October 17, 1997
India lacks an Internet backbone. The government plans one. The
industry wants many more. A confederation of Indian Industries
note has outlined its broad position on the country's Internet
policy. Here's the full text
Proposed Internet policy for India
Backgrounder and broad industry position on key issues
CII National Committee on Telecom
What is at stake
India has enormous potential to use the Internet for access
to information, for communicating information and for creating
and organising information in new ways. Therefore the national
expansion plan for Internet could be one of the Indian government's
most significant initiatives for economic growth and societal
The vibrant growth of Internet technology and services and aggressive
plans by several Pacific Rim countries in Internet infrastructure
and electronic commerce offer ample testimony to the fact that
Internet technologies and services represent a major source of
competitive advantage for nations in the new global economy.
India can simply not afford to pass up the opportunity to grow
at the rate of the Pacific Rim economies in this key area. It
will take enlightened policy and investment for India to catch
up and to grow the use of the Internet. For one of the world's
premier sources of software talent to do any less will be a major
If Internet service providers are allowed to compete, the
Indian government may devise licensing guidelines. These should
be based on the following principles:
- There should be no license fees imposed upon ISPs at any time.
Rationale: First, unlike the wireless spectrum and the
wireless licenses, the government is not providing a finite precious
resource to the ISPs in the competitive model we envision to support
the robust development of Internet services. Therefore, the government
should not look to derive revenue from ISP licenses.
Second, the development of an ISP business requires the creation
of viable business models. It must be recognised that ISP businesses
involve investment that may not provide a return for some and
the potential imposition of license fees in later years will have
a chilling effect on market development.
- Licensing conditions should be held to an absolute minimum,
letting market dynamics decide winners and losers, rather than
an up-front selection process. Appropriate licensing requirements
- Requiring licensed ISPs to demonstrate processes for addressing
legitimate customer grievances and protecting customers from scamsters.
- Requiring a basic level of interconnection and interoperability
in order for ISPs to be able to share competitively provided there
are backbone networks with market-based settlement arrangement.
- Guidelines for ISPs to make filtering software available to
their customers at competitive, market-based rates.
- Recognition by the government that ISPs cannot realistically
monitor and screen intellectual property that uses their services
and developing a very specific process together with ISPs for
the government to give them proper notification about repeat violators
of intellectual property, based on which the ISPs may deny future
access to such customers.
- Interconnectivity between different hubs of the same IAPs/ISPs
or different IAPs/ISPs. There should not be any separate tariff/fee
for the same and normal DoT/VSNL rates should apply.
- Existing email licensees should be freely allowed to opt for
IAPs/ISPs as per the new policy. Their interests in terms of existing
license fees should be protected and addressed in an appropriate
manner as suggested by the association of email provides to DDG-VAS.
- No separate licensing should be required for Web site hosting/electronic
trade and other Internet services as available now or may be introduced
in future on Internet.
- Ensure through licensing that existing email providers are
not disadvantaged in any manner and consider their pending requests
submitted earlier to DDG-VAS.
- The benefit of microwave, GSM and fibre backbones being built
by cellular and basic service providers should definitely be considered
for strengthening the options to build an appropriate domestic
backbone in relation to the one proposed by DoT.
Creation of multiple interconnected national backbones
The creation of a national Internet backbone for India is
a very desirable objective. The US experience has taught us many
things in this regard. The US has settled on a paradigm of multiple
interconnected Internet backbones provided by competing players
who in turn interconnect through bilateral arrangements or through
standardised 'network access points' administered by neutral parties.
A backbone network architecture with multiple interconnected parties
provides the best basis for bandwidth enhancement and technological
innovation; not to mention equity. In the Internet expansion plan,
the proposal that DoT build a single backbone while at the same
time serving as an ISP competing with other ISPs to whom it will
be a sole supplier of backbone bandwidth will be seriously limiting
at best, and entail a conflict of interest at its worst. Independent
backbone providers are needed for an evolving Internet to grow
to is true potential.
