Connectivity

High-speed, low-cost connectivity

Small Businesses, like their larger cousins, rely on leased lines backed by dialup or ISDN. DSL is catching on. Inter-office connectivity is dominated by Gigabit Ethernet, leased links and fibre. Priya Jain reports

Small businesses are using multiple modes of connectivity. According to the survey, 47 percent of respondents prefer dial-up Internet connectivity, followed by 40 percent who prefer leased lines and 27 percent who opt for Digital Subscriber Line (DSL).

However, for inter-office connectivity among small businesses, Gigabit Ethernet (24 percent) is the preferred technology followed by leased lines (24 percent) and optical fibre (19 percent).

Demand for bandwidth is being generated by enterprise-wide applications followed by intranets with manufacturing, services and chemical & pharma being the verticals spending the most on connectivity. The services vertical is the biggest adopter of Gigabit Ethernet, followed by manufacturing and FMCG.

The need for connectivity arises as most of these companies though small are looking for expansion or setting up a branch office. The new office will certainly be connected to the head office via the Net. The survey points out that the mean average of branch offices among small businesses is 6.3 within India. Many of these companies are planning to have some presence abroad.

Take for instance, Peerless Securities, Mumbai. The brokerage house offering financial services with its HO in Kolkata and branch offices in Ahmedabad, Thane, Nasik, Mumbai, Pune and Jamshedpur employs very small aperture terminals (VSATs) to connect its branches and HO. T N Santhosh, IT Officer, Peerless, believes that connectivity is important as they need to work online most of the time.

The need for connectivity is strongly felt due to the increasing use of enterprise-wide applications (67 percent), inter-office connectivity (12 percent) and use of VoIP and Web conferencing solutions.

Having said that, leased-line ISDN, DSL and dial-up have emerged as the preferred media for Internet connectivity. Companies with multiple locations opt for a VPN connection along with leased-line ISDN and dial-up. Further, VSAT services are used for broadcast applications and enabling connection between remote factory locations.

All about money

The overall spending on bandwidth and connectivity is still low but the need for better connectivity is being felt. Of the projected distribution of IT investment between various technology areas, 10 percent of the investment is targeted at connectivity. Of the respondents, 65 percent have invested in connectivity during the last fiscal with BFSI being the highest investor. But 46 percent across verticals still feel that they will be spending on connectivity in the present fiscal as they see themselves growing in terms of business and strength of staff.

Connectivity is looked upon as a means to communicate. Hyderabad Flextech is into manufacturing flexible and rigid circuit boards. They have a unit in Hyderabad consisting of 100 employees. They use a digital cable system for Internet by Digital Communication. P Srinivasa Rao, DGM, Hyderabad Flextech says, “We use 64 Kbps bandwidth. We do not have an e-mail server, only a Web server. As we do not require exchange of data there is no inter-connectivity. If there is an exchange it is through the use of CDs and floppies.”

However, some organisations do use connectivity for transferring data and running applications and are thus in need of higher bandwidth. This would typically be leased lines for terrestrial access and RF for wireless, and sometimes they may be used together for redundancy and fibre. VSATs are used for application-specific purposes by stockbrokers and for rural connectivity by others where adequate infrastructure is not available.

One such example of higher levels of IT adoption is a financial company involved in share-trading. Sandip Shigavan, Assistant IT Manager, KJMC Global Marketing India says, “We are planning for online trading for inter-office and external connectivity, and thinking of going in for VPN connectivity for security reasons.” The company uses Spearmail e-mail server for internal and external messaging. It has 20 Internet users, and consumes 512 Kbps.

Bandwidth patterns

"The fall in bandwidth prices is resulting in gains for SBs with customers being able to purchase more bandwidth at the same price" - P J Nath Sr VP & Head, Sales, Tata Indicom Enterprise Business Unit, VSNL

Looking at the bandwidth scenario in India, the bandwidth usage of BFSI units is significantly higher than average bandwidth requirement of small companies because of the volumes of data. Also, IT/ITeS companies have a greater need for bandwidth than manufacturing companies.

However, those adopting higher bandwidth are doing so because of fall in the prices. P J Nath, Senior Vice-president & Head, Sales, Tata Indicom Enterprise Business Unit, VSNL agrees, “The fall in bandwidth prices is resulting in considerable gains for small businesses with customers being able to purchase more bandwidth at the same price.”

He adds that small enterprises have gained due to improved service levels brought about by competition. Customers can also subscribe for bandwidth keeping in mind their needs through new products like bandwidth-on-demand, variable charge IPLC (international private leased circuit) and so on.

For instance, PNB Housing Finance has 28 branches. Each office is connected internally through LAN. The bank has six levels with different bandwidth requirements. With about 150 employees, the used bandwidth is 512 Kbps at the corporate level.

K Krishna, Senior Director, Marketing, Hughes India says, “Today the connectivity options for customers are multi-fold; however two key trends are driving adoption of these solutions—easy manageability and reduction in TCO. The need for manageability results in use of VPNs managed by service providers and the demand for reduction in TCO leads to SBs opting for Multiprotocol Label Switching (MPLS)-based network.”

Most of the time bandwidth usage depends on the number of users accessing the Net and the applications being used. Girish S Deshmukh, System Administrator, the Pride Hotel says, “We use broadband connectivity from Hathway. The bandwidth used is 512 Kbps. 50 people use Internet for sending and receiving mail. We are planning for leased lines in the future as these are secure and because we need to handle large amounts of data. We use dial-up connectivity from VSNL and Dishnet as backup for our leased lines.”

Multiple modes of connectivity

The key concerns of small businesses are higher speed, security, cost and the ability to effectively use a network. Though new technologies have an edge over these factors, certain technologies such as leased lines still remain popular.

