Tiger on the prowl, again
By Shehla Raza Hasan | 30 Mar 2002
1
Kolkata: The Bengal tiger wants to prove that it doesn't purr, but roar. Caltiger, the Kolkata-based high-profile Internet service provider, which shot into the limelight about three years back for offering free Internet services to its consumers, has now got new plans up its sleeve.
With the central government throwing open the domain of international long-distance (ILD) telephony to competition from 1 April 2002, Caltiger is aggressively planning to enter that challenging market.
With Videsh Sanchar Nigam Ltd (VSNL) losing its monopoly rights as the sole carrier of international voice traffic for India, the size of the total voice market thrown open is estimated to be anywhere between $120-150 million. India is the fifth largest ILD market in the world and is growing at a phenomenal pace (approximately 40 per cent), which is double the global rate.
For FY2001, VSNL reported traffic of 2.6 billion minutes and revenues of Rs 65 billion for ILD. But the real kill is the 'gray' traffic, which industry estimates put at 70-100 per cent of the reported traffic. Almost all of this traffic is incoming, which would be the potential traffic for private ILD players, post-liberalisation.
In a market that is expected to be extremely competitive, 'time to market' will be a key criterion for evaluating profitability. “We have 'on-the-ground, voice-ready IP infrastructure' that can, with moderate incremental investment, offer an ILD service,“ says Caltiger COO Christabel Silva.
Caltiger, she says, already has voice-capable gateways and switching hardware (@15,000 ports of CISCO and 3 Com), installed in over 20 cities. The network is currently expanding into another 21 cities (15,000 ports have a theoretical capacity of 8,000 million minutes of traffic per year).
The ILD market is expected to be a level-playing field with no particular incumbency advantage to VSNL. VSNL, unlike most ILD carriers worldwide, suffers from a severe disadvantage of not being an access provider. To that extent, the role of VSNL is transparent to both the terminator as well as the originator of voice minutes.
Incumbency, particularly in the ILD sector, has no definite advantages due to certain significant changes in the voice markets. Traditional bilateral agreements have become outdated in today's regularised fast-paced markets. Voice minute trading today is based on dynamic routing, automated delivery of minutes based on costs and quality, simplified and centralised settlement and most often happens through full service-centralised B2B exchanges.
“With the exception of a few state monopoly carriers, most of the free world has moved out of settlement rate contracts, to what is now known as automated, neutral and anonymous trading, much like the online stock markets,“ says Silva.
Even if we take cognisance of the fact that all outbound international calls originating from Mahanagar Telephone Nigam Ltd-Bharat Sanchar Nigam Ltd network would necessarily be routed through VSNL's network, the volumes just don't add up. The current ratio of calls into India and outbound is 80:20. This ratio is not expected to change significantly with the new policy permitting just the existing licensed basic and wireless operators to originate ILD traffic.
Most locations have between two and four such operators, and the lack of competition here will hold prices to fairly high levels. On the other hand, since the bulk of the traffic is incoming into India (driven solely by a function of price and quality), it creates an equal opportunity play for all ILD operators, says Silva.
Caltiger is uniquely positioned to harness this opportunity due to its interconnect, with the local basic operator already in place in 20 top Indian cities. Almost @1500 Mbps (22,500 circuits) of optical fibre and equipment is interconnected between the basic provider and the company's network operation centres (NOCs).
In smaller cities, where fibre is not laid in the last mile, the current inventory of 260 pairs of channelised E1 HDSL modems are capable of another 460 Mbps of high-quality capacity. This ground infrastructure gives more time to market advantage.
“The advantage of having a network covering all major and minor cites in India is significant considering the fact that direct interconnection with access providers is permitted under the license. We expect it to take about six to nine months for a Greenfield operator to replicate this set-up,“ says Silva. Caltiger expects the saving in domestic long-distance transportation of traffic will directly reflect as profits.
Silva is confident that her company has the strength to offer the lowest possible rates. “In this competitive market place we have the ability to service customers at extremely low overheads. Voice minutes are a commodity, and the success will go to the player with the lowest cost.“
Caltiger's current management team has years of experience in setting up voice and data networks. Before being an ISP, the company was in the business of installing equipment and infrastructure for basic and cellular networks. It has worked for over 10 basic and cellular operators and five paging operators in setting up their networks.
