Wednesday, March 24, 2004

Industry Roundup

Wireless for Businesses:

Wireless communication has the inherent characteristics of requiring minimal physical infrastructure. This advantage of wireless data communication is especially highlighted in the context of countries like Pakistan where the existing copper infrastructure is in bad shape and fiber reach is next to non-existent. Recently, there has been a race between ISPs offering different delivery technologies to their Internet customers. To those who observe closely, this has also been a race between the wired and the wireless technologies for Internet delivery. The initial excitement for DSL was very high for the business users and for the end users who could afford. However, the inherent never-ending management issues of copper used in the DSL quickly gave a reality check not only to the excited users but also to the excited service providers. DSL connection applications filled in at a tremendous speed but were catered for at a very slow speed. The Small Office Home Office (SOHO) sector (which, for Pakistan, include Desi-Cable Nets and Cyber-Cafés) quickly realized that they cannot wait for the DSL thing forever in their search for higher-than-dialup bandwidths.

Some ISPs started offering wireless solutions to these frustrated customers using off-the-shelf wireless equipment which uses the license-free frequency band. (Wireless solutions could be either in the license-free or in the licensed bands). Since operation in the licensed band carries considerable regulatory overhead on part of the operator, smaller ISPs resorted to offering wireless services in the 2.4 GHz license-free band to meet the existing demand of the customers.

However, since there are just too many such networks operating in this free-for-all band, interference and noises are typically high and the users end up with a bad service. Select few ISPs got on clue early on and opted for the licensed band path which, while cumbersome, could offer their customers all the goodness of wireless and none of the problems of license-free bands. The idea is now catching on with other ISPs and at least three more companies will be offering wireless Internet services to the SOHO market using licensed frequency bands.

A fresh ban on VoIP sites: PTCL finally got the clue on blocking the voice-over-ip websites the right way. Previously, the way PTCL had blocked these VoIP sites was not fool-proof and most ISPs were able to bypass the absurd ban by employing simple network techniques. During the time when PTCL removed its previous configuration and applied the newer (better) configuration, the ban was gone for a small amount of time. This was quickly observed by the industry and it even made to the news in the print media. However, as it later proved, the relief was short-lived and only to be followed by a tighter ban on the VoIP sites. The other source of bandwidth with PTCL apart from PIE (on which the fresh VoIP ban has been imposed) is FLAG. Since the FLAG network is not in the direct administrative control of PTCL, they can only request such bans to FLAG. As of the time of the filing of this article, FLAG have implemented these bans on VoIP sites partially and these bans are still not fool-proof. All that is being signaled here is the fact that PTCL does not have any plans to comply with the directives of PTA to remove restrictions on all Internet Telephony websites and will keep on making its own rules of the game.

ISDN Everywhere:

PTCL must be commended for the ISDN Basic Rate services that is has started offering to the ordinary users. Once (supposedly) only the domain of corporate and commercial entities, the service is now available to the ordinary PTCL users. In its stripped down state, the service provides two feature-packed digital telephone connections delivered over a single cable so that one can connect to the Internet while his/her telephone number still available to receive or make normal telephone calls. The full-blown version of the ISDN service can provide up to 128 kbps Internet connectivity if one has an appropriate account with an Internet service provider.

While the numbers of available ISDN connections are limited and coverage is still not universal, one can now walk in at the Corporate Customer Centers of PTCL in Karachi, Lahore and Islamabad and apply for the service. Not only a new connection costs an affordable amount of Rs 3000, if someone decides to convert an existing phone, the deal gets irresistible at a conversion charge of only Rs 800! To make the offer hard to believe (by PTCL's standards!), the customers are also being given the termination device (which otherwise costs in the range of Rs 12,000 to 15,000) free of any cost as part of the rental agreement.

Cable Internet operators, Cyber Cafe owners and technology savvy general users are responding very positively to the service offer. The services, once obtained by a large number of users, will go a long way towards improving the general performance of community Internet networks and digital connectivity for the general public.

