject to

setting up of appropriate monitoring equipments by the security agencies and

appropriate charges to be paid by licensee towards monitoring equipments or

setting up of monitoring equipment. As on date the security sensitive areas

are Punjab, J&K, North Eastern States, border areas of Rajasthan, Andaman &

Nicobar Islands and coastal areas of Gujarat and Tamilnadu (excluding

Chennai).

16

(i) The Internet nodes on places of security importance would be routed as per

directions issued from time to time by Licensor. Interconnection of these

nodes to other nodes within the country directly is not permitted.

42. Submarine Cable Landing Station For International Gateway For Internet

(i) An ISP is permitted to set up, maintain and operate submarine cable

landing station for international gateway for Internet with the prior

approval of the Licensor by applying in a prescribed format at Annex-VI

with a processing fee of Rs.Fifty Thousand. The landing Station is the first

point at which the submarine cable is terminated/connected in India.

(ii) The Landing Station for International Gateway for Internet shall be used

only for carrying Internet traffic.

(iii) The Landing Station configuration shall be strictly and exactly as per the

details provided in the prescribed application. Any variation to that shall

only be with the prior written permission of the Licensor.

(iv) Any information that is asked by the Licensor from the licensee shall be

provided forthwith by it and in any case, not later than 15 days of asking

for the same.

(v) All other applicable clearances/ permissions that are required as per the

laws of the land, shall be obtained by the ISP licensee.

(vi) The ISP shall provide information about all ISPs that would be connected

to the Landing Station. Any addition shall be with the prior written

permission of the Telecom. Authority.

(vii) Any change or addition in the network topology of Landing Station shall

be done only with the prior written permission of the Licensor.

17

(viii) Any change or addition in the type of services offered shall be with the

prior written permission of the Licensor.

(ix) Landing Station shall be permitted to be set up in security sensitive areas

subject to setting up of appropriate monitoring equipments by the security

agencies and appropriate charges to be paid by licensee towards

monitoring equipments or setting up of monitoring equipment. As on date

the security sensitive areas are Punjab, J&K, North Eastern States, border

areas of Rajasthan, Andaman & Nicobar Islands and coastal areas of

Gujarat and Tamilnadu (excluding Chennai).

(x) In case of any complaint or dispute with regard to the resource

(bandwidth) from the Submarine Cable or from any subscriber regarding

service, such complaint or dispute shall be a matter between the licensee

and the bandwidth provider/the subscriber. The licensor shall not be party

to any such complaint/dispute. The licensee undertakes to indemnify

licensor in respect of any action against licensor for acts of commission or

omission by or on the part of the resource (bandwidth) provider, licensee,

its agents and servants.

(xi) The licensee shall ensure that the Landing Station does not interfere with

any other existing systems of any telecom service provider.

(xii) The Landing Station shall be located within 100 km from the sea shore.

(xiii) It should be possible to effectively monitor the traffic at the Landing

Station from the national security point of view. The requirements would

include, but not limited to:

(a) Monitoring from the security angle – On-line and off-line (capture,

store and retrieve) monitoring of all classes of traffic (data, video,

18

audio etc.) specified by various attributes viz. destination, recipient,

sender, key words etc.

(b) Good quality intrusion detection system to ensure that the landing

Station (link) does not become a launch pad for attacking sites within

India.

(xiv) Agencies authorized by the Government shall be entitled and enabled to

monitor all types of traffic passed through the landing Station, including

data, FAX, speech, video and Multi-media etc., both in interactive and

non-interactive modes.

(xv) The monitoring should be possible on the basis of key words/key

expressions/addresses (IP address or e-mail address) of initiating or

terminating subscribers.

(xvi) It should be possible to scan through entire traffic passing through the

gateway and filter the traffic as per the key words/key expressions and

addresses defined by the security agencies. The scanning rate should be

such that there should not be any packet drops while scanning. Filtered

traffic should be stored in the memory/directory provided for the security

agencies, which have defined the monitoring requirement. Before storing

the monitored information, it should be segregated and stored in the

directory in different files. The filtered information must be decoded and

stored in such a way that direct hard copy of FAX and data or audio/video

tapes of the speech/video recording could be produced. Log of recorded

information for each agency must be created in the directory of the agency

concerned displaying the details like date and time of recording, number of

record etc.

19

(xvii) Each and every of the security agency shall be provided with adequate and

dedicated space, memory, directory and storage in the Monitoring system.

