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The forming of a consortium by IP II players RailTel, Gail, and Powergrid brings together an OFC network which would be second only to BSNL. The project, nicknamed Triveni, plans to offer range of bandwidth related services including e-entertainment, e-education and e-medicine. The consortium aims to offer Virtual Private Network (VPN), broadband and managed services to enterprises. These companies' existing revenue is approximately Rs 115 crore by virtue of, primarily, leasing out their network to telecom service providers. Lack of any significant experience of dealing with customers would be a big hurdle for the consortium. They would compete against companies of the likes of BSNL, Reliance, Tata, which would not be an easy task.

State telcos are facing a tough competition. So it remains to be seen how the consortium shapes up in the coming months

The soon to be formed consortium has set a revenue target of Rs 1,000 crore by 2008. The plan is to expand the network to 75,000 route km in the next 2-3 years covering 340 district headquarters. The combined network would have more than 2,300 points of presence in the country. According to calculations done by the three companies, the total broadband business in India would be worth about Rs 9,000 crore in the next 4 years. The consortium aims to garner about 10% of the revenue. A joint working group will work towards putting the MoU into a viable business model.

The consortium is also eyeing a slice of the exploding domestic long distance market, which, according to Voice&Data, stands at Rs 6,261 crore during 2004-2005. The doing away of IP II and IP-VPN licensing has given a further shot in the arm of the new venture. The government has decided to migrate the existing license to an NLD/ILD service license. But there is a catch. It has also mentioned that IP-II licensees not interested in migrating to NLD/ILD shall not be permitted to provide national/international leased line/bandwidth to individual subscribers as per the existing IP II license guidelines. It should not be forgotten that state telcos, BSNL and MTNL have been having a tough time fighting competition. So, it remains to be seen how the consortium shapes up in the coming months. Industry observers say that it would be a better idea for the consortium to continue to offer bandwidth services to leading operators and refrain from venturing into an area where success won't be so easy.

Lack of experience in dealing with consumers stands in the way of the RailTel-GailTel, PowerGrid consortium's success in offering telecom services. There is a lack of clarity regarding their strategy. There are reports of RailTel selecting seven firms to market its services and provide last mile which makes things more confusing. It would be difficult for the trio to move beyond their core competency which is primarily providing oil and gas services. From leasing of infrastructure to actually offering it is not going to be an easy task for the consortium. The only big advantage the consortium will have is the backbone of 59,000 route km of optic fiber backbone.

Sudesh Prasad

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