Seadia Pharmaceutical has 15 distributors. Girish Sharma, Manager, IT, Seadia Pharmaceutical says, “We are planning to switch over from the existing broadband connectivity to leased line. This is because the broadband connection gets disconnected frequently and it offers shared bandwidth of 128 Kbps at 1:1. Also there are security issues, virus attacks, problem of hackers. We also use few ports on Gigabit and VPN by Infonet.”

Sharma is right when he says that leased-line connectivity scores over broadband because of security reasons as most people feel that security and speed among leased lines is much better than dial-up or DSL.

"There are some industry-specific trends in SBs. Even the smallest of software/BPO companies go in for dedicated connectivity through leased lines" - Jasjit Sawhney CEO, Net 4 India

Jasjit Sawhney, CEO, Net 4 India says, “There are some industry-specific trends in SBs. For instance, even the smallest of software/BPO companies would only go for dedicated connectivity through leased lines.”

According to Nath, the preferred mode of connectivity for Internet is leased line with the last mile link being provided through Ethernet, as it is upgradeable seamlessly. Organisations that typically deploy an intranet have multiple locations. An intranet is used to address requirements like centralised ERP, messaging and home-grown applications.

A trend that is seen among small companies is use of multiple modes of connectivity depending on the priority of applications being used. For instance, in case of critical data, leased lines still top the list. Dial-up is being used more as a backup measure.

Customers also opt for dial-up connectivity when there are a number of users who need access to low-cost connectivity for a limited period of time, say two hours a day. Dial-up connections can be accessed easily as there are no last mile barriers like in the case of broadband.

In addition, dial-up connections are beneficial in areas not served by other high-speed Internet connection alternatives. Though dial-up connections are more expensive than their alternatives, they offer the facility of dialling an optional telephone number if the primary connection fails.

Globus Stores is using multiple modes of connectivity to connect its 13 stores and three warehouses. These are connected through secured point-to-point links using VPN. The VPN secure user group’s network is controlled by the service provider with a firewall and assured bandwidth. Gigabit Ethernet is used in data centre and copper links on Gigabit and servers. It has 300 Internet users. To connect their branches all over India, Globus requires overall 4 to 5 Mbps bandwidth. Their e-mail service is outsourced through Hathway.

Meheriar Patel, DGM & Head IT, Globus Stores says, “We are planning to increase the number of Globus Stores to 100 by 2007. Our vision is to build in-house brands and towards this end, we are planning to set up a network (integrated) and go in for applications.”

Gigabit coming soon

Gigabit connectivity is generally required by organisations that are into heavy graphic usage like film editing, multimedia and gaming development. For simple applications like ERP, intranet applications like sales force automation, accounting applications and so on there is no need for Gigabit Ethernet. Further, LANs are considered to have a lifetime of more than 20 years, and no one likes re-wiring a set-up frequently.

Krishna opines, “The criteria in choosing a connectivity option is location, number of users, applications and uptime required. Ethernet technology is widely deployed in small enterprises and goes down well with their IT departments. It is cost-effective due to the enormous volumes of these interfaces.”

Hence when a new office is designed, it is always better to design by using the latest technologies available on LAN. This is one of the primary reasons for organisations opting for Gigabit Ethernet these days.

Prana Studio has only one branch office consisting of 225 employees; they have only one marketing office outside India. They use Gigabit Ethernet network (Cat6) as the data transfer is huge. Says Pramod Daval, Manager, IT, Prana, “We have leased-line connectivity of 2 Mbps for Internet access.”

Broadband affecting connectivity

A few years ago, all that was available was dial-up, ISDN and leased-line connectivity at many times the cost today. Most businesses were using the connectivity for basic e-mail traffic. Things have changed significantly now, especially as companies have adopted and implemented a number of IT initiatives across the enterprise.

Most SBs with a lower IT adoption are moving towards some form of broadband (shared) connectivity, i.e. DSL, ETTH (Ethernet to the Home) and cable. Dial-up customers are moving towards broadband at a fast pace, driven by lower costs and the advantages of always-on connectivity in conjunction with VoIP services.

2005 has been a period of structural shift in access of Internet in the country, when broadband emerged as the real alternative to slow dial-up services. From a low subscriber base of 49,000 in December 2004, the broadband market grew phenomenally to touch one million subscribers by January 2006 according to the Telecom Regulatory Authority of India.

Nevertheless Krishna says, “The increase in broadband subscribers is attributed to three major factors i.e. slashing of broadband prices, broadband service providers focussing on the SOHO and SMB segments and value-added offerings by service providers.”

SMBs and SOHOs are using broadband services for business-supporting applications such as messaging, remote access services (SSL VPN) for enterprise mission-critical applications, and e-ticketing.

Sawhney observes, “Broadband penetration has recently gathered pace and will eventually take over from dial-up as long as it is universally available. However, as the market base itself grows there will be a decent share for dial-up.”

He adds that businesses which earlier had 64-128 Kbps connectivity through leased lines, because they were looking for higher speeds than dial-up but did not have the real need for dedicated connectivity have moved on to broadband connections as they cost less. Other than that in the SBs segment, the demand for leased line/RF connectivity is growing at a fast pace with new companies adopting them and existing companies increasing capacities/lines.

Having said that, broadband services have taken off well in the last 18 months with growth fuelled by several factors such as the need for connectivity anytime, anywhere, without interruption. SBs will take advantage of multiple choices like Gigabit Ethernet, broadband and dial-up to meet their growing requirements in the years ahead.

VoIP at a distance

Though the prices of broadband have come down, they have not affected VoIP. The technology has inherent advantages but is yet to gain acceptance among SBs. The only vertical that has seen acceptance of the technology has been the BPO segment.

— With inputs from Vinita Gupta