Local providers will face pressure from foreign entrants

Local providers will face pressure from foreign entrants
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First Published: Thu, Apr 19 2007. 02 54 AM IST
Updated: Thu, Apr 19 2007. 02 54 AM IST
New Delhi: The entry of telecom majors AT&T Inc., BT Group Plc. and Verizon Communications Inc. into the Indian market for global connectivity solutions will put pressure on the providers of such international bandwidth in the country, Videsh Sanchar Nigam Ltd, Reliance Communications Ltd and Bharti Airtel Ltd.
The market for the so-called ‘managed services’, which the new entrants plan to focus on, is estimated at $500 million (Rs2,100 crore) today and is predicted to double in two years.
Providers of managed networks, distinct from those who sell just point-to-point bandwidth, allow companies to hand data over to the service provider at one location and receive it at another, without worrying about the method or protocol used in transferring it. Such services require the operator to have staff managing equipment and servers at both the originating and terminating points and allow customers to outsource their connectivity needs completely.
In contrast, most of the international offerings by the three Indian companies hinge on providing raw bandwidth or connectivity pipes to foreign locations. The new providers have different ideas. “We do not want to enter the commodity business of just providing the pipes,” said V.S. Gopi Gopinath, AT&T’s vice president for the Asia Pacific market, after announcing his company’s plans for India. “We believe that, in the future, more and more companies are likely to move away from managing their own communication network and outsource it to operators like us who can do it better and with more efficiency.”
AT&T’s managed network, which connects different offices in different countries using a packet-based technology, reaches 155 countries, while Verizon’s ‘backbone’ network touches 150 countries across the globe. The managed network market, the AT&T executive said, was less than a third of the demand from corporate customers for voice and data communications but this was expanding at 40% a year.
An analyst said a single agency providing for all communications needs had an edge with demanding corporate customers. Indeed, while Indian companies may provide Atlantic and Pacific links, just one—VSNL—offers end-to-end managed global connectivity.
The entry of global players is likely to pressure Indian operators to offer value-added services as well, said Sourabh Kaushal, industry manager of the tech practice at the consultant Frost & Sullivan India.
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First Published: Thu, Apr 19 2007. 02 54 AM IST
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