Sankhya Vahini and some questions

Print edition : May 27, 2000

Sankhya Vahini, a joint venture project that envisages a high-speed data communication network to serve as India's high bandwidth Internet backbone, has evoked criticism from various quarters, including constituents of the Sangh Parivar.

ANUPAMA KATAKAM

THE Sankhya Vahini project, conceived with the objective of providing the much-needed broadband data communications network for the rapidly growing Information Technology (IT) industry and Internet activities as also to retain the country's leading posit ion in the global IT arena, is caught in a web of controversies despite the Union Cabinet's approval on January 19. The project, promoted as a joint venture, is envisaged to expand the bandwidth in order to offer Internet connectivity 1,000 times faster than the current speed. What has raised the hackles of domestic telecom manufacturers and some political parties is the method in which the partner was chosen for the joint venture, the credentials of the partner and the perceived threat to national secu rity. They allege that the project, which serves the country's interests, was awarded in a hurry and without competitive bidding.

Dr. V.S. Arunachalam and (right) Dr. Raj Reddy, two principal figures behind the Sankhya Vahini project.

KAMAL NARANG

According to ASG-Omni, the project's consultants and investment managers, in the first year of its establishment SVIL will provide 10,000 km of high-speed connectivity, with the bandwidth extending between 2.5 gigabits per second (Gbps) and 40 Gbps. The existing network can take only 34 megabits per second (Mbps) - 1,000 Mbps make a gigabit. Within three years, it will cover the entire country, providing approximately 25,000 km of backbone network.

High-speed link-up will initially be given to educational and research institutions, and subsequently to government departments, corporate houses, software companies, banks and financial institutions and Internet Service Providers (ISPs).

The system will enable data to flow so fast that it would take just a second to transmit thousands of volumes of an encyclopaedia or run an entire film on a computer without any additional load on the system. It would also have the capacity for video and voice transmission, which, according to its promoters, will make long-distance calls much cheaper.

While computer scientists of the Indian Institute of Technology (IIT) involved in the project generally agree on the need for high-speed bandwidth, the method by which Sankhya Vahini has been structured has caused concern. Besides, the manner in which IU Net has been allowed to have an equity participation of 49 per cent, the credentials of IUNet as a high-speed data network technology provider as well as the alleged "direct links" of the CMU to the U.S. Defence Department have added to the controversy.

What is it that IUNet can provide which DoT, through VSNL, cannot? The critics wonder why a foreign company should hold a large share of equity and also control the interests if what the Indian government requires is only consultants. They also question the government's decision not to invite a public tender.

THE controversy was sparked off when MIT, albeit its small equity share of 2 per cent in SVIL, decided early this year to scrutinise the joint venture agreement. It found that very little was known about IUNet. Since then MIT has been the chief opponent of the project, objecting to several aspects of the MoU and the lack of transparency and a proper discussion on the proposed technologies. On the political front, there have been fiery accusations from the Opposition parties. Significantly, even the Rash triya Swayamsevak Sangh (RSS) and the Bharatiya Mazdoor Sangh, the trade union wing of the Bharatiya Janata Party, were among the opponents of the project. The BMS has brought out a 30-page booklet, raising questions and doubts about the project. However , the government has sought to counter the criticisms through a background paper circulated in Parliament. It has categorically stated that the project will not be reviewed.

Significantly, it was Union Minister for Information Technology Pramod Mahajan who told mediapersons on April 15 that the Centre would not review the project. Although the Parliamentary Standing Committee on Communications headed by Communist Party of In dia (Marxist) member Somnath Chatterjee questioned DoT's decision to collaborate with IUNet without undertaking a study on the technologies available with the company and its competitors, ASG-Omni said the joint venture agreement would be signed soon.

In fact, on May 2, in a government note circulated to the BJP members of Parliament, Prime Minister A.B. Vajpayee ruled out any review of the project, asserting that SVIL will strengthen the technological capabilities of India. He sought to allay fears that SVIL would render Videsh Sanchar Nigam Limited (VSNL) redundant. In a 30-page note, he gave a point-by-point rebuttal of criticisms. Citing the instance of Israel, which has implemented a similar project with the CMU, the note said the project woud not compromise on national security interests.

