VSNL, the first commercial ISP, has so far signed on about 200,000 subscribers for its service. MTNL has signed on about 3,000-4,000 subscribers by now. Being government-owned organisations they have a ready-made infrastructure either on the domestic or on the international connectivity fronts. And they are extremely loathe to share this advantage willingly with private ISPs.

It mayappear as though this writer is playing an advocate for the Internet Service Providers' Association of India (ISPAI). Far from it. This writer has been singularly unsuccessful in being put on the mailing list of the ISPAI despite several tries at communicating with its chief honcho Rajeev Arora.

The ISPAI is the association, which is fighting for a better business environment for its ISP members, but like several other associations it appears to be woefully rift-ridden with its members chasing personal agendas, rather than the industry's needs as a whole. Being just-born, however, it is likely to have its share of teething troubles and hopefully it will grow up at some stage into an industry body genuinely looking after the internet industry's interests.

However, back to VSNL and MTNL, which seem to be playing the internet spoilsports. VSNL charges ISPs Rs 72 lakh (the rates are much lower for computer software firms and educational institutions) for a 2 MBps international internet connectivity line. Itshares the line with another two ISPs as its manager (marketing) AK Ahuja claims that it is possible to get throughput thrice of 2 MBps, through each 2 MBps pipe probably with the aid of digital compression. Each ISP has to pay additional charges to MTNL for installation and for local lines varying from a minimum of Rs 12 lakh to a maximum of Rs 53 lakh depending on the distance.

Excellent, but private ISPs say that they are getting barely 39-40 per cent efficiency out of the 2 MBps line. VSNL explains this by saying the configuration of the private ISPs' network is at fault and it is this which is causing the snarl-ups and slow internet access for private ISPs' customers. While the private ISPs can work on improving their infrastructure, let's tackle the costs of the 2MBps line that VSNL is providing.

Chief general manager DK Nimal told a seminar in Mumbai recently that an international internet pipe of 2 MBps is costing VSNL four times Rs 72 lakh per annum, that is Rs 2.80 crore. Let's call his bluff.An internet search by this writer revealed that 2 MBps lines were being hawked at somewhere around $60,000 a month in Israel in 1997. This price was being considered a rip-off at that time too because international telecommunications firms were milking off in a nascent internet market like Israel. A researcher in the US Mark Jamieson in Florida responded to a query on this by referring to a publication which said that even a high-cost company such as Nynex in the US priced 2 MBps lines at around $423,296 each in January 1996 for OECD customers. But Jamieson added that this did not reflect market realities as prices were much lower for 2MBps lines in the US.

Another firm A-Link Network Services in the US was offering a slower T1 leased (1.54 MBps) line at $1,050 per month with a one-time set up fee of $2,995 as long back as in 1995-96. Leased line equipment such as routers were being offered at discounts then. Another provider in Germany charged $4,000 a month as rental for a 2 MBps leased line. Closer tohome, Dinayar Contractor, a director of Scat Media & Consultancy, says 2 MBPs lines cost below $1,500 a month in the US currently. And he predicts that leased line rates being charged by VSNL will have to fall by next year as private internet gateways come up reflecting true market prices.

Already, MTNL has claimed that it will offer leased lines at discounts to the price being quoted by VSNL though it is getting those international internet pipes from VSNL itself.

Even at the upper end of the price range of $4,000 a month, the 2 MBps leased line annual cost works out $48,000 per year, which translates into approximately Rs 20 lakh per year. Let's even double that (for any hidden costs like satellite uplinking and transponder rentals) and the levy annually should work out to Rs 40 lakh per year. Where is Rs 72 lakh and Rs 40 lakh? It's all right to make money but is this kind of profiteering justified? If the above international leased line rates are correct, then it is likely that VSNL and MTNL aremaking money hand over fist through leased lines.

Hence, another allegation can be levelled against them: Are they trying to stifle competition by taking advantage of their monopoly status? (Private ISPs have no recourse but to go through VSNL -- MTNL also goes through VSNL -- to get international internet access as there are no private internet gateways right now.)

Is this healthy competition or is the monopoly behaviour of two government-owned organisations continuing in total violation of a rather liberal ISP policy? VSNL may argue that it has struggled to grow the commercial internet services segment; that it has invested huge amounts of money in infrastructure; that it is about time it reaped its rewards. But are these just rewards? And if VSNL is being allowed to get away with this by blinkered authorities then what is to prevent even private firms from also trying a similar tack of overpricing when they set up their own private gateways? Who will be the final sufferer in this scenario? The layinternet user as he will have to pay high access charges to his ISP, which is paying high-leased line rentals for an internet gateway to either VSNL or a private firm.

Actually, even MTNL's misdemeanours need to be looked into. The telco is clearly resisting providing local lines to private ISPs in the numbers that they need to offer a seamless and continuous internet service. And it is also resorting to differential pricing in various cities for reasons unfathomable.

Clearly, the Group on Telecom or the Telecom Regulatory Authority of India (that's if anyone in government is willing to give it the recognition it deserves) or the communications minister or even the Prime Minister's Office need to take a look at these hurdles which are being put in the path of private ISPs and crack down on both VSNL and MTNL right now. Otherwise, the growth of the internet business will not proceed as fast or as healthily as it should and Vajpayee's dreams of India emerging as an infotech powerhouse may not be realisedfully.

The writer can be reached at wanvari@giasbm01.vsnl.net.in or television@hotmail.com. Feel free to email with your comments