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ISPs feel the heat as Net users log off

06-January-2004
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ISPs feel the heat as Net users log off

The number of Internet subscribers in the country has almost stagnated as more users logged off because of poor service quality and high cost of dial-up Net connections.

New Internet connections, which grew to 30 lakh by March 2001 from 2.8 lakh in March 1999, were just about three lakh in 2003, taking the total subscriber base to barely 40 lakh, according to rough estimates by the Internet Service Providers Association of India (ISPAI).

A drop of about two lakh subscribers in the first quarter of 2003 meant that there was virtually no growth for Internet during the year. By end of 2002, there were 40 lakh subscribers.

"Internet in India is stagnating now as dial-up Net access is losing users," said Mr Amitabh Singhal, Secretary, ISPAI. Dial-up accessing accounts for as much as 95 per cent of the total Net subscriber base.

Internet access through other means such as DSL and cable are yet to take off in a big way because of high cost of access devices such as cable modems and lack of quality broadband content.

A dial-up user currently spends about Rs 30-35 per hour, which includes telephone and ISP charges, for Internet surfing during daytime. At the same time, one can surf the Net for Rs 15-20 at a neighbourhood cyber café.

Mr Singhal said many ISPs have stopped providing new dial-up connections as they incur more losses as users surf more. Severe competition among ISPs led to rates dropping to Rs 8-9 per hour, while the actual cost per hour for them is around Rs 16-17 per hour.

"We are not aggressively marketing our dial-up services," says Mr Jasjit Sawhney, CEO of Net4India, a Delhi-based ISP with over one lakh subscribers. "We have lost more subscribers," Mr Sawhney said.

Companies such as Wipro and BPL have stopped providing Internet service while ISPs such as Caltiger, which once had about 7.5 lakh subscribers, have folded up. About 200 ISP licences have been surrendered so far.

Aggressive strategies by State-owned telecom companies, Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd, which offer Internet at a lower rate to their phone users, have also affected private players, Mr Singhal said. "The growth is happening only to BSNL and MTNL."

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