Defending the choice of the MoU route, the report said that SVIL should not be compared with the proposal for a tie-up between VSNL and British Telecom (BT) for voice and data services that was stalled three years ago on the grounds that VSNL had chosen the MoU route instead of scouting for a partner. The report says: "The VSNL-BT deal was objected to in the context of the apprehension that the facilities sought to be developed might be used for voice telephony for long-distance bypass, which is not per mitted."

Regarding the criticism that the Telecom Commission was kept in the dark while the deal passed through several critical stages, the report admitted that the Commission was informed about the MoU only a month after it was signed. It maintained that althou gh the DoT/DTS in general did not sell or lease optical fibre, an exception was made in this case because DTS is a shareholder and the agreement contained the details of the fibre optics costs.

THE project was conceived on September 5, 1998, when Andhra Pradesh Chief Minister N. Chandrababu Naidu, as co-chairman of the Prime Minister's Task Force on IT, suggested the need for high-speed bandwidth and recommended that the CMU be the project's im plementing agency. Dr. V.S. Arunachalam and Dr. Raj Reddy, both attached to the CMU, are the principle designers of the network, and the brain behind the project. (In fact, they drew up the proposal four years ago.) Raj Reddy is currently a member of Pre sident Bill Clinton's Advisory Team on IT. Arunachalam was Scientific Adviser to the Union Defence Minister. Following a presentation by Arunachalam to the Task Force, an MoU was signed in the U.S. between DoT and the CMU.

Defending the proposal, Arunachalam said that India needed a large bandwidth in order to retain its position as a leader in the IT revolution. "You require three main ingredients to be on the top: computers, content and communications. We have the former two, but lack communication. There is, therefore, a need to establish an exclusive optical communication that is not encumbered by legacy (the present telecom structure)."

He was categoric that Sankhya Vahini did not pose any security threat to the nation. "When you send a message today it gets routed through a server which is sometimes stationed in the U.S. Is that not a security risk?" The Massachusetts Institute of Tech nology (MIT) will be spending about $100 million to help Cambridge University in Britain set up their network. "Why is it that they are not worried?" he asks. Moreover, the network will be designed in collaboration with Indian universities. Elaborating o n the advantages of SVIL, he said that the network would be "fault tolerable", that is, any fault can be repaired within 100 milli-seconds. Justifying the choice of the CMU as the partner, he said that the university was involved in developing high-speed technologies such as Internet2 and SuperNet.

Emphasising that the entire deal was transparent, he told the media in New Delhi that the relevant documents were available with international auditors for inspection.

Criticising the project, Prabir Purkayastha of the Delhi Science Forum says that the establishment of a high-speed network would provide the U.S. intelligence and defence agencies access to every bit of information available in India. He said: "At the en d of the day, the U.S. will have a pretty good idea of what the governments and other groups are thinking." For instance, during trade negotiations, including the one on the General Agreement on Tariffs and Trade (GATT), the Indian delegation's calls wer e monitored, so that the U.S. team knew the full negotiating position of the Indians well in advance. It is believed that information can be re-routed to unknown and untraceable destinations through "hooks" in the network.

Arunachalam, however, says there is nothing in the design of the network that will help monitor data. He said: "The design is a joint effort of the project partners and the operation of the network will be solely in the hands of Sankhya Vahini. Sankhya V ahini is an Indian company with a majority in equity holding and on the Board, and IUNet or CMU will have no role at all in the operation of the network. On the other hand, the network will ensure that domestic data does not leave the country's shores an d the international gateway is isolated from the nation-wide network so that it transports only those messages routed to or from foreign addresses. Even this amount of security is actually absent today in our present communication infrastructure. For exa mple, often an e-mail originating from Bangalore will go all the way to some server in the U.S. and reach some other place within the country, say, Delhi. Sometimes even mails within the same city take this overseas route."

According to data security experts, even if one assumes that the U.S. agencies have access to data, it is physically impossible for them to monitor the voluminous data flowing through the network. At best they can monitor data emanating from or arriving at some specific addresses. But then the responsibility of data security lies with the parties sending the message; for instance, by encrypting the data sufficiently. Software for encryption is freely available over the Internet, they point out.