(xviii) It should be possible for the monitoring agencies to access the monitoring

centre computer through PSTN/ISDN line and dedicated lines (Cable pair

or Optical link). Adequate number of all types of interfaces should be

provided at the monitoring centre to facilitate remote and dedicated access

by the security agencies.

(xix) Remote Accessing/Log-in facility for security agencies should be through

fully secured unique password. Each agency must have different password.

The access password should be re-definable (changeable) by security

agency concerned.

(xx) It should be possible to monitor the same traffic by more than one security

agency simultaneously. However, no agency should know the traffic being

monitored by other agencies.

(xxi) Office space of 20 feet x 20 feet with adequate uninterrupted power supply

and air-conditioning which will be physically secured and accessible only

to the personnel authorized by Telecom. Authority, shall be provided by

the licensee at each location, free of cost.

(xxii) The installation of the monitoring system at the Landing Station is to be

done by the ISP licensee. After installation of the monitoring system, the

ISP licensee should get the same inspected by monitoring/security

agencies. The permission to operate/commission the gateway will be given

only after this.

20

(xxiii) The total cost of the monitoring system including its commissioning and

maintenance including infrastructure at the premises of the licensee shall

be borne by the licensee.

(xxiv) ISPs should provide the monitoring software, if specially, developed for

monitoring traffic at cable landing terminal, to the security agencies free of

cost.

(xxv) In addition to the equipment, one local exclusive telephone line shall be

made available by the licensee at the monitoring centre, at the cost of the

licensee.

(xxvi) The licensee shall provide all technical details of and access to various

equipment, including hardware, software and communications equipment,

when demanded by the Telecom. Authority.

(xxvii) Towards the administrative cost for performing monitoring function, a

contribution of Rs. 20 (Twenty) lakhs per annum per Landing Station will

be made by the ISP licensee.

(xxviii)Training shall be provided at the cost of licensee to the security personnel

on the equipment installed at the Landing Station.

(xxix) A terminal of the NMS, with full access rights will be given to the

monitoring agencies. (It is presumed that the landing Station would have a

state of the art network management system which can monitor/manage

the network effectively.)

(xxx) The Licensor shall have all rights to monitor the traffic that goes through

the Landing Station. The licensee shall ensure that the bandwidth provider

(eg: Submarine Cable company) gives the complete monitoring rights to

the Licensor. Also the licensee has to get the assurance from the

21

bandwidth provider that it shall co-operate with the Licensor and also

provide any information requested by the Licensor including but not

limited to the aforesaid issue of monitoring.

(xxxi) Any attempted intrusion that comes to the notice of the licensee should be

immediately reported to the Licensor.

(xxxii) A suitable monitoring equipment/system to cater to the above mentioned

user requirements should be given. Complete and detailed network

diagram including the monitoring set up should be clearly indicated. The

licensee shall be able to demonstrate the efficacy of the monitoring

equipment.

(K. Haridhasapavalan)

Assistant Director General(LR-I)

For and on behalf of the President of India

22

Annex-I

GOVERNMENT OF INDIA

MINISTRY OF COMMUNICATIONS

DEPARTMENT OF TELECOM

(DS CELL)

Sanchar Bhavan, 20 Ashoka Road, New Delhi –110 001.

APPLICATION FOR ISP LICENCE

The Application form should contain complete information on each and every point.

Additional sheets may be added, if required. Incomplete application or application with

conditional compliance shall be summarily rejected.

1 Application for the Service Area:

(Separate application is to be

submitted for each service area)

--------------------------------------------------

2 Name of other service area(s) for

which application has been

submitted separately.(Attach

separate sheet, if required).

1. -----------------------------------------------

2. -----------------------------------------------

3. -----------------------------------------------

4. -----------------------------------------------

3. Name of Applicant Company: ----------------------------------------------------------

----------------------------------------------------------

----------------------------------------------------------

4. Complete postal address with

telephone/FAX Nos.

i) Corporate Office: --------------------------------------------------------

--------------------------------------------------------

--------------------------------------------------------

--------------------------------------------------------

ii) Registered Office: --------------------------------------------------------

--------------------------------------------------------

--------------------------------------------------------

--------------------------------------------------------

5. Address for correspondence

with Telephone/FAX Nos.

--------------------------------------------------------

--------------------------------------------------------

6. Name of Authorised contact

person, his designation and

telephone/FAX Nos.

