labels: telecom, dishnetdsl, mtnl, infotech, bharat sanchar nigam ltd
The impending WiFi warnews
12 April 2005

With WiFi hotspots likely to land several competitors in a spot, Dishnet Wireless expects to capitalise on its first mover advantage in WiMax — wireless broadband internet access. Venkatachari Jagannathan reports.

Chennai: From day after tomorrow, which also happens to be Tamil New Year, the privately-held Dishnet Wireless Limited, plans to aggressively offer wireless internet fidelity (WiFi) access and wireless microwave access (WiMax) services. In addition, the company will also offer enterprise solutions.

"We are planning an investment outlay of Rs250 crore over 18 months," says V G Suri, 42, vice president, sales and marketing, Dishnet Wireless.

The company is part of the C Sivasankaran-owned Rs850-crore Sterling Infotech group, with business interests in mobile telephony, wireless broadband access, food and beverages, telecom infrastructure consulting, online education, software and speciality restaurants.

The Sterling group was the first company in India to introduce digital subscriber line (DSL) technology for net access in the country through its Dishnet DSL Limited. After ramping up a subscriber base of 50,000 broadband and 1.5 lakh dial up internet access accounts and setting up internet cafes, the wire line internet business was sold to the Tata group''s Videsh Sanchar Nigam Limited (VSNL) 2004 for Rs270 crore. The brand name ''Dishnet'', however, remained with Sterling.

Floating a new company, Dishnet Wireless Limited, the Sterling group announced its entry into the wireless internet access sector.

Part of the roll out plan is to set up 6,000 WiFi hotspots all over the country in one and a half years time. For the past thirty days Suri and his team were soft launching around 150 hotspots in three star hotels, coffee outlets like Barista, educational institutions, shopping malls, trade fair complexes like the Chennai Trade Centre, Indian Trade Promotion Organisation''s Pragati Maidan at New Delhi and others. Soon the number of will be increased to 250.

What is WiFi? It is the term used for wireless connectivity to the internet or to the local area network (LAN). It operates on a standard protocol of 802.11b and enables internet access over a small area, called hotspot, through a transmitter.

Interestingly, Dishnet Wireless is not alone in this field. Bigger telcos like Bharat Sanchar Nigam Limited (BSNL), Mahanagar Telephone Nigam Limited (MTNL), Bharti Televentures Limited and Tata Teleservices Limited are also boarding the WiFi bus.

Between them the two government-owned telcos BSNL and MTNL have finalised plans to set up around 500 hotspots. While BSNL will set up 300 hotspots in 15 cities, MTNL will set up around 200 hotspots in Mumbai and Delhi. The two companies have awarded the contract to the Chennai-based Microsense Private Limited.

Says Microsense managing director S Kailasanathan, "The installation for BSNL will start this month. For MTNL we have already set up around 20 hotspots."

Microsense (2004-05 turnover Rs22 crore) won the two government companies after fiercely competed tenders. "The second lowest bidder quoted twice our rates in the BSNL tender." Apart from setting up the hotspots, Microsense will also set up the network operating centres and provide the OSS.

Microsense will also set up and operate hotspots for the Bharti group on a revenue sharing basis. According to Kailasanathan, Bharti will pay for the hardware while Microsense will use its software and run the hotspots. According to plans, Microsense and Bharti well set up around 100 Airtel hotspots in cities like Mumbai, Delhi and Bangalore.

Kailasanathan could well earn the sobriquet of India''s Wi Fi king. His Microsense has already bagged over 25 WiFi contracts from hotels many of them belonging to hospitality giants like Taj, ITC groups and coffee parlours (Café Coffee Day) in the country. According to Kailasanathan, the company will manage around 200 hotspots.

"Unlike other players, we have our own network management and billing software," he says.

Microsense plans to promote around 1,000 hotspots in six cities — Mumbai, Delhi, Bangalore, Chennai, Hyderabad and Kolkata. "In the first phase we will invest around $3 million. The funding source will be largely through internal accruals. We are also in talks for funding assistance."

With the new contracts Kailasanathan hopes his company reaches a turnover of Rs100 crore within three years.

