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India & the Internet

The Internet revolution seems to be in full swing, but is India really plugged into the global community it represents? Maybe yes, maybe no.

As the Internet spins a web of interconnectivity around the globe, as it grows literally by the hour, India is struggling, not to catch up but to keep from falling further and further behind.

Inside India, things do seem to be improving.  Five years ago there was limited Internet access but only in a few major cities, all in the hands of the government.  VSNL, the agency responsible for Internet activities, and the DOT (Department of Telecommunications) provided an agonizingly erratic connectivity, with miserly bandwidth and far too few phone lines.  Connection rates ran as low as 5% (for every 20 dialups you might get connected once) and users were frequently cut off.  And the rates for this pathetic level of service were among the highest in the world.  Domestic users paid about $2 per hour, and lease lines, for the few companies that could afford them, ranged over $2000 per month for a 64 Kpbs line.  By the end of 1998, after three years of government monopoly, there were barely 150,000 Internet connections in India.

Today (midyear 2000) the government monopoly is largely over.  Dozens of small to large Internet Service Providers have set up shop, triggering a price war and an improvement of service.  Users are now estimated at over 2 million, with a growth predicted to reach 50 million in the next five years.  Small Internet kiosks have set up even in small towns, and the governments, both State and Central are pushing for growth in the Internet sector.  Internet is the new buzzword.  The many small tutorial colleges that pushed computer software courses of variable quality are now in a hardsell scramble to push Net related content.  The Internet represents the new wealth frontier for the middle classes - a good salary and a clean job, and for a few, the chance to go abroad.

There has been a great increase in Indian content on the Internet.  Many net entrepreneurs have been quick to realize the huge potential of the global market.  Initially, most sites targeted the global Diaspora of Overseas Indians who had more access to the Internet, not to mention the credit cards that drive Net commerce.  But there is a growing realization that the Net can reach the large and wealthy Indian Middle class.  This group is rapidly plugging into the Net (still out of range for most people here) and there is increased use of credit cards.


Additionally, Business to Business (B2B) transactions are on the increase though there is no accurate estimate of the current or projected volumes.  For Indian businesses interested in an overseas market the Net provides an efficient medium of communications - a factor that has retarded a great deal of trade in the past.  Email and web sites are available 24 hours a day.  And for the large and growing software industry, the Internet offers the ability to reach a client, respond to problems on a real time basis, and transfer products instantly with the click of a mouse.  India exports billions of dollars of software annually, and the industry is growing rapidly.  The Internet represents so much potential for India, and the demand for efficient Internet infrastructure is growing rapidly.  This is where India has been failing.  The demand has not yet been met efficiently and this represents an enormous barrier to business and societal development.

Even the government, which has monopolized infrastructure development until recently, has recognized it must not hold back this development.  They have opened the industry to private entrants and promised support.  In practice, though, the vast bureaucracies that implement (theoretically) the government programs have moved sluggishly and ineffectively.  For instance, the private ISPs that were allowed were initially required to acquire their bandwidth from VSNL which wanted a country wide monopoly on this lucrative sector.  The result, new users signing up competed for increasingly limited bandwidth.  Now the ISPs have been allowed to establish their own gateways but the effect has not yet been felt extensively.  The DOT, responsible for providing phone lines to ISPs lagged way behind and the new providers are often left with far too few lines to service the increased demand.  Lease lines are reduced, though still very expensive - approximately $1000 per month for a 64 Kpbs line.

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Some cities in India have developed more efficiently than others.  Reports suggest that Bangalore and Madras currently offer better bandwidth.  Of course, this is all relative to the pathetic service people were forced to put up with in the past.  Hyderabad, where the INDAX offices are located, is trying to promote a cyber savvy image, but the reality is still very poor.  We cannot justify a lease line (though reports are that prices are due to drop significantly soon), but rely on a dial up connection that only really works well in the early hours of the morning or late at night.  It is not unusual to be unable to get a productive connection for hours at a time during the day, even though we use four or more ISPs.  And this poor connectivity still costs us hundreds of dollars a month.  Needless to day, the frustration is acute.  Not to mention loss of productivity.  Our experience, multiplied by that of millions of other small business across the country, amounts to billions of dollars of lost potential business each year. This is a horrific waste.

Looking at India from a global perspective, it is difficult to see how India can actually catch up. Advances in technology, connectivity, and usage of the net are increasing so rapidly that even in developed countries it is hard to keep up. At present, the percentage of Indians connected to the Net is less than a fraction of one percent.  Even if it soars to 50 million over the next five years, as predicted, that represents at most 5% of the population.

And how can this amount of growth occur over the next five years when the infrastructure of both the Internet and the telephone network is already far behind current demand? In developed countries, telephone networks had basically reached saturation when the Internet arrived.  The problem was primarily to provide the increased bandwidth and line usage the Net demands.  In India the telephone network is antiquated, overextended and only reaches a fraction of the population which is interested in getting a phone.  Internet demand is straining the telephone system further.

Private ISPs have entered the arena, and though they were initially stymied by both uncooperative government agencies and by lack of existing infrastructure, there is some promise here.  There are also experiments with wireless and cable connections, but even here an antiquated infrastructure and government obstructionism are problems.  Businesses are relying more and more on aspects of the Internet.  Email, for instance, is a huge asset to companies.  And more and more companies are entering into web related business activities, like web site creation, software development, and various service oriented businesses that utilize the Net, like medical transcription or data processing for overseas companies.

In any event, it seems likely that in the future those that can pay for it will have adequate access to the great global community.  As in even developed countries, those that can't pay for it, or lack the skills to use it, will be left behind.  Unfortunately in India, this disadvantaged group will still be the majority well into the current century.  Until the country can mobilize the resources, the education, and the infrastructure to provide a much larger section of its population both the means and the reason to access the Internet, India will not truly join the global community.

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