Still hanging on to the telephone

TELECOMS

Despite the green light from government, domestic net telephony hasn't taken off.

January 1 was meant to be the big day. The hem-and-haw game behind it, the government had finally allowed Voice over Internet Protocol (VoIP) services, almost free in the US, in India. But three weeks later, no Indian company has stepped into the newly opened arena.

The reasons? To begin with, the government has made a distinction between within-India and international calls, allowing India's Internet service providers (ISPs), who may possibly have entered the VoIP arena, permission only for international long-distance call services, which already has some 40 foreign players such as Skype connecting India to the rest of the world. Domestic long-distance call services are the territory of access service providers (ASPs).

According to a leading operator, though, that policy distinction is not the only hitch; VoIP may not even get much scope to lure customers with any low-price deal within India if the proposed OneIndia plan goes ahead ­- by which all calls within India's borders shall be charged at the same "local" rates.

The plan, having caught the popular imagination, is likely to get implemented. VoIP isn't exactly free, the operator adds; it requires special handsets, so the customer bears a switchover cost.

That apart, existing telecom operators like Reliance or Airtel have very little incentive to invest in new technology to support VoIP telephony.

Also, internet penetration in India is still poor, at a pathetic six million usage nodes (less than a million broadband), which is less than the number of car-owning households.

The telephone base, in contrast, is 125 million. This makes it more likely that the phone will turn into a web-surfing device before the computer turns into a phone. Especially if phone prices fall.

"Calls from computers to phones or vice-versa will have takers only in the urban space," says the spokesperson of another operator.

For those who make frequent overseas calls, though, VoIP remains a good option, with over 40 international services vying for your call. An Indian player would be a late entrant, and without a domestic market to fall back on, would be unable to make headway.

"Under the revised UASL licence, only access service providers can provide Net telephony at 6 per cent revenue share. Internet service providers, too, are being charged the same for offering similar services out of India. We have requested the government to permit domestic access at 6 per cent revenue share rates," says Deepak Maheshwari, secretary, Internet Service Providers Association of India.

Net telephony has seen phenomenal growth in the US, Europe, South Korea and Japan, where the telecom market has fewer policy barriers.

But of course, it is the net-savviness of these countries that has given them the joys of VoIP, and unless India takes to the internet in greater force, many of its benefits could prove elusive. India's poor per-capita net usage has been the real disappointment.