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The Videsh Sanchar Nigam Limited is the government owned overseas telecommunications monopoly. That it will continue to be for some years to come.

Yet, VSNL's senior executives are tossing in their beds because a smaller, but strategic, monopoly has been snatched away from it. The Internet services.

Since Internet services were commercially made available in the country some three years ago, the VSNL had been doing everything from managing all the gateways in the country to retailing access.

Now that private companies and half-cousins like MTNL are preparing to step in, some quick thinking has become imperative for VSNL.

Swamped by a never-imagined demand for Internet access, VSNL could not even manage a pretence of a decent access service in the country. Consequently it suffered a massive public relations disaster.

It is this ill will that the new ISPs are hoping to capitalise on.

The only consolation VSNL has at this point is that the private ISPs will have to pass through its gateway, boosting its bandwidth wholesaling business. Though the government is mulling the possibility of allowing private companies to set up their own gateways, defence and security issues are dodging those efforts.

The only chance that VSNL has now is to improve its current services and pull a PR coup before private ISPs put their marketing juggernaut into the streets.

And there already are signs that VSNL is picking up some momentum. This week, acting Chairman and Managing Director Amitabh Kumar announced in Hyderabad that the company would be seeking the Telecom Regulatory Authority of India's permission to reduce tariff if more Internet service providers begin operations.

Kumar said VSNL intends to reduce rates for Internet access but "as of today we are not allowed to cut tariffs".

However, when more ISPs come into the field, providing economies of scale, VSNL would ask TRAI to allow it cut rates, he assured.

Even otherwise, Kumar sees Net access rates falling by a third to half in just one year. As the number of ISPs increase over three to four years, the rate cuts would keep happening, he says.

Kumar said VSNL would give Internet connectivity to even cable TV operators if they asked for it.

Within six months, VSNL will expand its number of antennae from the existing 17 to 30. Similarly, it is planning to extend Net access to 60 to 70 cities from the present 42 by the end of the current year.

Saying that the increasing number of ISPs in India would drive up bandwidth demand, Kumar revealed that VSNL is already negotiating for much larger capacities on the optical fibre systems.

It is planning to move the entire bandwidth to cable as the cable systems are estimated to provide a considerable price advantage over satellite circuits.

Kumar, however, warned that there are a number of issues that need to be addressed on priority while implementing the new ISP policy.

The expansion of Internet services would give rise to a great demand for more access lines, a national backbone and international bandwidth.

He said VSNL's experience over the last three years has shown that dearth of access lines and their poor quality have been the most significant limiting factors to Internet's growth in India.

In this context opening of Internet access via cable television systems is not believed to be a very viable solution. Hence a concerted and planned effort is required to meet the access lines demand in the next six months.

Under the new policy dispensation, he explained, statewide access has been provided under the dialling schemes of '17222', which connects a subscriber to the nearest ISP node.

With over 800 cities that have high potential for growth of Internet services, access lines are likely to put considerable load on the national trunk network.

Kumar stressed that there is an urgent need to provide a common access backbone to which customers from any part of the state could dial to access any ISP node.

The access service should be isolated from the ISP and content service. He wanted provision of a national backbone by private operators in addition to those provided by DoT and VSNL, which would form an indispensable part of the National Information Infrastructure.

Kumar also pointed out that multiple ISPs operating in the country would require a common exchange point for traffic flowing between customer groups and content sites.

In the short run, VSNL should be allowed to assume that role in addition to the international gateway facility for which most of the ISPs would need to connect to VSNL, he demanded.

That's that...

• But MTNL, another broken monopoly, is burning the midnight oil too.

Earlier:

• We have run out of headlines!
  Finally. After several announcements, reports and headlines, the Net business has been thrown open to the private sector.
• VSNL attempts answer to the private ISPs poser
• TRAI to work out Internet tariff
• MTNL packs a double-barrel
  Phone muscle will help offer cheap Net access. And the Net carrot will reel in more telephone customers!
• TRAI releases response to telecom tariff proposal
• ISP aspirants allow a peek at their hand
• DoT backtracked on bank guarantee promise, charge ISPs

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