NIXI offers new lease of life to beleaguered ISPs

For a nation that likes to see itself as a software superpower, India had the dubious distinction of being among the few countries in the world that didn’t have an Internet Exchange. Now, the National Internet Exchange of India (NIXI) is finally up and running after some false starts, and ISPs and end-customers will benefit. Srikanth R P tells you why an Internet Exchange is important to India as we seek to become a knowledge economy

According to Kobita Desai, NIXI can help Indian ISPs cut operational costs and pass on the benefits to the end-customer. This would help in increasing the Internet subscriber base and hence profitability

The cheery ‘India Shining’ campaign certainly doesn’t include India’s Internet Service Provider (ISP) sector. No one seems to be shining there—of the 587 license holders for the ISP business, over 200 ISPs have closed down. Further, only 205 ISPs are in operation. The Internet subscriber base, which grew at heady rates of more than 200 percent during the boom period between 1998-99 has dropped to negative growth levels today. A sluggish Internet subscriber base and the government’s indifferent attitude has meant that the sector that had the potential to transform India into a knowledge economy is now fighting hard to survive with its back to the wall.

What’s worse, the International Telecommunication Union’s Digital Access Index, which measures access to information and communication technology (ICT) services ranks India at 119 among 178 countries—just four ranks away from the bottom of the category of classification under which India was placed.

New hope

However, despite the bleak scenario, there’s a new ray of light that could help ISPs in slashing their operational costs. The ‘ray of light’ is the launch of the National Internet Exchange of India (NIXI), funded partly by the Union government. To understand how an Internet Exchange can make a difference, take a look at the following facts: Around 60-70 percent of Internet traffic in India is domestic in nature. But in the absence of an exchange at the gateway, the traffic goes over the gateway to exchanges in the US or elsewhere and then gets redirected back to India, consuming not only precious and expensive international bandwidth but also resulting in delays.

Ergo, this means that even if the server is hosted in India, domestic traffic still needs directions from international exchanges to come back to India. Another way of routing traffic is a scenario where an ISP has a peering or an interconnect agreement with another ISP. This would mean that e-mail, for instance, would go directly from the mail server of one ISP to another. But this is not wholly realistic, as all ISPs cannot be expected to have interconnect arrangements with each other. Giants like VSNL who have interconnection arrangements with all ISPs provide a transit service. But in the absence of another significant competing player, VSNL’s tariffs for transit services are priced at a premium.

NIXI will help in ensuring that India-based traffic does not do the expensive roundabout but goes straight to hosting servers in India. With NIXI connecting ISP servers through its own servers in different regions, this would mean that ISPs can exchange domestic traffic with each other. Market sources estimate ISP operational costs will be slashed by a huge 25-30 percent by way of reduced bandwidth costs alone.

Says Amitabh Singhal, president of the Internet Service Provider Association of India (ISPAI), “In the absence of an exchange, all ISPs have been using international links (bandwidth) to send even domestic traffic. In turn, the ISPs have been paying for 100 percent of upstream and downstream international traffic and that too for expensive international transit bandwidth. The full cost of this is borne by the ISP, without any operational control, and therefore ISPs here are expensive as compared to their foreign counterparts. Additionally, quality of service is not under the ISP’s control. As a result there is higher latency and delay in traffic with more packets failing to reach their destination and being re-sent. Localised Internet Exchanges are meant to reduce this imbalance. ISPs who peer locally will be able to get Indian traffic routed locally and hence provide a better customer experience.”

Amitabh Singhal warns that unless VSNL joins NIXI the industry will not benefit and India will continue to lose out on competitiveness with respect to Internet infrastructure as well as businesses that are dependent on the Internet

Adds Kobita Desai, principal analyst, Gartner, “Today, most Indian ISPs are not profitable. And their biggest expenditure head is international bandwidth. An Internet Exchange in India can help ISPs cut operational costs and pass on the benefits to the end-customer. This would help in increasing the Internet subscriber base and hence profitability.”

