India's ISPs Want Payola from Big Portals

knorthern knight writes "Story on The Register. America's biggest content providers could face a toll to enter India cyberspace, if plans mooted by the Indian ISP trade association bear fruit. Although the Internet Service Providers Association of India is split on the issue, several of the larger ISPs want to block access to eBay, MSN or Yahoo! unless the prociders pay a toll. 'In order to increase revenue streams we should ask [the portals] to pay if they want traffic on their sites from India,' reports the Hindustani Times."

Comments

Won't work

[csnydermvpsoft]

I don't see how this would work. If the sites didn't cough up the dough, and were blocked, then a single ISP would gain a huge advantage by not blocking the sites, and advertising as such. I know I'd switch to that ISP.

Re:Won't work

[Graymalkin]

You're kidding right? Do you think an portal site paying out dough to ISPs is not going to pass on the cost to its customers? Did you just get here on the slow boat or something?

If a portal like Yahoo had to pay money to reach their users they would just stop any and all free services. How the fuck are they supposed to be profitable with little to no revenues from advertisements, operational overhead, plus tariffs they'd have to pay to ISPs. Where in the positive cashflow in that situation? I'll give you a hint, there is none. ISPs aren't going to charge end users any less. The data capacity of the fiber in the US has risen emensely in the past seven years but the price of internet access has remained relatively fixed.

This is a stupid idea. Portals providing free services to users are not going to fork over money in order to access the ISP's users. If anything they will in return charge ISPs for their services going out to their network and the net change in cash will be 0. All charging tolls does is piss off users. Like the other poster said, people would switch to the one ISP that didn't block access. Likely portals would only allow access from the ISP that wasn't acting like an assclown anyways. If the one ISP charged too much thse customers would go to the next ISP that allowed access to anything and had low rates. You'll notice this pan has no steam behind it because there isn't universal support for the idea. Without a giant cartel of ISPs the plan has no way of working. In a service oriented business the cartel would last as long as it would take for a single upstart to allow free cheap access to everything.

Re:Funny and sad....

[big.ears]

Not only that, but since these portals are probably losing money for every non-western world click-through because their advertisers only want to advertise in North America or Europe, the sites would probably gladly allow their url to be blocked in India.

Re:Sheya, right, as if

[screwballicus]

I know there are a lot of programmers in India and stuff, but do they really thing Yahoo and MSN will care?


Ahem.

India
1 peninsula region (often called a subcontinent) S Asia S of the Himalayas between Bay of Bengal & Arabian Sea occupied by India, Pakistan, & Bangladesh & formerly often considered as also including Burma (but not Ceylon)
2 those parts of India until 1947 under British rule or protection together with Baluchistan & the Andaman & Nicobar islands &, prior to 1937, Burma
3 country comprising major portion of peninsula; a republic within the Commonwealth of Nations; until 1947 a part of the British Empire capital New Delhi area 1,195,063 square miles (3,095,472 square kilometers), population 896,567,000
[M-W.COM]

Enough said.

Re:Lets not forget...

[guttentag]

Some points to note:

• India has 2.2 telephone lines per 100 citizens
• 0.4% of the population uses the Internet, not 10%
• high poverty levels are limiting Web access to the few that can afford it
• "Shopping is still considered a family duty in India, so online shopping may not be as popular as it is in the West"

U.S. tech firms are flocking to India for developers because they will work for about what a Silicon Valley developer pays in rent (this I've heard in-person from developers who were flown to the U.S. for several weeks of training before being sent back -- a lot of them are brilliant, but they have to take what the market in India offers because they can't stay in the U.S.). If that's any indication of the economic state of India, I doubt eBay is that desperate to reach the Indian market.

Yahoo isn't going to pay some smart-ass ISP for the priviledge of allowing Yahoo to distribute its already free content.

And MSN will laugh at them: "You want us to pay how much? OK, but we're invoking the terms of our EULA that allows us to remotely control your systems."

Re:Sheya, right, as if

[TomServo]

So, in other words, what you're saying is, you realize there's a market there, yet you've failed to grasp the way most of these sites & ISP's have worked so far.

People want to see MSN, Yahoo, and eBay. Take that away from them, and they will find alternative methods to connect to the Internet.

Especially in the case of eBay, this will mean near certain death for the current India ISPs. eBay is doing fine as it is, and if my former company's foray into the international market, www.etoys.co.uk, is any lesson of the past, they will not make any effort to go international on their own. If Indian ISPs block it, some smart entreprenuer will offer some sort of alternative connection that doesn't block those sites.

Also, a statement of population has little to nothing to do with a) how many of those people are on the internet and b) how many of them having spending cash to support your advertisers/sellers. Though I have never been to India, I'm going to assume that given the number of Indian workers who have come to America to find good paying jobs and the tales I've heard of poverty in India, there's not a HUGE money market in India right now that any of the three aforementioned sites are going to care at all about.