--------------------------------------------------------

--------------------------------------------------------

--------------------------------------------------------

7. Details of Payment of Processing

Fee

--------------------------------------------------------

--------------------------------------------------------

--------------------------------------------------------

8. Certified copy of Certificate of

Registration duly certified by the

Registrar of Companies. (Please

enclose as Annexure)

23

9. Promoters/Partners in the

Company:

(details of equity holding)

S. No. Name of Promoter/Partner Indian/

Foreign

Equity % age

------ ---------------------------------------- --------------- ---------

------ ---------------------------------------- --------------- ---------

------ ---------------------------------------- --------------- ---------

------ ---------------------------------------- --------------- ---------

------ ---------------------------------------- --------------- ---------

Total Indian Equity (%age)

Total Foreign Equity (%age)

10. Details of FIPB Clearance, if

applicable

11. List of Telecom Service License(s) held by the company and its allied /sister

concerns, if any, and their present status. (Attach separate sheet, if required)

(i)

----------------------------------------------------------------------------------------

(ii)

----------------------------------------------------------------------------------------

(iii)

----------------------------------------------------------------------------------------

(iv)

----------------------------------------------------------------------------------------

12. Resolution of Board of

Directors/other proof that the

person signing the application

is authorised signatory.

(Enclose as Annexure )

24

Certificates:-

1. I hereby certify that I have carefully read the guidelines and draft Licence on Internet

Service. I fully comply with the terms and conditions therein.

2. I understand that this application, if found incomplete in any respect and/or if found with

conditional compliance or not accompanied with the processing fee, shall be summarily

rejected.

3. I understand that processing fee is non-refundable irrespective of whether or not the

licence is granted to me.

4. I undertake to sign the Licence Agreement, a draft of which has been supplied to me

within the prescribed time notified to me, failing which my application shall be rejected

and processing fee forfeited.

5. I understand that all matters relating to the application or licence if granted to me will be

subject to jurisdiction of courts in Delhi/New Delhi only.

*6. (a) I certify that none of the companies mentioned in Item 11 of the

application form are in default of the conditions of licence granted under

Section 4 of Indian Telegraph Act, 1885.

(b) I certify that the companies mentioned in Item 11 of this application form

are in default as on today of the conditions mentioned separately on attached

sheet of paper, of licence granted under Section 4 of Indian Telegraph Act,

1885.

*- strike (a or b) whichever is not applicable

7. I understand that such companies and their allied or sister concerns who have failed to

carry out the contractual obligations with regard to other Telecom Service Licences

granted under Section 4 of Indian Telegraph Act, 1885 shall be granted ISP licence on the

condition that any decision with regard to said default or breach whenever taken at the

discretion of the Central Government will be applicable in all respects to me.

8. I understand that if at any time any averments made or information furnished for

obtaining the licence is found incorrect, my application shall be liable to be rejected and

any licence granted on the basis of this application shall be liable for termination.

Date

Place

Signature and name of the

Authorised Signatory

(Company’s Seal)

25

Annex-II Details of Category ‘B’ Service Areas

Sl. No. Name of

Telecom Circle/ Metro

Service Area

Areas covered

01. West Bengal Entire area falling within the Union Territory of Andaman & Nicobar Islands and area falling within the State of West Bengal and the State of Sikkim excluding the areas covered by Kolkata Metro Service Area.

02. Andhra Pradesh Entire area falling within the State of Andhra Pradesh.

03. Assam Entire area falling within the State of Assam.

04. Bihar Entire area falling within the re-organised State of Bihar and newly created State of Jharkhand pursuant to the Bihar Reorganisation Act, 2000 (No.30 of 2000) dated 25th August, 2000.

05. Gujarat Entire area falling within the State of Gujarat and Union Territory of Daman and Diu, Silvassa (Dadra & Nagar Haveli).

06. Haryana Entire area falling within the State of Haryana except the local areas served by Faridabad and Gurgaon Telephone exchanges.

07. Himachal Pradesh Entire area falling within the State of Himachal Pradesh

08. Jammu & Kashmir Entire area falling within the State of Jammu & Kashmir including the autonomous council of Ladakh.

09. Karnataka Entire area falling within the State of Karnataka

10. Kerala Entire area falling within the State of Kerala and Union Territory of Lakshadeep and Minicoy.

11. Madhya Pradesh Entire area falling within the re-organised State of Madhya Pradesh as well as the newly created State of Chattisgarh pursuant to the Madhya Pradesh Reorganisation Act, 2000 (No:28 of 2000) dated 25th August, 2000.