Spending a few hours at the concerned office of PTCL from where these ISDN connections are being given out quickly reveals that the word about ISDN and its magical availability has spread among the cable operators like jungle fire. Hoards of young boys managing the cablenets in their respective neighborhoods could be spotted queued up to get ISDN connection. It appears that very soon, most of the functional cablenets would be turning to ISDN for their upstream requirements. Many of them, when asked, expressed their plans to upgrade their upstream connection from dialup to ISDN and some even plan to replace their existing wireless connection with the ISDN connection. Viewing the large number of new ISDN customers getting ready to be served, ISPs are also upgrading their ISDN service plans making them more affordable and competitive.

Reality Bites:

ISPs with faulty business models are continuing to closing down. Small shops closed down almost silently while those of medium size created a few noises before disappearing in the dark forever. Interestingly, end users did not feel too surprised at the closure of these smaller ISPs as if they had already seen it coming. ISPs with bigger market shares, however, have reported a healthy growth in their network utilization because the market is now shrinking between the players that are now left in the ring.

Tier 2 Cities:

Established ISPs are now focusing on tier two cities. A small group of Internet Service Providers is emerging as nationwide service providers with presence in most of the cities of the country. For one, this indicates the saturation that the bigger markets like Karachi, Lahore and Islamabad face. Apparently, this is being done in search of new markets for the dialup Internet services. While the untapped markets of the tier two cities might look too juicy at first, the small number of user population might prove it to be otherwise later. To make things interesting, the existing PTCL copper infrastructure in the smaller cities is there to haunt the technical and customer service personnel of the ISPs.

Whatever be the drivers and the challenges, the result is that increasingly bigger and better ISPs are now offering their services and customer support to these smaller cities bringing some a fresh air of relief to the population which was previously hostage to the small local ISPs.

UIN access between smaller cities and their closest Internet city has been a point of controversy. While PTCL claims that Internet services are available in almost every city of Pakistan via its UIN access facility, ISPs have reported that there are ridiculously few number of UIN channels to support this claim. Active Internet service providers have already gotten to the point where they are considering entering tier three cities with mini point-of-presence to tackle the limited number of UIN channels.

The DSL Confusion:

The PTCL and PTA duo has been remarkably successful in maintaining the confusion that has marred the DSL scenario from day one. PTCL acted on the directives of the government to start offering DSL services and selected four ‘chosen’ parties as their DSL franchise operators. Established and experienced dialup Internet service providers were kept away from entering this business and they ended up complaining about the situation with PTA. PTA did declare the four selected PTCL franchises as illegal as they had not got any explicit permission from PTA for their broadband operations. In an effort to partially comply with the directives of PTA, PTCL allowed other ISPs to enter the DSL scenario but on game rules set by and to the advantage of PTCL. Despite the industry yelling on top of its voice about it, PTA is yet to take a clear-cut stance on the matter of DSL licenses and DSL operations. Clear policies and stringent application of the regulations by PTA could do magic to the development of DSL cause in the country. [Interestingly, a few days ago, PTA has asked ISPs via ISPAK to present a joint report on the efforts made by ISPs towards the cause of making broadband available in the country.]

In the meanwhile, those ISPs who have managed to enter the DSL arena by creative manipulation of the awarded licenses are facing uphill tasks on two fronts. Firstly, roll out speeds for DSL is all but what was expected. Customers waiting for service provisioning are sitting in the queue for long times.

Backbone infrastructure available to DSL operators to connect their DSLAMs back to their network centers is of critical importance. Internet bandwidth is still very expensive in Pakistan and that is the reason why users witness a unique type of DSL which offers speeds in the vicinity of 64 and129 kbps! However, if the DSL services in Pakistan can sport local bandwidths to the tune of one megabit per sec, a number of positives things such as local content hosting and P2P application usage surge can happen quickly. For cheap local bandwidth to be available to the DSL users, it is important to have bigger and cleaner pipes to connect DSLAMs. Current network design where the DSL operators are using E1 circuits to establish connectivity will remain cumbersome and difficult to scale. High speed interconnect and Internet exchanges between the DSL operators are also needed to realize the dream of having an active local broadband landscape.