Indian Internet telephony yet to take off

Internet telephony service is yet to make it big in India despite a
significant increase in the Internet subscriber base.

Triggered by issues including access to last mile connectivity and
unrestricted telephony access, Internet Service Providers (ISPs) are unable to
tap the market potential existing in the country.

According to the Internet Service Providers Association of India (ISPAI),
there were 5.9 million Internet subscriber base and 3.9 lakh broadband
connections, as on June 2005. Revenues from the Internet and Internet Telephony
services for the AMJ quarter for FY 2005-06 stood at Rs 550 crore. The industry
is expecting revenues to the tune of around Rs 1,300 crore for the current
fiscal and has the potential to grow three times more than the present.

Telephony caught in a labyrinth of problems despite a market size of Rs 500 cr

Still, all is not well for the industry players. If ISPs lay their own cable
to offer the service, it would be expensive, which would result in bad quality
of service.

The ISPAI has sought unrestricted telephony access that would allow users to
make calls from both mobile and landline numbers. Currently, users have limited
choice in India. This is because only PC-to-PC calls are allowed in the country.

When IP telephony debuted in the Indian Internet market in 2002 there was an
estimated 120-odd ISPs offering this service. The Department of
Telecommunications (DoT) projected the IP telephony market to be Rs 500 crore in
2002.

However there are only 50-odd ISPs now, holding operating licenses. Out of
these 50 ISPs, only five to six are actively offering the service.

ISPAI estimates said that 36 million minutes and 43 million minutes were used
in the JAS and OND quarters respectively in fiscal 2004-05.

In the JFM quarter 2004-2005, 41.5 million minutes were used and it was
further reduced to 38 million in the AMJ quarter in 2005-06. Industry players
attribute this decline to the creation of the vigilance team to monitor and
control the traffic, which, according to ISPs, raised doubts on whether this
service is legal or not.

Kusumba, executive council member, ISPAI said, "Since the vigilance team
was set up six months back, and though usage of international calls through
Internet access was de-licensed, the government has not given enough statements
to ratify that IP telephony is a legal service. Consumers are still in the
belief that IP telephony is an illegal service and an ISP has to undertake
promotional and awareness activity, which is not his job."

SUNITHA NATTI

(CyberMedia News)