Still, I'm very impressed that you found the population.

All bull

[Karna]

This story is very very shady. Note that there isn't a paper called Hindustani (note the i) Times. There's Hindustan Times and it's online version has no mention of this at all.

There have been various messages flying up and down Indian telco lists such as India-GII that this is blatently untrue. Move along, there's nothing here to see.

This story is a hoax!

[udhay]

See this comment from a list I run, by an office bearer of the ISP Association of India - the organisation which is supposedly behind this scheme.

http://lists.vipul.net/pipermail/silklist/2002-J ul y/002003.html

Looks like we have misquoting to thank for this "story".

How Internet charges work

[Paul Johnson]

This won't happen. Market forces have already sorted out the way that ISPs pay each other, and the Indian ISPs are swimming against the tide.

The food-chain in ISPs looks something like this: Customer -> Tier 3 -> Tier 2 -> Tier 1, with each level paying the layer above for access. Tier 1 ISPs are people like UUNet with global reach. Tier 2 are national or "regional" (e.g. EU, Americas, Asia-Pacific). Tier 3 are local ISPs, and customers are both individual users and hosting companies.

Actually there is nothing stopping a customer or Tier 3 ISP from signing up with a Tier 1 ISP, and many do. But the principle is the same.

There are two kinds of link an ISP can have to other ISPs: Transit and Peering. In a transit link an ISP pays a larger ISP for access to "the Internet". In other words the smaller ISP can route packets through the link to any destination and expect to receive replies via the same route. In a peering relationship two ISPs, usually in the same Tier, agree to exchange traffic, usually without payment, but with the proviso that only traffic for customers of the other ISP is to be routed through that link. You can't send traffic to B through your peering link with A (although there are sometimes mutual backup link terms in the agreement).

You can think of this in your own terms quite easily. You have a transit link with your ISP that you pay for. But if you and your neighbour exchange a lot of traffic you might string an Ethernet cable between your houses and create your own peer link. But it would be very bad manners to use that link to pinch bandwidth off your neighbour.

The market forces that created this system are very straightforward. Originally the Internet worked with free transit links, but then the people investing in global networks realised that all the smaller ISPs were getting a free ride, and so they started demanding payment. This happened around 1996-7, and you can find lots of discussion papers from that time worrying about "the balkanisation of the Internet". In fact nothing of the sort happened. Metcalfe's law saw to it that everyone found more value from being connected to an unbalkanised Internet, and the net effect (sorry) was that money flowed from you and me up to Worldcom, and much good it did them. Meanwhile the smaller ISPs found that peering arrangements helped them to cut their costs because peer traffic avoided the expensive transit routes.

Thats not to say that things are so simple in real life. Peering arrangements in particular are fraught with difficulty because it usually means negotiating with your direct competitors, and you can play all sorts of dirty tricks like "hot potato" routing (routing packets to your nearest exit point instead of the globally most efficient one). But thats the general idea.

Incidentally the economics work like this regardless of the direction of most of the bits. People who tried to analyse the Internet using telephone economics got this wrong, because with the phone its usually the caller who pays. On the Internet the "caller" is hard to identify and the rules for doing so keep changing. And in any case the issue is irrelevant. You have content providers who want to reach readers and readers who want to access content. (Peer to peer changes the numbers and locations, but not the fundamentals). Both pay ISPs to provide this service, and those ISPs then pay the next tier up, and so on.

So now we look at India, where a bunch of Tier 3 and 2 ISPs are demanding payment from Tier 1 ISPs. The Tier 1 ISPs will rightly tell them to get lost.

I suppose that the Indian ISPs (who are mostly consumer ISPs) might demand payment from content providers such as Yahoo, Slashdot and co, on the grounds that the content providers want to reach Indian eyeballs. But I don't see this flying either. Those Indian eyeballs want the content just as much as the providers want to provide it, which is why you get no-payment peering arrangements between content providers and consumers: its the flow of value that counts, not the flow of bits.

Paul.

Not quite the whole story

[tlambert]

After looking around, it seems like the original TheRegister article disclosed only partial information; the provider list is correct, but the services and the reason for blocking are not (though the effect would be to extort some money and/or partnerships with Indian ISPs).

The actual point in question was the blocking of voice cht services, which by (new) Indian law can only be offered by ISPS, due to the failure of their law makers to distinguish voice chat from IP telephony, when they legislated to permit Indian ISPs to enter the IP telephony market.

The concern appears to be that India requires a license, and requires that you be a Licensed ISP in India, to offer these services.

Here is the original Press information from the ISPAI (Internet Service Provider's Association of India) web site:

http://www.ispai.com/bs05042002.html

-- Terry

Block only the ads

[codexus]

The solution is simple: Block the ads from those portals.
That's even worse for the portal and the ISP customers are happy.