1. 26 April 2005ELITEX, New Delhi1 Bandwidth issues & ICT applications Deepak Maheshwari Secretary ISP Association of India

2. 26 April 2005ELITEX, New Delhi2 Agenda 1,2,3…Let’s Talk numbers! IT Superpower or …? Elephant & the Dragon(s) Bandwidth & Internet International Trends Policy & Regulatory Actions Regulatory Intent & Actions Last Mile: The Biggest Challenge Pro-Active Regulatory interventions Vibrant Bandwidth Market : Futures, Options & … (circa 2006?)

3. 26 April 2005ELITEX, New Delhi3 1,2,3… Let’s Talk Numbers! 700 + ISP licenses issued so far 300 + surrendered 180 + operational 6 million Internet subscribers < 0.4 million broadband subscribers 35 million Internet users Public access the primary and sole access point for a big populace 256 kbps minimum to qualify as ‘broadband’

4. 26 April 2005ELITEX, New Delhi4 IT Superpower or …? Index / RankSponsor(s)RankYear Network Readiness Index WEF / INSEAD42/1052003-2004 Digital Access IndexITU119/1782003 Friendliest Environment for online business EIU43/602004 Maximum no. of Internet users Internet.com & others 6-82004-2005 In 2000, Planning Commission targeted 35 million Internet subscribers in 2007 Broadband Policy 2004 has a target of 40 million Internet subscribers by 2010 Large population and internal disparity weigh us down

5. 26 April 2005ELITEX, New Delhi5 Elephant & the Dragon(s)  Broadband Policy 2004 targets at least 50% Internet subscriptions to be of Broadband type in India, w.e.f. 2005 itself  Less than 20% international traffic in China / Japan / Korea Mostly local content  In India, more than 70% Internet traffic is international Mostly non-local content Even domestic traffic is often routed through international transit IndiaChina Internet users6 million100 million Broadband as % of Internet <8%> 45%

6. 26 April 2005ELITEX, New Delhi6 Bandwidth & Internet Worldwide, >80% international bandwidth is used for Internet Worldwide, >50% domestic bandwidth is used for Internet Broadband access is the key behind continuous development of technologies like DSL, cable modem, wi-fi, Wimax, 3G/4G, … Though Internet is a global system, its beauty and efficiency lie in keeping the traffic as local as possible.

7. 26 April 2005ELITEX, New Delhi7 International Trends Bandwidth consumption outpacing reduction in prices Submarine as well as terrestrial prices down by around 50% during last year Around 50% further reduction predicted in next one year E1:DS3:STM1 price multiples are typically 1:4:10 Internet traffic growth rates have outpaced backbone capacity deployments New cables build-up begin with gusto Asia is the new fulcrum of activity FL-LRIC (Forward Looking – Long Range Incremental Cost) is the model chosen by most regulators in tariff fixation

8. 26 April 2005ELITEX, New Delhi8 Policy & Regulatory Actions Towards Development of Effective Competition Till 9 th July 1998, service providers had to pay double the normal tariff for domestic leased circuits Thanks to Telecom Tariff Order, 1999 leased line tariff came down by upto 93% overnight, w.e.f. 1 st April 1999 Competition in NLDO introduced in 2001 Leasing of Passive & Active Infrastructure permitted Competition in ILDO introduced in 2002 No separate category for Passive & Active Infrastructure Broadband Recommendations dated 29 th April 2004 recognised that bandwidth constitutes major cost for Internet & Broadband services IPLC tariff ordernotified on 11 th March 2005 Domestic Leased Circuit order notified on 21 st April 2005

9. 26 April 2005ELITEX, New Delhi9 Regulatory Intent & Actions Broadband Recommendations dated 29 th April 2004 Access providers of local segment of leased lines to be mandated to provide the local links to NLDOs & IP-2 “The Authority views access to international bandwidth as a bottleneck facility and will take appropriate actions” Telecom Tariff Order, 1999 dated 9 th March 1999 International Leased Line tariffs forborne though no reasons recorded “The Authority will review leased circuit tariffs again after one year in order to take account of the decline in costs during that period” Domestic Leased Circuits Tariff Order dated 21 st April 2005 “The Authority will revisit this ceiling tariff after a year based on the prevailing market trends and data prevailing at that time”

10. 26 April 2005ELITEX, New Delhi10 Last Mile : the biggest challenge >90% fixed (copper) lines controlled by incumbent ‘Unbundling’ is usually under the ‘Interconnection’ regime in most countries but rather than dealing with it head-on, TRAI forwarded a complex set of recommendations on unbundling ‘at least 3 year old’ copper pairs However, unbundling not recognised as a bottleneck in the Broadband Policy though operators free to enter into commercial agreements Commercial agreements could always happen and did not require policy annunciation per se Regulatory intervention required in sharing infrastructure of this ‘natural & historical monopoly’ of the copper pair in the last mile Cable Though technically, cable is ‘ultra-high Broadband’ capable, mostly uni-directional and requires investment in upgrades Wireless Wi-fi, LMDS, MMDS, CorDECT, Wimax, 3G, 4G, …, … Incentives needed for making wireless attractive Pricing reform & decongestion

11. 26 April 2005ELITEX, New Delhi11 Pro-active Regulatory Intervention Regulatory intervention required if the market fails TRAI has recognised market failure and ineffective competition for both IPLC & DLC, albeit lately To be effective, the intervention must be fast, effective, minimalist & exemplary Incumbent ignored and continues to do so, TRAI’s intervention against discriminatory pricing of leased circuits to other telecom licensees introduced w.e.f. 1 st April 2004 Further steps to be taken for boosting competition Equitable access to submarine cable landing facility by all ILDOs & ISPs Introduction of Infrastructure Providers in International Sector as well Leasing of dark fibers & Wavelengths are quite common Guard against ‘Vertical Price Squeeze’

12. 26 April 2005ELITEX, New Delhi12 Vibrant Bandwidth Market : Futures, Options & … (circa 2006?) TRAI recommendation on ‘Unified Licensing Regime’ dated 13 th January 2005 “The Authority recommends that reselling should not be permitted at this stage” TRAI order on Domestic Leased Circuits dated 21 st April 2005 : Measures to Promote Competition “Inter-connect of operators for provisioning of multi-operator leased circuits Introduction of reselling of bandwidth Introduction of wholesale and retail pricing”

13. 26 April 2005ELITEX, New Delhi13 Thanks for your patience! Time for Q&A!! Emailispai@ispai.comispai@ispai.com