Satellite bandwidth enters the marketplace while HLL finetunes its Net strategy, and rediffmail registers spectacular growth. VCs in both Mumbai and Hyderabad are on the lookout for money and mature companies, not just ideas.

By Aparna Ramalingam & Vinod Mahanta 
With reports from Roshni Jayakar & E. Kumar Sharma

e-lead

Please welcome the probability of an additional one gigabit of internet bandwidth in India. The Department of Telecom (DoT) has announced that ISPs setting up international gateways using satellite transponders can directly sell excess capacity to other ISPs. Earlier, this facility was available to ISPs with submarine cable landing stations. The total bandwidth in India at the moment is approximately one gigabit, with VSNL accounting for close to 775 megabits.

• HLL's redesigned corporate website will be uploaded by the end of March, 2001. This will coincide with the launch of hllcareers.com, which will jump-start the consumer goods major's positioning as a pro-active online recruiter. Then, HLL has also entered into a strategic tie-up with the NASDAQ-listed ivillage.com for a women's portal for the Indian market. The business will be fully-owned and managed by HLL. iVillage will be paid a fee for the content, technology and knowledge it provides. It's a long-term investment explains Hemant Bakshi, HLL's head of e-commerce (Consumer Connectivity), adding: ''We are also aware that this medium is yet to mature and are willing to invest for the future.''

e-news

• On the heels of Intel exiting from Rediff.com, the portal announced its Q3 results ending December 1, 2000. Perceptions have improved. The ADs has appreciated on the NASDAQ (to around $5), taking the market cap to $118 million (that's slightly more than double the cash on the balance-sheet). While growth, at 31 per cent, has slowed down in q3, 2001-as opposed to the 52 per cent growth in the previous quarter-gross margins remain stable at 65 per cent. Also noteworthy is the spectacular growth of rediffmail; the company says that it has 4.08 million subscribers for the mail service, a jump of 94 per cent over the previous quarter. Finally, revenues from e-commerce now account for 9 per cent of Rediff's net revenues.

• Apnaloan.com has acquired Mumbai-based Trivia Technologies for an undisclosed amount. Trivia Technologies manages wealthfront.com, a financial planner and tool site, and calciplus.com, a personal finance horizontal portal. According to reports, ICICI will sell 8 per cent of its equity in subsidiary ICICI Infotech to a UAE-based financial services group company, Emirates Merchant Bank. ICICI has proposed to transfer 3.8 million equity shares to the foreign bank for $12.25 million.

• eVector, the subsidiary of the Bangalore-based Trigyn Technologies, has developed what it describes as an open multiple access messaging platform that facilitates mobile-enabled businesses and business applications. That means messages can be sent and received in the user's preferred language irrespective of the language in which it is created.

• IIT Madras, along with Harvard University, Massachusetts Institute of Technology, and Boston-based Internet Business Capital Corporation are starting a Sustainable Access in Rural India (SARI) project to provide internet and voice connectivity to over 2,000 villages. In Phase 1, the sari project will cover the short distance charging areas of Madurai and Battagunda districts.

e-mood

• They're nobody's children. Venture capitalists are disowning their first round investments into dotcoms. The mantra: no more money. While a number of VCs are encouraging dotcoms to source alternate funding or even debt funds, a few have given their understudies bridge loans to tide over the crunch. As a result, VCs aren't really looking for ideas; maturity is the desired attribute. ''I look for companies with Rs 10 crore turnover,'' proclaims a VC. The only space that defies this trend is e-broking. Indiabulls, for instance, recently got Rs 10 crore funding from Infinity. Investmart has also raised funds recently. Not surprisingly, the VCs too are finding it tough to raise their next round of funding. Chrysalis Capital is reportedly struggling to close its second round of funding. Other VCs raising money include Accordiant, Connectcapital, ING Barings Private Equity and Infinity. As a result, says Sumir Chadha, managing director, Westbridge Capital Partners, ''Time is a constraint for VCs raising funds.'' No time...no money.

• Over to Hyderabad, where there's bad news for the infotech-savvy Chief Minister N. Chandrababu Naidu. ''The it scene here seems to be hit by the general slowdown in this market, and an overall shortage of funds, as most VCs are themselves busy with the second round of fund raising,'' says Jignesh Bhate, 29, CEO, Idea2Solutions, an incubator company. It also appears that the appetite for it-services is diminishing, with a distinct shift already noticeable in some of the new start UPS, many focused on telecom products and high-end technology. Concurs K. Krishnam Raju, 40, director, VisualSoft Technologies: ''there is a feeling that, over time, margins will increasingly shrink in areas like maintenance contracts and medical transcription, with new competition coming in from China and Russia.'' For now, bio-infomatics is the rage. And dotcoms? On the back-burner.

