Wiring India From the Bottom Up
November 5, 1999
By Tiernan Ray
HOW DO YOU hook up to the Internet in a place where making a local telephone call can be a dicey proposition? How do you connect to a worldwide information superhighway when the local phone company uses a signaling system no one else in the world understands? How do you connect to the Web a billion people who may not even know what a fax is?
It's one of the ironies of late 20th century capitalism that while India has produced such digital-era billionaires as Sycamore Networks' (SCMR) Desh Deshpande (and many others), the Subcontinent itself remains almost completely unwired. In some of the major cities ? Bombay, Delhi, Bangalore ? the population is starting to discover the practice of late-night Web surfing. And young people everywhere are signing up for Hotmail accounts and checking their inboxes regularly. But the fact remains that there are only 450,000 Internet accounts in all of India. Signing up the rest of this sprawling nation remains a daunting prospect.
I had the privilege recently to observe ground zero in that massive project. A year ago the Indian government opened up the Internet service provider market to private companies, allowing them to compete with the government-run phone monopolies ? VSNL and MTNL. According to Abdullah Kumar, director of operations for VSNL, there are 170 companies licensed today to provide Internet service in India, with about 30 actually in operation.
Some, such as Satyam Infoway (SIFY), based in the east coast city of Chennai, are public companies with billion-dollar valuations. Satyam's American depositary receipts started trading on the Nasdaq on Oct. 19. As of Friday morning, the company was sporting a market cap of $830 million, a decent, if unspectacular, showing when compared to its cousin, the $9 billion Infosys Technologies (INFY), a Bangalore-based software and services firm that went public last spring.
But ground zero is not with the ambitious national ISPs like Satyam. It is at the local ISPs, where the towns and cities are being wired one account at a time. Consider the scene in downtown Ahmedabad, in the state of Gujarat, an hour's flight north of Bombay. On the upper floors of a low-rise office building dubbed "Silicon Tower," a 24-hour help desk is staffed by young ladies in saris taking questions from local residents who have forgotten their passwords or can't quite get their modems to work properly.
In and around cubicles distinguished from Silicon Valley cubbies only by the delicate floral decorations painted on glass by a local artist, a marketing plan is being drawn up for IceNet, the retail brand of the local ISP.
Inside the glass-enclosed control room, Hemal Patel and Chirag Mehta, IceNet's founders, talk about adding an extra bank of modems to their pride and joy: a row of seven-foot telco racks stuffed with the latest and greatest American networking equipment. With 3,000 subscribers in Ahmedabad and several Lucent Technologies (LU) MAX remote access servers, Patel and Mehta are gearing up for what they hope will be a quintupling of IceNet's Internet users by the end of next year.
IceNet is the brainchild of Patel, who has worked for the past decade or so as a software consultant at Chase Manhattan (CMB), Citigroup (C) and other big American finance firms. It is India's first digital ISP. Formerly built around analog modem banks, the business is being transformed as IceNet shows service providers how to install and manage the latest technology.
India's government-owned telecom plant is aging, so Patel and Mehta, two college engineering buddies, have dug their own fiber-optic cabling to the local central office. Over this cabling they run a series of high-speed digital circuits ? E1 lines, as they're called, comparable to T1 lines in the U.S. ? running at 2 million bits per second and providing 56 kilobits per second to each subscriber. The Lucent boxes, which the company spent months reprogramming to suit India's idiosyncratic telephone network, provide a digital modem instead of the analog type. That allows IceNet to simply drop in a new box as needed. A Cisco Systems (CSCO) router directs traffic to IceNet's link to the rest of the world ? a 1 megabit satellite uplink back to the UUNet backbone run by MCI WorldCom (WCOM) in America.
IceNet's user base is tiny compared with Satyam's 87,000 Internet accounts (as of September), but Patel and Mehta's brilliance may lie in their determination to form what may be the new consumer experience of the young and wired in India. With only 1.4 million PCs sold each year in India, only a tiny fraction of the population owns one. IceNet's marketing plan is to send local resellers out into the field to spend two hours in each household showing customers how to hook up the modem, how to dial into IceNet's POP server and how to surf the Web. Needless to say, labor costs in Ahmedabad, and indeed throughout India, are a fraction of what they are in the U.S.
Because the Internet "backbone" in India is slow in most places, Mehta and Patel have been resourceful. With boxes from Silicon Valley startup Cacheflow, IceNet stores locally the most-requested Web pages, moderating demand for the satellite uplink. (But not completely ? email is the killer app here, too, and Patel says Hotmail takes up about 70% of the traffic across the satellite link.) PCs in the office, meanwhile, keep copies of the most frequently requested software downloads, such as the latest copy of Netscape's browser.
Patel has a secret plan, too, to take advantage of the small "cyber cafes" that never caught on in America, but that have become a true grassroots movement in the rest of the world. With PCs still a foreign notion in most Indian homes, young people log on daily at small hole-in-the-wall establishments to check email or surf to Rediff on the Net and other Indian portal sites. With 56 kbps ISDN connections at $2.50 an hour or so, they're a cheap on-ramp to the Net.
Patel's plan is to sell these outfits computers equipped with IceNet's secret sauce: a home-brewed piece of Java-based software called "JISP," which helps ISPs manage the process of signing up new accounts and tracking Internet usage for each subscriber. It also helps technicians troubleshoot problems. Patel hopes JISP will become the basis for a full-fledged software operation someday.
"We'd like to think this operation is just exactly like what you'd see in America, in Silicon Valley," says Patel, admiring the many innovations he's introduced. And in fact the neat little cubbies of IceNet do look much like Menlo Park or Mountain View. Still, he concedes that India has a ways to go in reaching certain milestones on its journey to the Net. Access is still billed on a per-usage basis. Subscribers buy time in advance, and when JISP notices they're near their quota, an email is sent to both the subscriber and the reseller who helped install the IceNet connection. They pay an additional usage fee per minute to the phone companies.
Until Internet access reaches the $19.95 flat-rate found in the U.S., most here concur that access cannot truly spread rapidly. In fact, with the deterrent of metered usage, Patel keeps a cap on his equipment needs by having to install only one digital modem for every 15 subscribers ? a better ratio than in the U.S.
Still, walking from the Oval Maidan in downtown Bombay ? where bookstalls hawk the latest Java and C++ programming books ? to the cyber cafe to check my email, I can't help thinking about IceNet. Those shiny telco racks will change things dramatically in a country where cows and camels and dogs and monkeys saunter down city streets. Email is fast etching itself onto the youth culture here, with Hotmail being the focus of attention. India's entrepreneurs will no doubt return home sooner or later, after the windfall they earned helping wire this country, and they'll have billions to spend. You can bet India won't stay unwired for long.
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