12. Maharashtra Entire area falling within the States of Maharashtra and Goa, excluding areas covered by Mumbai Metro Service Area.

13. North East Entire area falling within the States of Arunachal Pradesh, Meghalaya, Mizoram, Nagaland, Manipur and Tripura.

14. Orissa Entire area falling within the State of Orissa.

15. Punjab Entire area falling within the State of Punjab and Union territory of Chandigarh.

16. Rajasthan Entire area falling within the State of Rajasthan.

26

17. Tamilnadu Entire area falling within the State of Tamilnadu and Union Territory of Pondichery excluding the areas covered by Chennai Metro Service Area.

18. Uttar Pradesh-West Entire area covered by Western Uttar Pradesh with the following as its boundary districts towards Eastern Uttar Pradesh : Pilibhit, Bareilly, Badaun, Etah, Mainpuri and Etawah. It will exclude the local telephone area of Ghaziabad and Noida. However, it will also include the newly created State of Uttaranchal pursuant to the Uttar Pradesh Re-organisation Act, 2000 (No.29 of 2000) dated 25th August, 2000.

19. Uttar Pradesh _ East

Entire area covered by Eastern Uttar Pradesh with the following as its boundary districts towards Western Uttar Pradesh: Shahjahanpur, Farrukhabad, Kanpur and Jalaun.

20. Chennai Local Areas served by Chennai Telephones, Maraimalai Nagar Export Promotion Zone (MPEZ), Minzur and Mahabalipuram Exchanges

21. Delhi Local Areas served by Delhi, Ghaziabad, Faridabad, Noida, and Gurgaon Telephone Exchanges

22. Kolkata Local Areas served by Calcutta Telephones.

23. Mumbai Local Areas served by Mumbai, New Mumbai and Kalyan Telephone Exchanges

NOTE: 1. Yenum, an area of Union Territory of Pondicherry is served under Andhra

Pradesh Telecom Circle in East Godavari LDCA. 2. The definition of Local areas of exchanges will be as applicable to the existing

cellular operators, i.e. at the time of grant of cellular Licences in Metro cities. 3. The definition of local areas with regard to the above service area as

applicable to this Licence is as per definition applicable to Cellular Mobile Service Licences as in the year 1994 & 1995, when those Licences were granted to them. This is in accordance with respective Gazette Notification for such local areas wherever issued and as per the statutory definition under Rule 2 (w) Indian Telephones Rules, 1951, as it stood during the year 1994/1995 where no specific Gazette Notification has been issued.

27

ANNEX-III

Performa for Financial Bank Guarantee

To

The President of India

In consideration of the President of India (hereinafter called ‘the Authority’) having

agreed to grant a Licence to M/s

_____________________________________________ of

_____________________________________ (hereinafter called ‘the LICENSEE’)

to establish, maintain and operate Internet Service (hereinafter called ‘the

SERVICE’) in ________________ Service Area (Name of Service Area) in

accordance with the Letter of Intent/ Licence

No.______________________________________ dated ___________________

(hereinafter called ‘the Licence’) on the terms and conditions contained in the said

Licence, which inter-alia provides for production of a Bank Guarantee to the extent of

Rs.__________________ (in words _________________________) under the said

Licence by way of security for payment of the said Licence fee as well as such other

fees or charges required to be paid by the LICENSEE under the Licence. We

_______________ (indicate the name and address and other particulars of the

Bank) (hereinafter referred to as ‘the Bank’) at the request of the LICENSEE hereby

irrevocably and unconditionally guarantee to the Authority that the LICENSEE shall

pay all the dues, including but not limited to, the Licence fee etc. to the Authority.

2. We, the Bank, hereby undertake to pay the Authority an amount not exceeding Rs………(Rupees…………only) against any loss or damage caused to or suffered or would be caused to or suffered by the Authority by reason of any failure of the LICENSEE to extend the validity of the guarantee or give a fresh guarantee in lieu of existing one in terms of the Licence Agreement, pay all the above mentioned fees, dues and charges or any part thereof within the periods stipulated in the Licence. 3. We, the Bank, hereby further undertake to pay as primary obligor and not

merely as surety to pay such sum not exceeding Rs._________________________

28

(Rupees _____________________ Only) to the Authority immediately on demand

and without demur stating that the amount claimed is due by way of failure of the

LICENSEE to pay any fees or charges or any part thereof in terms of the said

Licence.