P R O P E R T Y  S I T E S
Virtually Real

Would you buy, or even rent, a house online? That is a question that plagues the online real estate players, which is suffering a serious crisis of confidence. On the face of it, there's enormous potential. The mood is perfect too. The decline in commercial property prices has reached a plateau, while residential prices are at rock bottom. But will all this potential for real estate excitement translate into revenues for property websites? ''The net will add value by providing accurate information dissemination, transparency and speed to the real estate transaction process in India,'' says Naresh Malkani, CEO, Indiaproperties.com.

A typical property site provides a platform for brokers, builders, and developers, apart from alliances with product manufacturers (glass, paint, and cement), service providers (waterproofing services, for instance), banks and insurance companies, and even alliances with companies specialising in property law and taxation. ''A person usually buys and sells a house once in a lifetime. But he needs the other services frequently'' explains Shamit Khemka, CEO, Sampatti.com.

Then there's the touch-and-feel factor. Sampatti, for instance, offers virtual property tours, while Indiaproperties has a GIS system in place. ''The technology will take over as we move ahead, and people will be able to take a more informed decision,'' says Naresh Nadkarni, CEO, hdfcrealty.com.

That seems a bit optimistic. A website can only bring the interested buyers and sellers together, but cannot close the deal online due to the complex nature of the product. ''We realised that you cannot create transactions on the net, so we just show the surfer the properties and provide information about the persons to contact,'' says Jagan Varudani, CEO, abodesindia.com. Unfortunately, even these property databases often have outdated information.

And revenues? For instance, Indiaproperties leverages its broker network by having a subscription model for putting a property online. There's the advertising option too, but the number of ads are few and far between. ''Online data is perceived to be insufficient in the buyers' search process,'' avers Varudani. Then, brokers will have to be trained. Moreover, due to the secret nature of the business, affiliates are uncomfortable with sharing information on the net. The bottomline: most Indian real estate sites are still at the stage of content assimilation and aggregation. There's not much more to say. 

-Vinod Mahanta

S A T E L L I T E  G A T E W A Y S
A Future In Thin Air?

You can't see them, but those big birds in the sky are beaming bandwidth. With the privatisation of satellite gateways, many ISPs are in the launch or the pre-launch phase. Caltiger, for one, plans to expand from three satellite gateways to putting up another seven by March, 2001. Then, satellite companies like Loral Space, Intelsat, and Panamsat have been setting up offices within the country, and Singtel and Thaicom are waiting to get in. But as the cost of fibre optic connectivity is internationally one-sixth the cost of satellite bandwidth, what does the future hold?

A shake-out and consolidation is in the offing. The differentiator: the quality of bandwidth and value-added services. ''While others provide downlinking facilities, we also provide uplinking,'' says Sanjay Kumar, Regional Director (Asia) for Intersat's New Skies. Estel Communications, a Delhi-based data communication company, for example, plans to provide end-to-end connectivity on its satellite gateway, from Eutel Sat 3. ''We provide both dedicated and shared bandwidth, along with internet exchange facilities,'' says Raj Hajela, Managing Director, Estel Communications. Most of the bandwidth provided by VSNL was shared.

Of course, VSNL remains the defacto internet exchange point in India. Says Raghu Das, V-P and GM, Indian Ocean Region, Loral Space: ''All ISPs would like to maintain a defacto link with VSNL, both for reliability and redundancy.'' Adds Amitabh Kumar, Director (Operations), VSNL: ''Private operators are no threat as they have small earth stations and are just not cost effective today.''

So what will happen to the cost of satellite bandwidth, currently at Rs 60 lakh to Rs 70 lakh a year for a 2 mbps pipe? One estimate says that this figure will come down to about Rs 3 lakh in a couple of years. ''Then all these investments will come to naught. So, the players are working overtime to recover the costs in good time,'' says Joe Silva, Chairman, Caltiger. Disagrees Chander Bhan, MD, Indam Telecom Consultancy Services, a subsidiary of Panamsat, which is providing the satellite gateway to Mantra Online: ''At the same time, nobody is putting any ceiling on the demand requirement. If one looks at US, even with so many satellites, there is always a shortage of transponders.''

However, with the boom in the expansion of fibre-optic networks and the expected free-fall in bandwidth prices, satellite broadband could be pushed back into a niche market. In time, competitive pricing and improved quality will make private players and users pitch for cable connectivity in all markets except remote locations where the satellite route is reliable and cheaper. Moreover, the satellite route is a good option for browsing, but not as reliable as fibre-optics for online applications. Says R. Ramaraj, 49, Managing Director, Satyam Infoway: ''In the future, players could either lease capacity or invest in earth stations.'' For the moment, however, it's a two-timing game for the private players. 

-Pooja Garg & E. Kumar Sharma

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