In its ISP business, Caltiger has serviced over 200 corporate and 750,000 retail customers. It has a full-fledged 10-seater call centre and a 40-man team of software, database and application engineers for backend IT functions.
With the central government throwing open the domain of international long-distance (ILD) telephony to competition from 1 April 2002, Caltiger is aggressively planning to enter that challenging market.With Videsh Sanchar Nigam Ltd (VSNL) losing its monopoly rights as the sole carrier of international voice traffic for India, the size of the total voice market thrown open is estimated to be anywhere between $120-150 million. India is the fifth largest ILD market in the world and is growing at a phenomenal pace (approximately 40 per cent), which is double the global rate.
For FY2001, VSNL reported traffic of 2.6 billion minutes and revenues of Rs 65 billion for ILD. But the real kill is the 'gray' traffic, which industry estimates put at 70-100 per cent of the reported traffic. Almost all of this traffic is incoming, which would be the potential traffic for private ILD players, post-liberalisation.In a market that is expected to be extremely competitive, 'time to market' will be a key criterion for evaluating profitability. “We have 'on-the-ground, voice-ready IP infrastructure' that can, with moderate incremental investment, offer an ILD service,“ says Caltiger COO Christabel Silva.
Caltiger, she says, already has voice-capable gateways and switching hardware (@15,000 ports of CISCO and 3 Com), installed in over 20 cities. The network is currently expanding into another 21 cities (15,000 ports have a theoretical capacity of 8,000 million minutes of traffic per year).
The ILD market is expected to be a level-playing field with no particular incumbency advantage to VSNL. VSNL, unlike most ILD carriers worldwide, suffers from a severe disadvantage of not being an access provider. To that extent, the role of VSNL is transparent to both the terminator as well as the originator of voice minutes.
Incumbency, particularly in the ILD sector, has no definite advantages due to certain significant changes in the voice markets. Traditional bilateral agreements have become outdated in today's regularised fast-paced markets. Voice minute trading today is based on dynamic routing, automated delivery of minutes based on costs and quality, simplified and centralised settlement and most often happens through full service-centralised B2B exchanges.
“With the exception of a few state monopoly carriers, most of the free world has moved out of settlement rate contracts, to what is now known as automated, neutral and anonymous trading, much like the online stock markets,“ says Silva.
Even if we take cognisance of the fact that all outbound international calls originating from Mahanagar Telephone Nigam Ltd-Bharat Sanchar Nigam Ltd network would necessarily be routed through VSNL's network, the volumes just don't add up. The current ratio of calls into India and outbound is 80:20. This ratio is not expected to change significantly with the new policy permitting just the existing licensed basic and wireless operators to originate ILD traffic.
Most locations have between two and four such operators, and the lack of competition here will hold prices to fairly high levels. On the other hand, since the bulk of the traffic is incoming into India (driven solely by a function of price and quality), it creates an equal opportunity play for all ILD operators, says Silva.
Caltiger is uniquely positioned to harness this opportunity due to its interconnect, with the local basic operator already in place in 20 top Indian cities. Almost @1500 Mbps (22,500 circuits) of optical fibre and equipment is interconnected between the basic provider and the company's network operation centres (NOCs).
In smaller cities, where fibre is not laid in the last mile, the current inventory of 260 pairs of channelised E1 HDSL modems are capable of another 460 Mbps of high-quality capacity. This ground infrastructure gives more time to market advantage.
“The advantage of having a network covering all major and minor cites in India is significant considering the fact that direct interconnection with access providers is permitted under the license. We expect it to take about six to nine months for a Greenfield operator to replicate this set-up,“ says Silva. Caltiger expects the saving in domestic long-distance transportation of traffic will directly reflect as profits.
Silva is confident that her company has the strength to offer the lowest possible rates. “In this competitive market place we have the ability to service customers at extremely low overheads. Voice minutes are a commodity, and the success will go to the player with the lowest cost.“
Caltiger's current management team has years of experience in setting up voice and data networks. Before being an ISP, the company was in the business of installing equipment and infrastructure for basic and cellular networks. It has worked for over 10 basic and cellular operators and five paging operators in setting up their networks.
In its ISP business, Caltiger has serviced over 200 corporate and 750,000 retail customers. It has a full-fledged 10-seater call centre and a 40-man team of software, database and application engineers for backend IT functions.