4. WE, THE BANK, DO HEREBY DECLARE AND AGREE that the decision of

the Authority as to whether LICENSEE has failed to pay the said Licence fees or any

other fees or charge or any part thereof payable under the said Licence and as to the

amount payable to the Authority by the Bank hereunder shall be final and binding on

us.

5. WE, THE BANK, DO HEREBY DECLARE AND AGREE that the

(a) Guarantee herein contained shall remain in full force and effect for a period of

One Year from the date hereof and that it shall continue to be enforceable till all the

dues of the Authority and by virtue of the said Licence have been fully paid and its

claims satisfied or discharged or till Authority satisfies that the terms and conditions

of the said Licence have been fully and properly carried out by the said LICENSEE

and accordingly discharged this guarantee.

(b) The Authority shall have the fullest liberty without our consent and without

affecting in any manner our obligations hereunder to vary any of the terms and

conditions of the said Licence or to extend time of performance of any obligations by

the said LICENSEE from time to time or to postpone for any time or from time to time

any of the powers exercisable by the Authority against the said LICENSEE and to

forbear or to enforce any of the terms and conditions relating to the said Licence and

we shall not be relieved from our liability by reason of any variation or extension

being granted to the said LICENSEE or forbearance act or omission on the part of

the Authority or any indulgence by the Authority to the said LICENSEE or to give

such matter or thing whatsoever which under the law relating to sureties would but

for this provision, have effect of so relieving us.

29

(c) Any claim which we have against the LICENSEE shall be subject and

subordinate to the prior payment and performance in full of all the obligations of us

hereunder and we will not without prior written consent of the Authority exercise any

legal right or remedy of any kind in respect of any such payment or performance so

long as the obligations of us hereunder remains owing and outstanding.

(d) This Guarantee shall be irrevocable and the obligations of us herein shall not

be conditional of any prior notice by us or by the LICENSEE.

6. We, the BANK, undertake not to revoke this Guarantee during its currency

except with the previous consent of the Authority in writing.

7. Notwithstanding anything contained above, our liability, under the Guarantee

shall be restricted to Rs…… and our Guarantee shall remain in force until….year

from the date hereof. Unless a demand or claim under this Guarantee is made on us

in writing within this date i.e. …. all your rights under the Guarantee shall be forfeited

and we shall be released and discharged from all liabilities thereunder.

Dated_______________ day ________________ for _____________________

(Name of the Bank)

Witness:

1………………………….. 2…………………………..

…………………………… ……..……………………

…………………………… ……………………………

…………………………… ……………………………

…………………………… ……………………………

30

ANNEX-IV

PERFORMA FOR PERFORMANCE BANK GUARANTEE

To

The President of India

In consideration of the President of India (hereinafter referred to as ‘the

Authority’) having agreed to grant a Licence to M/s

_____________________________________________ of

_____________________________________ (hereinafter called ‘the LICENSEE’)

to establish, maintain and operate Internet Service (hereinafter called ‘the

SERVICE’) as per Letter of Intent/ Licence No. ____________________ dated

__________ (hereinafter called ‘the said Licence’) on the terms and conditions

contained in the said Licence, which inter-alia provides for production of a Bank

Guarantee to the extent of Rs.__________________ (in words

_________________________) for the service by way of security for the due

observance and performance of the terms and conditions of the said Licence. We

_______________ (indicate the name and address and other particulars of the

Bank) (hereinafter referred to as ‘the Bank’) at the request of the LICENSEE hereby

irrevocably and unconditionally guarantee to the Authority that the LICENSEE shall

render all necessary and efficient services which may be required to be rendered by

the LICENSEE in connection with and/or for the performance of the said LICENSEE

and further guarantees that the service which shall be provided by the LICENSEE

under the said Licence, shall be actually performed in accordance with the terms &

conditions of the LICENCE to the satisfaction of the Authority.

2. We, the Bank, hereby undertake to pay the Authority an amount not exceeding Rs……(Rupees……only) against any loss or damage caused to or suffered or would be caused to or suffered by the Authority by reason of any breach by the said LICENSEE of the terms and conditions contained in the said Licence including failure to extend the validity of this guarantee or to give a fresh guarantee in lieu of the existing one.

31

3. We, the Bank hereby, in pursuance of the terms of the said Licence,

absolutely, irrevocably and unconditionally guarantee as primary obligor and not

merely as surety the payment of an amount of Rs._________________________

(Rupees _____________________ Only) to the Authority to secure due and faithful

performance by the LICENSEE of all his/their obligations under the said Licence.

