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