The unprecedented build out of backbone fibre and microwave networks
in India to support landline telephony as well as interconnection
of wireless networks offers opportunities for combining Internet
traffic on such backbones, further enhancing any economies of
scale. By allowing multiple backbone providers to support Internet
traffic, the Indian government can encourage efficient building
and use of incremental capacity. We do recognise that while bandwidth
may be shared, switching will be accomplished for the Internet
by the peeling of Internet protocol-based backbone traffic to
be serviced by routers and IP-switchers, rather than by circuit
International gateway and connectivity options
The options presented in the paper involve a trade-off between
a single international connectivity provider (the Videsh Sanchar
Nigam Limited) and multiple international connectivity providers.
Given the rapid Internet technological innovation and the explosive
bandwidth growth that will result from growth in the user base
as well as innovations such as reservation protocols and quality
of service classes, any single provider is likely to quickly become
The ISPs should be able to find the right bandwidth provider and
the technology mix to suit their users' needs. Growth in Internet
services will not only come in the form of a growing user base,
but also in the form of an expanding suite of services. Given
that many transport service features are negotiated between multiple
nodes and gateways in real time, ISPs need the assurance that
all the links in their overall connectivity can be under their
control if they need.
This includes international connectivity and international links.
A VSNL monopoly on international connectivity will lead to poorer
quality of service and slow down innovation that results only
from competition in all segments.
Enabling private ISPs to have their own links will result in dramatically
greater revenues for VSNL. This is because, those ISPs who have
the scale and wherewithal to require their own direct international
link will still go through VSNL for the provision of the leased
line, so that VSNL gets at least half of the circuit cost.
Others may choose to take a connection to either one of the private
ISPs with international links, in which case the bandwidth requirements,
and hence, number of links goes up. VSNL wins again.
As 80 per cent of the content on the Internet is located on the
North American continent, the quality of an ISP's international
connectivity to the Internet is of great importance. International
connectivity to the Internet can be provided in one of two ways
- either through an in-country gateway provider or through direct
leased lines to a major tier 1 or tier 2 service provider abroad.
The key problems associated with using a single in-country gateway
provider amongst others, include:
- Redundancy is dramatically affected as all the country's
Internet users have to depend on the reliability of the single
gateway provider. The gateway provider's internal network as well
as the connections become highly critical. Redundancy is further
affected if the gateway service provider terminates his international
connectivity with one single service provider (say MCI) in one
country, or with a single service provider even if it is in multiple
- Uniformly high latency (and therefore, uniformly low
levels of performance) would also result from all the ISPs in
a country having to use a single monopoly gateway service provider's
gateway. This is because the ISPs in the country would all have
the status of 'tier 3' or even lower providers (the phase 'level
of gateway connection' refers to what type of ISP access provider
the ISP in a particular area is connecting to. There are, for
instance, connections to the VIX providers, 'tier 1' providers,
'tier 2' providers, 'tier 3' providers, etc. A tier 3 provider
has a lower level of gateway connectivity than tier 2 providers.
A packet getting into a tier 3 provider has to typically traverse
several more routers before it gets the delivery to its destination.
The in-country gateway provider would be, at best, a tier 2 provider
connected to a tier 1 provider abroad. If different ISPs in the
country can take the level of connection they desire (i.e. to
a tier 1 abroad or to a tier 2 in the country), they can provide
the quality of service as commensurate with their investment ability.
- High cost of operations through gateway provider Further,
for an in-country ISP who wishes to set up a nation-wide operation,
gateway connectivity in country is invariably more expensive.
This is because the gateway provider will be selling IP port connections
to a limited number of in-country ISPs and therefore operate at
a much high costs than a worldwide provider at UUNET, who will
be offering IP port connections to ISPs all around the world,
and will therefore be operating at much lower cost levels.
In addition to the disadvantages associated with using a single
monopoly gateway provider, there are also significant advantages
to enabling in-country ISPs direct connectivity with providers
abroad. Chief among these are the following:
- Typically the service providers abroad (for example UNNET)
offer value added services over and above more port connectivity
- such as advice on connectivity equipment, assistance with installation
and commissioning, network management and monitoring (of the interconnection)
as well as options such as download of newsgroups, mailhosts,
- More importantly, enabling direct connectivity with premier
tier 1 service providers abroad gives them an incentive to invest
money in the Indian ISP (which they would not have otherwise,
as the Indian ISP would be an isolated operation, and not a part
of the premier service provider's worldwide operations). Not only
does this mean that more capital flows into the country to help
build a better Internet service, but the local partner also gets
access to the worldclass billing, operations support, customer
care, technology and management expertise of the foreign partner.
