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Spinal discord

Proposed Internet policy for India

T O D A Y

• Spinal discord • IT bonanza for Andhra • Pamper policy • Tetra comes to India

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 benefits.

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 lost opportunity.

Licensing principles
If Internet service providers are allowed to compete, the Indian government may devise licensing guidelines. These should be based on the following principles:

1. 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.

2. 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 would include:
   1. Requiring licensed ISPs to demonstrate processes for addressing legitimate customer grievances and protecting customers from scamsters.

   2. 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.

   3. Guidelines for ISPs to make filtering software available to their customers at competitive, market-based rates.

   4. 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.

   5. 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.

   6. 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.

   7. 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.

   8. Ensure through licensing that existing email providers are not disadvantaged in any manner and consider their pending requests submitted earlier to DDG-VAS.

   9. 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 switching infrastructure.

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 a bottleneck.

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 countries.

• 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, etc.

• 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.

Appendix
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 rapid change.

For example,

• 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 infrastructure!

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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