4. We, the Bank hereby also undertake to pay the amounts due and payable

under this guarantee without any demur, merely on a demand from the Authority

stating that the amount claimed is due by way of loss or damage caused or would be

caused to or suffered by the Authority by reason of breach by the said LICENSEE of

any of the terms or conditions contained in the said Licence or by reason of the

LICENSEE’s failure to perform any of it’s obligations under the said Licence.”

5. We, the Bank, hereby agree that the decision of the Authority as to whether

the LICENSEE has failed to or neglected to perform or discharge his duties and

obligations under the said license and/or whether the service is free from

deficiencies and defects and is in accordance with or not of the terms & conditions of

the said Licence and as to the amount payable to the Authority by the Bank

hereunder shall be final and binding on the Bank.

6. WE, THE BANK, DO HEREBY DECLARE AND AGREE that:

(a) the Guarantee herein contained shall remain in full force and effect for a

period of Two Years from the date hereof and that it shall continue to be

enforceable till all the dues of the Authority and by virtue of the said Licence

have been fully paid and its claims satisfied or discharged or till Authority

satisfies that the terms and conditions of the said Licence have been fully and

properly carried out by the said LICENSEE and accordingly discharged this

guarantee.

(b) the Authority shall have the fullest liberty without our consent and without

affecting in any manner our obligations hereunder to vary any of the terms

32

and conditions of the said Licence or to extend time of performance of any

obligations by the said LICENSEE from time to time or to postpone for any

time or from time to time any of the powers exercisable by the Authority

against the said LICENSEE and to forbear or to enforce any of the terms and

conditions relating to the said Licence and we shall not be relieved from our

liability by reason of any variation or extension being granted to the said

LICENSEE or forbearance act or omission on the part of the Authority or any

indulgence by the Authority to the said LICENSEE or to give such matter or

thing whatsoever which under the law relating to sureties would but for this

provision, have effect of so relieving us.

(c) any claim which we have against the LICENSEE shall be subject and

subordinate to the prior payment and performance in full of all the obligations

of us hereunder and we will not without prior written consent of the Authority

exercise any legal right or remedy of any kind in respect of any such payment

or performance so long as the obligations of us hereunder remains owing and

outstanding.

(d) This Guarantee shall be irrevocable and the obligations of us herein shall not

be conditional of any prior notice by us or by the LICENSEE.

7. We the BANK undertake not to revoke this Guarantee during its currency

except with the previous consent of the Authority in writing.

8. Notwithstanding anything contained above, our liability, under the Guarantee

shall be restricted to Rs…… and our Guarantee shall remain in force until….year

from the date hereof. Unless a demand or claim under this Guarantee is made on us

in writing within this date i.e. …. all your rights under the Guarantee shall be forfeited

and we shall be released and discharged from all liabilities thereunder.

Dated_______________ day ________________ for

_____________________

(Name of the Bank)

33

Witness:

1…………………………..

……………………………

……………………………

……………………………

2………………………….. ……………………………

……………………………

……………………………

34

Annex-V

Application for Setting up of International Gateway for Internet

(Note: Please read the Guidelines and General Information carefully before filling up this

form. The Application form should contain complete information on each and every point.

Additional sheets may be added, if required. Incomplete application or application with

conditional compliance may be summarily rejected. Fifteen (15) copies of the application,

alongwith Annexures, may be submitted to ADG (LR), 10th Floor, Sanchar Bhavan, New

Delhi-110 001.)

I GENERAL INFORMATION

1. Name of the Company

2. ISP licence No: Service Area

3. Complete Postal Address with Telephone / fax nos./e-mail address

Corporate Office ...........................

Registered Office ...........................

4. Address for correspondence with telephone / fax nos./

e-mail address

5. Name of authorised contact person,

designation and telephone / fax nos./e-mail address

6. Resolution of Board of Directors / other proof

that the person signing the application is authorised

signatory (Enclose copy of resolution)

7. Percentage of foreign equity in the company.

(Total Foreign equity participation(s), if any

upto the extent of 74%, including NRI equity

both repatriable and non-repatriable is

allowed. Complete break-up of 100% of the

equity must be given).

Enclose certified copies of the

approval/clearance from Govt. of India

for foreign equity.

9. No. of International Gateways proposed

to set up:

10.Processing fee:

A non-refundable processing of Rs. 40,000

Per Gateway Location in the form of

Demand Draft payable to Pay and Accounts

35

Officer (HQ), DOT, New Delhi to be

submitted with the application.