Questioning the credentials of the parties in the joint venture, Purkayastha wonders what the CMU will actually bring? Can this technology not be developed by others? He said: "A partner should be chosen fairly. IUNet has been set up through contacts and through the use of contacts." Purkayastha agrees that there is a need for high technology but the strategy adopted by IUNet to obtain the project "smacks of dubiousness". It is obvious that "whoever owns such a high-speed network will own the Internet - and that really is the issue," he said.

Purkayastha said that in the U.S. and China, where similar networks have been set up, the governments have made it clear that they will be designed, implemented and controlled by their own efforts. In the case of Sankhya Vahini, the CMU will have comple te control over the project.

If competitive bidding has been introduced for privatisation of the telecom sector, why should IUNet be an exception?

Arunachalam says that there is no need for competitive bidding when the focus of the project is on education. But Purkayastha's argument is that competitive bidding is a must when commercial gains are involved.

THE main contention against SVIL is the method adopted to create IUNet. The MoU was signed in Washington D.C. but IUNet did not exist at the time and was incorporated only in January 1999. Only after the MoU was signed did the equity pattern emerge.

According to an ASG-Omni report, the authorised share capital for the venture is Rs.1,000 crores and the equity will be shared among the participants at a ratio that ensures that the company will have an Indian majority but will not be a public sector co mpany. The equity share to be held by DoT/DTS is 45 per cent; this will be in the form of providing a pair of optical fibres from the existing optical fibre cables of the department, infrastructure and hard cash. IUNet's equity of 49 per cent will be in the form of latest equipment, systems, technologies and cash. The remaining equity percentage will be held by the Indian Institute of Science (Bangalore), the IIT (Chennai and Mumbai), the Indian Institute for Information Technology (Hyderabad) and the M IT. In addition, the agreement ensures that the CMU will continue to have "controlling interests" in IUNet even after capitalisation for at least five years.

Ashok Vasudevan, director of ASG-Omni, told Frontline that DoT wanted the "controlling interest" clause so that even if private investors did come in at some time into IUNet, the CMU will continue to have "majority voting rights". With regard to r aising funds, he says the money being raised will be a private placement and not to an initial public offer (IPO) and will be done globally. Investors will mainly be from the financial community. Equipment suppliers will be kept out to avoid any pressure on technology choices later. Profits, he says, would be shared based on the equity holding. As for DoT's benefits, he says this technology will add value to DoT's assets. DoT has laid thousands of kilometres of optical fibre in the last few years. "The fibres themselves are only physical assets and have no value until the right technology is brought to bear on them. In mathematical sense, the fibre is worth only a few million dollars but the network with Dense Wave Division Multiplexing (DWDM) will inc rease its enterprise value significantly." This theory is endorsed by Arunachalam, who says that it is precisely this technology that makes them plump for the project.

Vasudevan adds that "DoT and its family of companies such as VSNL, the Mahanagar Telecom Nigam Limited (MTNL) and DTS stand to commercially benefit from Sankhya Vahini." As per the agreement, DTS will charge SVIL for real estate and for services it rende rs in exchange for management. MTNL will lay the fibre optics and use the broad bandwidth.

The proposal to supply bandwidth to the ISPs has also been criticised. The ISPs will have to buy bandwidth from SVIL to provide faster connectivity. This could result in SVIL dictating terms and making huge profits as it would be the only organisation po ssessing a high bandwidth. SVIL argues that bandwidth will be sold at internationally competitive prices. Arunachalam says that SVIL will not be an ISP. Critics wonder why it will not provide ISP services when it has the technology.

With the involvement of Chandrababu Naidu in the project, it is most likely that Sankhya Vahini will come through. This hope is based on the fact that his Telugu Desam Party is an important component of the ruling coalition at the Centre. An informed sou rce pointed out that the project smacked of his strategy; he prefers the MoU route, especially when his own interests are at stake. The government, too, seems determined to go ahead with the project, as is evident from the removal of Madan Lal Khurana as BJP vice-president when he questioned among other things, the project.

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