In summary, multiple interconnected suppliers at each of the three
levels - ISP, backbone provider and international gateway and
connectivity provider - represent the most flexible and growth-oriented
approach to Internet connectivity development in India. Government
funds and subsidies should and can be administered in such a way
that competing suppliers can draw from them in an equitable manner.
Flexibility is particularly important, given the non-linear growth
patterns and rapid innovation taking place in Internet technologies;
and no one player can be assured of keeping up with the changes
and opportunities rapidly enough.
Content related policies
The Internet's power and use derive from enormously expanded
access to information that it provides compared to other media.
The content-related issues that are mentioned but not discussed
much at the end of the report represent important frontiers for
which well though-out policies should be put in place. Technologies
such as PICS (platform for Internet content selection) should
be considered, for example, when it comes to content selection
by individuals or by service providers. We will be happy to discuss
each of the content-related areas in more depth and capture the
state of the art in both the technology and public policy, which
are very much intertwined if we want to maximise the growth and
utility of this revolutionary new medium.
Competition and competencies in the Internet business -
Why multiple providers?
We have pointed out earlier in this note that a competitive environment
involving multiple interconnected providers is necessary in each
segment of Internet service provision - ISP (access provider),
national backbone and international transport/gateway.
Offering Internet services requires a set of competencies that
differ from that of operating a voice telephone network. An experienced
voice telephony provider, however good, is not necessarily a good
and responsive Internet service provider.
The Internet uses dial or dedicated access portions of traditional
telephone networks for the first or last segment of physical connectivity
to customers. It uses long haul and International private lines
for the backbone, but these links are connected by routers or
IP switches as opposed to the circuit-switches that are used for
traditional telephony. While circuit-switching technology is mature
and relatively slow to change, routers and IP switches are undergoing
- Routers are expanding quickly in their bandwidth handling capacity
to include gigabit routers.
- New reservation and prioritisation protocols (such as RSVP)
are being developed and implemented by the multiple competing
providers of technology like Cisco, 3Com, Bay Networks and Ascend.
These will lead to multiple classes of service on the Internet
(conceptually: first class, business class, coach class and standby,
as opposed to only standby today). This will enable video-conferencing
and real-time audio applications, leading to dramatic innovation,
new services and bandwidth growth.
- Technical standards and protocols - ATM and IP, with a new
IP version 6, for example - are rapidly evolving and are being
combined to create new capabilities.
- The operational aspects of the Internet business, including
congestion control and customer care, are vastly different in
complexity from the voice telephony business.
To sum up, a good voice telephony provider is not necessarily
a good Internet provider: however, weaknesses in telephony infrastructure
provision will certainly make for weakness in developing Internet
For these reasons, it is unreasonable to expect that any one service
or backbone provider has the ability to keep up with the technological
and marketplace changes to offer the best possible services to
users and to ISPs. However, no Internet evolution plan can be
successful if all the links are not evolving with the state of
the art. In an environment that supports multiple providers, the
forces of competition will ensure that the providers will adapt
to the latest technologies and develop the most efficient services.
Finally, an agency to manage Internet growth
A national level 'Internet management agency' could be set
up to do exactly that, on the lines of the Telecom Regulatory
Authority of India.
The major difference between the IMA and the TRAI is that besides
protecting customer interests, interconnect standards and quality
guarantees, the IMA should manage the growth and investment in
the Internet business rather than regulate it. Key amongst its
functions should be issues relating to censorship and ways to
protect consumer interests through self-regulation technology
and legislation. The agency should comprise members from DoT,
DoE, industry and users associations.
It is highly recommended that the agency should be formed at the
policy stage but definitely before providing licenses and finalising
license conditions as well as detailing roles for VSNL, DoT, DoE,
Indian industry, international investors and online service providers,
as participants in the Internet liberalisation program.
Policy recommendations for licensing of tier 1, 2 and 3 providers
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