Details of the processing fee:

Demand draft no……………………….

Date ……………………….

Bank drawn ……………………….

Amount ……………………….

II TECHNICAL DETAILS OF INTERNATIONAL GATEWAY FOR INTERNET

(Note: If applying for more than one Gateway location, please furnish information required

under this Section, separate for each of the Gateway location.)

11. Location Details :

12. Bandwidth requirement :

(both short term and

long term)

13. A copy of the diagram of International

Gateway Network, giving all details,

including its location : Annex I

14. International carrier access scheme : Annex II

15. Details of equipments to be used for

International Gateway Network, including

make, specifications, model, etc. : Annex III

16. Technical specifications of equipment

to be used at customers' premises /

other internet service access nodes. : Annex IV

17. Carrier and modulation Technique : Annex V

18. Router/switch configuration for internet

gateway and allocation of ports

for various uses : Annex VI

19. Any other Technical detail of relevance : Annex VII

20. In case of satellite access, details of Earth

Station uplinking facilities and equipment to be

used for uplinking : Annex VIII

36

21. Details of proposed interconnectivity

with other gateways in India : Annex IX

22. Details of International Connectivity on:

International Internet Backbone Service Provider

Point of access of International connectivity Annex X

23. Details of topology including how the

monitoring equipment will be fitted :Annex XI

Any change in the topology should be informed

to the Telecom Authority immediately.

24. Types of services that will be provided : Annex XII

III CERTIFICATES/UNDERTAKING

(i) We hereby certify that we have carefully read the guidelines and general information on

‘International Gateway for Internet’. We fully comply with the terms and conditions therein.

(ii) We also undertake to sign any Agreement with Government of India in this connection.

(iii) We understand that all matters relating to the application or permission/licence if granted

to us will be subject to jurisdiction of courts in Delhi / New Delhi only.

(iv) We understand that our application for operating Internet gateway in India is subject to

security clearance by Government of India.

(v) We would willingly provide all technical details of and access to various equipment,

including hardware, software and communications equipment, to security agencies as and

when demanded by the Telecom Authority.

(vi) We understand that if at any time any information furnished by us for obtaining the

permission/licence is found incorrect, our application shall be liable to be rejected, processing

fee forfeited and permission granted on the basis of this application shall be withdrawn and

the ISP licence agreement terminated.

(vii) We understand that the permission to set up Gateway is subject to other

clearances/permissions that are required as per the laws of the land and it will be the

responsibility of the licencee/company to obtain these clearances/permissions.

(ix) We understand that the Government (Licensor) reserves the right to make changes in

the conditions under which this permission/licence is granted.

Date : Signature and name of the

Place: Authorised Signatory

37

ANNEXURE XIII

Additional Details for the Application for ISP Gateway for Internet using Foreign Setellite

I. Satellite Related:

(a) - Name of Satellite (preferably ITU notified name)

- Satellite Orbit Location

- Transmit/Receive Beam Identity

and Contour Level relative to Beam Centre (if available)

(b) Freq. Band of operation

- Uplink

- Downlink

(c) Transponder usage details

- Polarisation

- Bandwidth (MHz) / Satellite EIRP consumed - Uplink

- Bandwidth (MHz) / Satellite EIRP consumed - Downlink

(d) Is the satellite foot-print Coordinated for operation

Over the Gateway location

(e) Saturated downlink EIRP

(f) SFD & Transponder Attentuation Setting

(g) G/T of Satellite

II. Ground Station Details:

(a) Antenna size

(b) Uplink EIRP

38

(c) No. of carriers & Data rates of each carrier along with

type of modulation and FEC Rate.

(d) G/T of the ground station

(e) Whether antenna off axis Radiation pattern conforms to

ITU-R Rec. S. 580-5

(f) Beam width in degrees

- Transmission

- Reception

(g) CPD of Antenna

(h) Maximum gain of Antenna in dB (TX/RX)

III Link Engineering with calculation details for various connectivities:

IV Networking Details:

(a) Detailed Block Diagram

(GIVING MAKE AND MODEL NO.)

(b) Gateway routing protocol

(c) Facility for security monitoring

V General:

(a) Teleport address

(b) Backbone ISP Connectivity

(c ) Confirmation regarding availability of

RF Monitoring Point on HPA output

(d) Beacon frequencies of the satellite proposed along with satellite down-link EIRP.

