Record VSAT contract boosts Net in India - Company Business and Marketing

CommunicationsWeek International, May 8, 2000 by Theresa Foley

Hughes has won a deal with a company in India to supply VSATs to 50,000 sites. The network will provide Internet access across the country.

A huge VSAT network to be installed in India later this year by Hughes Network Systems (HNS) Inc. and S. Kumars.com is set to expand Internet access vastly in the country.

The Kumars.com VSAT-Internet network will use satellite technology to deliver broadband Internet and e-commerce services to retail outlets across India. Within a year, the companies claim, it will be delivering consumer and business information and services to up to 25 million subscribers.

"The important thing is that it will reach into parts of India where the information base has not yet been tapped, so that businesses can market into those parts of the country," said Partho Bannerjee, managing director of Hughes Escorts communications Ltd., the New Delhi-based subsidiary of HNS, of Germantown, Maryland.

Currently, only 100 cities and towns are connected to the Internet in India, according to Vikas S. Kasliwal, chairman of S. Kumars.com, of Mumbai, and it is this limited access that spurred the company to invest in the satellite network.

The contract, in which Hughes will install its DirecPC Internet access satellite product at 50,000 sites, is the largest ever for very small aperture terminals, according to William Pitkin, vice president and satellite analyst at Merrill Lynch in New York. The contract is valued at $75 million. "To put the size of the order in perspective," Pitkin said, "for 1999 [Israeli competitor] Gilat did 77,000 terminals in orders--their largest year."

Installation of the Hughes VSATs should start by early fourth quarter 2000, with an installation rate of 10,000 sites per month. "The challenges are to get the right type of satellite to provide high-power transmission, and to build up a franchising network," said Bannerjee. The venture has not yet contracted for its satellite capacity, but Hughes is talking to operators, he said.

Challenges ahead

But according to Pitkin the project will face challenges, not least whether the services will be affordable to consumers. "The demand might be there, but can people pay?," he questioned.

The DirecPc VSAT product has been available worldwide for about four years, but to date Hughes has signed up only around 100,000 users. However, the company is relaunching it later this year with some major changes, including: two-way services over satellite instead of one-way; and more bandwidth allocated to services, allowing users to get closer to the "up to 400-kilobit-per-second" speed advertised.

The Indian project will use the new two-way services now being offered. Bannerjee said the data rate for an individual user is likely to be around 100 Kbps. But, he said: "It's not the individual rate that is important, but the aggregate rate [dedicated to the service]. We're planning 35 Mbps, outbound, from DirecPc, to be shared by 25,000 users."

S. Kumars.com is a subsidiary of S. Kumars, originally a textile company but which has diversified into e-commerce, energy and retailing. Kumars already has a presence in retail outlets all over India, and will use the satellite Internet kiosks to bring Internet and e-commerce services to 1,008 towns. Eventually, the service is planned to connect to 5,000 towns and 600,000 villages in India.

Kiosk services

Under the terms of the contract, HNS will supply only terminals to S. Kumars to enable it to deliver services to kiosks.

Users will be able to surf the Internet, have access to streamed media or store e-mails at mailboxes, Bannerjee also expects heavy usage for shopping. "There is a disparity in pricing for the same goods in various parts of the country in India," he said.

The satellite services will be delivered by S. Kumars via partnerships already in place through its manufacturing and retail businesses. Business users are expected to be customers for services such as training.