O wing to the lack of a credible hosting infrastructure in India, more than 80 percent of Indian businesses who took to the world wide web, chose to host overseas.

Hitherto, the likes of VSNL, thanks to their ISP presence, were offering rudimentary hosting services out of their ISP nodes. These facilities were not geared up to meet the key parameters crucial for a stable quality internet presence:

• Redundancy

• Scalability

• Reliability

Let us examine the mass preference of Indian businesses for choosing US as a hosting destination. What emerges is that:

• The Internet economy matured years ahead of India in the US, leading to a proliferation of multiple buyers and sellers. The resultant market forces have ensured that prices to prevail are those that the market can absorb.

• The investments would have undergone depreciation, making the current prices being offered affordable.

• There are several public internet exchanges in the US and all a pure IDC player needs to do is connect to the exchange and access as much bandwidth needed and in some cases pay only based on utilization.

• Bandwidth is an affordable commodity. This commodity is perishable and therefore, affordable prices are of extreme importance.

• Most leading IDCs are carrier-neutral thanks to Internet exchanges and can service every browser qualitatively.

In most cases, for similar offerings, prices in the US are 50% lower than those offered by organized players in India!

But the entry of organized players have changed all that. Their advent has led to world class hosting infrastructure to be created in India. This, together with new market development efforts, have led to the re-examining of hosting options.

The proposition of organized players like SatyamHosting is that the primary basis of choosing the hosting destination is a function of the geographic concentration of the target audience. So, if an Internet business’ target audience is primarily India-based, then the hosting destination needs to be India and the benefits of choosing India are several (due to the unique facility and network design for India-centric applications can be created):

• The international bandwidth (which is the monopoly of VSNL) connecting India to the US is choked as a result of which the browser speeds are not satisfactory.

• Every time an Indian browser accesses a site/application which is hosted in the US, the request travels all the way to the US and then the packet returns to India. The number of hops it travels could be anywhere between 15-30 hops. Now compare this with the browser experience, if the same site were to be hosted in India. The WAN network keeps local traffic local and ensures that no browser is more than 3 hops away from the web site application. This means enhanced browser experience in turn leading to positive word of mouth and increased referrals. So, if the site model were based on advertising revenue, this would mean increased page views and thereby more revenue earning potential.

• An online presence requires a fair amount of co-ordination and the time zone differences between India and the US make this coordination difficult and, at times, adversely affects browser experience. Moreover, the day shift here in India coincides with the night shift in the US and usually the quality of the staff manning the night shifts is of suspect competency.

• Tasks like web server administration, creating passwords and so on are frequently required by Indian clients hosting in the US. Any such activity which requires manpower interface is classified as a "pair of hands" and is charged by the hour!. The prices charged are in the range of $400-500 per hour. By hosting in India, clients have hands-on access or alternatively, can fall back on IDC engineers who can execute tasks without commercial tariffs.

• The network performance (depending on the network of IDC) is entirely under IDC control and therefore, performance parameters can be defined and committed to clients. This is impossible when the browsers travel over multiple networks internationally, to access sites based in the US.

• The legal accountability in case of non-delivery against commitments is higher if both the client and the hosting service provider are India-based as the transaction would be governed by comprehensive SLAs, with legal provisions clearly explained.

Prices assume a lot of importance in today’s depressed market conditions, coming in the wake of more realistic investment outlays and the need to minimize investments and maximize returns. However, it is important here to note that Indian tariffs are significantly higher primarily because of the bandwidth scenario.

VSNL has sole access to international bandwidth and every hosting service provider in India needs to buy bandwidth from VSNL. As in any monopolistic situation, VSNL has been skimming and preventing market forces from dictating the prices, and making Indian businesses choose the US as a hosting destination. All this will change once the VSNL monopoly ends on 1 April 2002. A multiple seller-buyer scenario for bandwidth trading will then emerge and lead to market forces dictating prices—making it competitive internationally.

This, coupled with the planned setting up of Internet exchanges in the country, will surely make India an attractive hosting destination for both Indian and international business. And technical expertise, a key parameter, needs no proof as far as India is concerned.

Parag Amalnerkar, senior product manager, hosting division, Satyam Infoway