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 Content Page
No. 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.
 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

1
 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.

2
 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

3
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

4
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 -

5
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

6
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.

7
 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.

8
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

9
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.

10
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

11
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

12
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 years 5 . 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

13
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

14
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

15
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.

16
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.

17
Group company wise market share are shown as below:

Fig. 2.3Group company wise market share

18
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.

19
 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

20
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 Economic
Low regulation now GDP
Responsibility for content Structural change since telecoms
Access to schools, libraries, hospitals Deregulation
Universal service Recession: Fewer computers bought?
Less spent by consumers and providers?

Sociological Technological
Language barrier Rapidly changing technologies & services
Reluctance to accept new/foreign technology Fuelled by the internet:
Demography: age (changing), ethnic mix Transport, switching, backbone, local loop
Geography: urban/rural Disruptive technologies
Reliance on technology

Fig. 3.1 ISP PEST Analysis

21
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.

22
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.

23
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.

24
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.

25
 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

26
 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

27
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

28
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

29
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.

30
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

31
will lose their customer base if they charge more for a service someone else provides more
cheaply.

32
 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.

33
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.

34
 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.

35
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.

36
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.

37
 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.

38
 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.

39
 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

40
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

41
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 Technology

Volatile customer satisfaction Integrating ever changing technologies
Customer churn, customer trust Delivering new services in real time
Need for differentiated services Developing and managing rapidly expanding
Infrastructure

Resources Regulatory Framework

Telcos have more resources Censorship of the Internet
Acquiring capital investment for Responsibility for content
Infrastructure Possible charges for services such as VOIP
Hiring experienced employees 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.

42
 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.

43
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

44
 BSNL SWOT Analysis

Bharat Sanchar Nigam Ltd (BSNL), the corporate version of erstwhile DOT, came to existence
st
on 1 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 –

45
 BSNL – SWOT ANALYSIS
STRENTHS
 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
OPPORTUNITIES
 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
WEAKNESSES
 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
THREATS
 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
46
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

47
 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.

48
 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

49
 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.

50
 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.

51
  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.

52
 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.

53
 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.

54
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.

55
 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.
1.94
Ltd.

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%

56
 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),

1
 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

2
 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.
3
(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.
4
(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.

5
 (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
6
 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

7
 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.

8
 (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

9
 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,
10
 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.

11
(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.
12
(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

13
 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

14
(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).
15
 (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.

16
(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,

17
 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.
18
(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.

19
(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
20
 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

21
 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)
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
22
9. Promoters/Partners in the
Company:
(details of equity holding)

S. No. Name of Promoter/Partner Indian/ Equity % age

Foreign
------ ---------------------------------------- --------------- ---------
------ ---------------------------------------- --------------- ---------
------ ---------------------------------------- --------------- ---------
------ ---------------------------------------- --------------- ---------
------ ---------------------------------------- --------------- ---------
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 )

23
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 Signature and name of the

Place Authorised Signatory
(Company’s Seal)

24
 Annex-II
Details of Category ‘B’ Service Areas

Sl. Areas covered

No. Name of
Telecom Circle/
Metro

Service Area
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.
25
 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 _ Entire area covered by Eastern Uttar Pradesh with
East 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.

26
 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._________________________
27
(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.

28
(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…………………………..
…………………………… ……..……………………
…………………………… ……………………………
…………………………… ……………………………
…………………………… ……………………………

29
 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.
30
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

31
 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)
32
Witness:
1…………………………..
……………………………
……………………………
……………………………

2…………………………..
……………………………
……………………………
……………………………

33
 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
34
 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

35
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

36
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

37
(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.

38
 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

39
 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 ……………………….

40
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

41
 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.

42
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

43