Mahanagar Telephone Nigam Ltd has introduced a post-paid Internet access scheme that will help users pay for Internet as per usage, and will bundle the billing for it along with the monthly telephone bills.
Named Calling Line Identification-Based Instant Internet Access Service, it charges Internet usage at 10 paise a minute plus local charges.
Users would have to dial 24880000 to connect to the service. The username would be the telephone number from which they are making the connection and MTNL would be the password. The service would be charged on a pay-as-you-use basis.
The service is currently available only in Mumbai and will soon be extended to Delhi.
"You can access Internet immediately without the need for stepping out of your home/office to buy a CD pack. Also since the billing will come as a part of your monthly telephone bill, it reduces any inconvenience caused while paying Internet bills, " says K P Ravindra Kumar, senior manager, value-added services, MTNL.
With its post-paid Internet access and convergent billing scheme, MTNL has changed the rules of the game, making redundant the emphasis on the distribution and retail network that pure-play ISPs like Videsh Sanchar Nigam Ltd or Satyam have been laying on.
Sify has 8,000 retail points, whereas VSNL has over 2,400 in addition to offering options like online renewal to customers.
Both, however, remain unfazed by MTNL's latest move.
"Nothing changes. AT&T bought a cable company to try and do convergent billing and failed. The skill to offer an Internet service that is of high quality and consistent in terms of user experience is different from that to offer basic telephony services," says David Appasamy, general manager, corporate communications, Sify.
Quality of service is something that VSNL too is banking on.
Prateek Pashine, head of retail business, VSNL, concedes that convergent billing will add significant value to the customer, but it is finally quality of service that will lure a customer eventually to an ISP.
"As an Internet user, you are finally going to go with somebody who gives you good connectivity. VSNL has among the best connectivity to offer for dial-up users. An IMRB ISP report of 2001-02 says that VSNL rates higher than any other ISP in the market today. That is the only plank that we will be working on to woo customers," says Pashine.
There are other factors that might prompt users to stick with their current ISP. Many first time users are exposed to an ISP package at a retail point or register with bundled access services sold along with the computer.
Besides, registered users show reluctance to shift because of the change in email address.
The restricted reach of MTNL to just Mumbai and Delhi also seems a limitation for the new offering.
"Sify's services are available across metros, mini metros and small towns. So the reach is extremely wide," says Sify's Appasamy, while VNSL's Pashine points to that VSNL offers international roaming in about 232 countries.
There is no denying, however, that post paid services will, in the long run, give an upper hand to ISPs who are also basic telephony services providers. This will possibly dent the level playing field of pure-play ISPs.
Yet repeated attempts to work out a revenue sharing arrangement between the ISPs and basic service providers have not worked out. The upper hand that basic telephony service providers have has ensured that they do not even get on the negotiation table.
"ISPs have driven more than Rs 1,600 crore (Rs 16 billion) in revenue because of the use of telephone lines for Net usage. Yet, unlike the international norm, telecom companies have not shared the revenue made possible by this nor have they given interconnection charges between their networks and an ISP's network. They have been allowed to do this primarily because they are state run entities," says Appasamy.
The Internet Service Providers Association of India has termed the move 'unfair'. It has indicated to telecom regulator Trai the need to ensure that pure play ISP's do not get a rough deal.
With a number of ISPs folded up over the last two years due to difficult market conditions, the regulator must ensure a level playing field for those who want to remain in the business, feels ISPAI.
"There is a talk of pure play ISP's not being able to withstand such tactics especially since their overall business prospects have been bleak for some time now. Their survival itself is a question. Hence, it's important for the regulator to deal with this in the right perspective, if it wants to maintain competitiveness in the market," says Amitabh Singhal, secretary, ISPAI.
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