Down memory lane

While NIXI will not end all ISP woes in India, it will certainly make a significant difference, So, what stopped India from getting an Internet Exchange all these years? There have been attempts in the past to set up an exchange, but all plans failed to take off due to a variety of reasons. For instance, around two years ago, VSNL was the first ISP to set up an Internet Exchange. But the ISPAI did not support this concept as the organisation wanted to support an exchange that was not-for-profit and was totally neutral when it came to connecting and peering member ISPs. VSNL had an excellent reason to use its existing infrastructure since all ISPs peered with the organisation. But as it continued to charge ISPs international bandwidth rates even for domestic traffic, ISPs were reluctant to sit in an exchange controlled by VSNL.

Another attempt was made when Band-X, a US-based company, proposed to form an exchange. But this idea was stillborn as there were issues regarding funding. This time around, Indian ISPs are optimistic, as NIXI is neutral, independent and not-for-profit. More importantly, it does not compete with the ISPs’ businesses, but rather ensures that ISPs become more cost effective and efficient.

Says Sharad Sanghi, managing director of NetMagic Solutions, “By facilitating peering between ISPs, member ISPs do not have to pay a national transit provider transit charges to exchange domestic traffic. This improves performance, particularly when it comes to domestic content and also helps save costs.” Sources at NIXI say that their charges will be far lower than that of any transit service provider.

Adds Uday Sodhi, chief operating officer, Net4India, “Internet penetration in the country will grow only if the cost of access is reduced significantly. This is possible only by effective peering by all ISPs. We believe that if all ISPs participate nationally in this initiative we can see a 25-30 percent savings in bandwidth costs and a significant improvement in the surfing experience.” Market players say that they expect current delays—in the range of 0.7 seconds to 2.0 seconds—to go down to 0.2 seconds to 0.4 seconds, resulting in improved browsing speeds.

Regional exchanges

Instead of one national exchange, ISPAI has also mooted the concept of regional exchanges at STPI Noida, Mumbai, Chennai and Kolkata. Of these, the Noida and Mumbai Internet Exchanges are operational, with 17 ISPs joining the Noida-based Internet Exchange and around 10 ISPs joining the Mumbai-based exchange. The regional exchange concept is unique to India. Explains Singhal of ISPAI, “India is a geographically diverse country. If we only had one Internet Exchange in Mumbai, it would mean that an ISP in say, Guwahati, would have to buy a pipe from Guwahati to Mumbai. This renders the whole exercise meaningless since there will be no cost advantage left and traffic will still travel over long distances. An ISP in Guwahati would be better off connecting to an ISP in Kolkata.” Singhal believes that if this concept of local exchanges takes off and there is growth in overall traffic, there would be local exchanges getting closer and closer to physical clusters of ISPs.

Will VSNL sulk?

But despite the positive signals and the fact that the government is driving NIXI, the big daddy of Indian ISPs, VSNL, has still not joined the exchange, though some sources say that the firm is on the verge of joining NIXI.

Says Singhal, “Most domestic traffic still gets routed through VSNL today and they must join the exchange for the industry to benefit or we Indians will continue to lose out on competitiveness with respect to Internet infrastructure as well as businesses that are dependent on the Internet.” But most analysts Express Computer spoke to said that they don’t expect VSNL to join NIXI as they would lose out on transit charges that they gain from other ISPs.

Additionally, even among the ISPs connected to NIXI, the percentage of traffic that is exchanged today is very small. This is because ISPs would have to disconnect their existing transit links to start depending on NIXI. This will only happen after the stability of NIXI is tested, tariffs are finalised and policies are firmed up.

The cautious optimism of the Indian ISP sector is summed up perfectly by Sodhi of Net4India when he says, “It is critical that all ISPs join the exchange and route 100 percent of their inter-ISP traffic through NIXI. This is a great initiative and it is in their interest [ISPs] to make it successful.” Incidentally, NIXI can not only improve the financial health of ISPs and ensure better services for customers, but can also provide a fillip to the data centre and hosting industry as data centres in India can provide better performance to customers. Countries like Korea, which have high Internet penetration ratios, have used local content hosting and Internet Exchanges very effectively to reduce the cost of Internet access for customers. The ball is clearly in the Indian ISPs’ court now.

srikanth@expresscomputeronline.com