26 April 2005 ELITEX, New Delhi 1

Bandwidth issues & ICT applications

Deepak MaheshwariSecretary ISP Association of India

26 April 2005 ELITEX, New Delhi 2

Agenda 1,2,3…Let’s Talk numbers! IT Superpower or …? Elephant & the Dragon(s) Bandwidth & Internet International Trends Policy & Regulatory Actions Regulatory Intent & Actions Last Mile: The Biggest Challenge Pro-Active Regulatory interventions Vibrant Bandwidth Market :

Futures, Options & … (circa 2006?)

26 April 2005 ELITEX, New Delhi 3

1,2,3…Let’s Talk Numbers!

700 + ISP licenses issued so far 300 + surrendered 180 + operational

6 million Internet subscribers < 0.4 million broadband subscribers 35 million Internet users Public access the primary and sole access

point for a big populace 256 kbps minimum to qualify as ‘broadband’

26 April 2005 ELITEX, New Delhi 4

IT Superpower or …?

Index / Rank Sponsor(s) Rank Year

Network Readiness Index

WEF / INSEAD 42/105 2003-2004

Digital Access Index ITU 119/178 2003

Friendliest Environment for online business

EIU 43/60 2004

Maximum no. of Internet users

Internet.com & others

6-8 2004-2005

• In 2000, Planning Commission targeted 35 million Internet subscribers in 2007• Broadband Policy 2004 has a target of 40 million Internet subscribers by 2010• Large population and internal disparity weigh us down

26 April 2005 ELITEX, New Delhi 5

Elephant & the Dragon(s)

Broadband Policy 2004 targets at least 50% Internet subscriptions to be of Broadband type in India, w.e.f. 2005 itselfLess than 20% international traffic in China / Japan / Korea

• Mostly local contentIn India, more than 70% Internet traffic is international

• Mostly non-local content• Even domestic traffic is often routed through international transit

India China

Internet users 6 million 100 million

Broadband as % of Internet

<8% > 45%

26 April 2005 ELITEX, New Delhi 6

Bandwidth & Internet

Worldwide, >80% international bandwidth is used for Internet

Worldwide, >50% domestic bandwidth is used for Internet

Broadband access is the key behind continuous development of technologies like DSL, cable modem, wi-fi, Wimax, 3G/4G, …

Though Internet is a global system, its beauty and efficiency lie in keeping the traffic as local as possible.

26 April 2005 ELITEX, New Delhi 7

International Trends

Bandwidth consumption outpacing reduction in prices Submarine as well as terrestrial prices down by around

50% during last year Around 50% further reduction predicted in next one

year E1:DS3:STM1 price multiples are typically 1:4:10

Internet traffic growth rates have outpaced backbone capacity deployments

New cables build-up begin with gusto Asia is the new fulcrum of activity FL-LRIC (Forward Looking – Long Range Incremental

Cost) is the model chosen by most regulators in tariff fixation

26 April 2005 ELITEX, New Delhi 8

Policy & Regulatory Actions Towards

Development of Effective Competition Till 9th July 1998, service providers had to pay double the

normal tariff for domestic leased circuits Thanks to Telecom Tariff Order, 1999 leased line tariff

came down by upto 93% overnight, w.e.f. 1st April 1999 Competition in NLDO introduced in 2001

Leasing of Passive & Active Infrastructure permitted Competition in ILDO introduced in 2002

No separate category for Passive & Active Infrastructure Broadband Recommendations dated 29th April 2004

recognised that bandwidth constitutes major cost for Internet & Broadband services

IPLC tariff ordernotified on 11th March 2005 Domestic Leased Circuit order notified on 21st April 2005

26 April 2005 ELITEX, New Delhi 9

Regulatory Intent & Actions

Broadband Recommendations dated 29th April 2004 Access providers of local segment of leased lines to be mandated to

provide the local links to NLDOs & IP-2 “The Authority views access to international bandwidth as a

bottleneck facility and will take appropriate actions” Telecom Tariff Order, 1999 dated 9th March 1999

International Leased Line tariffs forborne though no reasons recorded

“The Authority will review leased circuit tariffs again after one year in order to take account of the decline in costs during that period”

Domestic Leased Circuits Tariff Order dated 21st April 2005 “The Authority will revisit this ceiling tariff after a year

based on the prevailing market trends and data prevailing at that time”

26 April 2005 ELITEX, New Delhi 10

Last Mile : the biggest challenge

>90% fixed (copper) lines controlled by incumbent ‘Unbundling’ is usually under the ‘Interconnection’ regime in most

countries but rather than dealing with it head-on, TRAI forwarded a complex set of recommendations on unbundling ‘at least 3 year old’ copper pairs

However, unbundling not recognised as a bottleneck in the Broadband Policy though operators free to enter into commercial agreements

• Commercial agreements could always happen and did not require policy annunciation per se

• Regulatory intervention required in sharing infrastructure of this ‘natural & historical monopoly’ of the copper pair in the last mile

Cable Though technically, cable is ‘ultra-high Broadband’ capable, mostly

uni-directional and requires investment in upgrades Wireless

Wi-fi, LMDS, MMDS, CorDECT, Wimax, 3G, 4G, …, … Incentives needed for making wireless attractive

• Pricing reform & decongestion

26 April 2005 ELITEX, New Delhi 11

Pro-active Regulatory Intervention

Regulatory intervention required if the market fails TRAI has recognised market failure and ineffective

competition for both IPLC & DLC, albeit lately To be effective, the intervention must be fast, effective,

minimalist & exemplary Incumbent ignored and continues to do so, TRAI’s

intervention against discriminatory pricing of leased circuits to other telecom licensees introduced w.e.f. 1st April 2004

Further steps to be taken for boosting competition Equitable access to submarine cable landing facility by all

ILDOs & ISPs Introduction of Infrastructure Providers in International

Sector as well• Leasing of dark fibers & Wavelengths are quite common

Guard against ‘Vertical Price Squeeze’

26 April 2005 ELITEX, New Delhi 12

Vibrant Bandwidth Market : Futures, Options & … (circa 2006?)

TRAI recommendation on ‘Unified Licensing Regime’ dated 13th January 2005

“The Authority recommends that reselling should not be permitted at this stage”

TRAI order on Domestic Leased Circuits dated 21st April 2005 : Measures to Promote Competition

“Inter-connect of operators for provisioning of multi-operator leased circuits

Introduction of reselling of bandwidth Introduction of wholesale and retail pricing”

26 April 2005 ELITEX, New Delhi 13

Thanks for your patience!

Time for Q&A!!

Email ispai@ispai.com