IntechNet to offer unlimited Net use at Rs 8,500 pa

Hyderabad-based Internet Services Provider (ISP) IntechNet may open a new front in Internet price wars. The company has said it will offer Internet services at Rs 8,500 per annum with unlimited hours of access.

Currently, most ISPs charge similar amounts but usually cap usage at 500 hours per annum. IntechNet will kick off services in Hyderabad this month with plans to expand to Chennai, Bangalore, Mumbai and Pune.

The company is also drawing up an aggressive plan to set up its own Internet gateways. Earlier, the company was a class B ISP which restricted its operations at a state level, and has now become a class A ISP which offers it national reach. IntechNet is planning a total bandwidth capacity of 45 mbps. This will comprise shared as well as dedicated access modes. IntechNet also plans to offer bandwidth to smaller ISPs. This bandwidth will be spread over eight gateway nodes in the country. Currently, the company is in the process of testing its pilot gateway node at Hyderabad.

Said IC Rao, CEO, IntechNet, “The other seven gateway nodes should be up by December this year.” IntechNet plans to follow the satellite route to set up its gateways. The company is in talks with Loral Orion to lease transponder capacity. Said Mr Rao, “The total cost of setting up a base gateway node works out to Rs 4 crore, assuming a subscriber base of 10,000 people. Out of this, $20,000-25,000 per month will be shelled out for the transponder.”

Internationally, satellite service providers sell transponder space in packets of 2 mbps for Internet-related services, and cost variance is a function of packaging bandwidth for every node. In case of Intechnet, the company is planning eight nodes where bandwidth will be shared dynamically. The company is also planning to set up nine POPs (points of presence). The total cost of setting up the gateways and allied equipment is placed at around Rs 35 crore. To fund the capital expenditure, IntechNet is planning to float a joint venture with a US-based Internet and telecom company. The company is also planning an IPO by March next year.

IntechNet has an authorised capital of Rs 1 crore, of which Rs 67 lakh is paid up. Said Mr Rao, “We will be expanding the authorised capital to Rs 5 crore.” As per the ISP policy announced in November last year, a foreign player cannot subscribe to more than 49 per cent of a company’s equity. Said Mr Rao, “We still have to work out the details, but are not shy of offering a 49 per cent stake.”

Source: Harshad Oke The Economic TimesAugust 10, 1999.