39

Annex-VI

Application for setting up of Submarine Cable Landing Station

for International Gateway for Internet

(Note: Please read the Guidelines and General Information carefully before filling up this form. The

Application form should contain complete information on each and every point. Additional sheets may

be added, if required. Incomplete application or application with conditional compliance may be

summarily rejected. Fifteen (15) copies of the application, alongwith Annexures, may be submitted to

ADG (LR), 10th Floor, Sanchar Bhavan, New Delhi-110 001.)

I GENERAL INFORMATION

1. Name of the Company

2. ISP licence No: Service Area

3. Complete Postal Address with Telephone / fax nos./e-mail address

Corporate Office ...........................

Registered Office ...........................

4. Address for correspondence

with telephone / fax nos./e-mail address

5. Name of authorised contact person,

designation and telephone / fax nos./e-mail address

6. Resolution of Board of Directors / other proof

that the person signing the application is authorised

signatory (Enclose copy of resolution)

7. Percentage of foreign equity in the company.

(Total Foreign equity participation(s), if any

upto the extent of 74%, including NRI equity

both repatriable and non-repatriable is

40

allowed. Complete break-up of 100% of the

equity must be given).

Enclose certified copies of the

approval/clearance from Govt. of India

for foreign equity.

9. No. of Landing Stations proposed

to set up:

10. Processing fee:

A non-refundable processing of Rs. 50,000

Per Landing Station in the form of

Demand Draft payable to Pay and Accounts

officer (HQ), DOT, New Delhi to be

submitted with the application.

Details of the processing fee:

Demand draft no……………………….

Date ……………………….

Bank drawn ……………………….

Amount ……………………….

41

II. DETAILS OF SUBMARINE CABLE LANDING STATIONS FOR

INTERNATIONAL GATEWAY FOR INTERNET

(Note: If applying for more than one Landing Station, please furnish information

required under this Section, separate for each of the Landing Station.)

11. Location Details

12. Name of the Submarine (Optical Fibre) Cable

13. Terminal Landing Stations

14. Total Fibre Capacity

15. Landing stations en-route

16. Fibre pair configuration:

No of fibres:

Capacity(bitrate)of each fibre

Routing of each fibre

17. Repeater configuration

No of repeaters

Location of repeaters

18. Technology

No of repeaters

Location of repeaters

19. Terminal equipment:

(A list of all terminal station equipment

including network diagram to be provided)

20. Test and Monitoring equipment

A list of all test equipment and monitoring

Facilities

21. System manufacturer

42

Details of subsystem contractors:

22. Ownership:

Shareholders in the cablesystem (in descending order)

with percent share

23. Network Ownership:

List of all operators having acquired capacity

on system(in descending order)

24. Facility of security monitoring:

Licensee to provide full details

25. Landing station owners (Countrywise)

26. Details of services that would be provided

27. Approximate cost of the Landing station

28. Complete and detailed networking diagram

Including monitoring set-up

29. Details of equipment to be used

Including specifications, make, data sheets, model etc.

30. Details of International Connectivity to

International Internet Backbone Service Provider.

31. Any other relevant details.

43

III CERTIFICATES/UNDERTAKING

(i) We hereby certify that we have carefully read the guidelines and general

information on ‘Setting up of Submarine Cable Landing Stations for International

Gateway for Internet’. We fully comply with the terms and conditions therein.

(ii) We also undertake to sign any Agreement with Government of India in this

connection.

(iii) We understand that all matters relating to the application or permission/licence

if granted to us will be subject to jurisdiction of courts in Delhi / New Delhi only.

(iv) We understand that our application for operating Landing Station in India is

subject to security clearance by Government of India.

(v) We would willingly provide all technical details of and access to various

equipment, including hardware, software and communications equipment, to

monitoring agencies as and when demanded by the Telecom Authority.

(vi) We understand that if at any time any information furnished by us for

obtaining the permission/licence is found incorrect, our application shall be liable to

be rejected, processing fee forfeited and permission granted on the basis of this

application shall be withdrawn and the ISP licence agreement terminated.

(vii) We understand that the permission to set up Landing Station is subject to other

clearances/permissions that are required as per the laws of the land and it will be the

responsibility of the licencee/company to obtain these clearances/permissions.

(ix) We understand that the Government (Licensor) reserves the right to make

changes in the conditions under which this permission/licence is granted.

Date : Signature and name of the

Place : Authorised Signatory