For the consumer, Microsense'' association with various telcos presents the possibility of roaming facilities across networks. Currently roaming is available within only the subscribed service providers own network. Kailasanathan also plans to offer his subscribers global roaming for which he is already negotiating with foreign hotspot operators.

Targeting the same pie
Meanwhile all the players are targeting their hotspots at the same market segment — hotels, restaurants, parlours, airports, shopping malls, exhibition halls and other public places.

Amongst these, hotels are hot properties for WiFi service providers since like air conditioned rooms, availability of broadband internet access is taken for granted in better hotels.

"There is a generic demand for net access in hotels. To some extent the demand also exists at airports and even railway stations where passengers have spend their time waiting," reasons Kailasanathan.

For hotels, providing broadband net access has become a lucrative revenue source, similar to the telephone charges before the advent of cell phones. Normally 5-star hotels charge Rs600 per day or Rs200 per hour of internet access while the 3- and 4-star hotels provide net connectivity for half the amount. In restaurants the rates hover around Rs40 per hour and at public hotspots Rs25 per hour.

For exhibition complexes, the revenue potential is around Rs25,000 per day. Interestingly, at ITPO''s Pragati Maidan, three service providers already offer WiFi services. They are, MTNL, Bharti and Dishnet Wireless.

The outlay in the case of a standalone hotspot is estimated to cost around Rs30,000. For net enabling all the rooms in 3- and 4-star hotels, the outlay is estimated at around Rs5 lakh and in the case of 5-star hotels the cost would be around Rs20 lakh.

With telcos affect stand-alone service providers like Dishnet Wireless and Microsense? It is worth recalling that the moment telephone companies like MTNL, BSNL and other private operators started offering dial up net access, the business of companies like Sify, Dishet DSL was stymied.

But Kailasanathan and Suri dismisses the notion. "In the case of telcos the main revenue would be from voice traffic. The share of WiFi in the total revenue will be too negligible for them to spend time and effort over. It is better for them to outsource these from an efficient service provider."

Adds Suri, "We have been in the broadband internet access business for the past eight years and have learnt the trade nuances. The same cannot be said of others." Dishnet Wireless has tied up with Pronto Network Inc for hardware. Though Suri does not want to comment, going by the Sterling group''s past history, Dishnet Wireless is likely to hve obtained the hardware and the operations support system (OSS) at rock bottom rates.

Referring specifically to Microsense'' future he adds, "There is always space for focused players. It may look like David versus Goliath, but you know who won."

WiMax from Dishnet
While competition is heating up in the WiFi hotspot segment, Dishnet Wireless will have the first mover advantage in another wireless broadband internet access space WiMax. Simply put WiMax is the wireless substitute for the wired broadband access of the variety provided by DSL and cable.

Though WiMax may appear similar to WiFi, actually it is not. The WiFi spectrum is unlicensed whereas WiMax requires the spectrum to be licensed. More than that, in the case of WiMax the reliability is higher and the quality of service is expected to be better than WiFi.

Currently Dishnet Wireless has set up five base stations in Chennai. According to Suri, the fiscal 2005-06 will see the company rolling out WiMax in eight cities — the four metros (Delhi, Mumbai, Kolkata and Chennai) plus Pune, Hyderabad, Ahmedabad and Bangalore.

"By March 2006, WiMax services will be available in 38 cities around 300 base stations," Suri says.

Ruling out Sify Limited as their competitor in the wireless broadband segment Suri however remarks, "Competition will come from Bharti and Tata group outfits." As to the speeds, Dishnet Wireless would offer access speeds starting from 128 kilo bits per second (kbps) and go upwards.

For its enterprise solutions, Dishnet Wireless targets corporates, business process outsourcing units, call centers. The company has contracted domestic national network in the quantity of STM 64 covering close to 200 cities and towns all over India. The company is also in the final stages of finalising the international bandwidth.

Not wanting to talk about the expected average revenue per user (ARPU) Suri says wireless access would bring in around Rs23 crore during the first year of operations, that is, 2005-06.

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The impending WiFi war