Internet Data Centers

What are IDCs?
They are the storehouses of information (text, images, and audio and video stored in data form) that form the Internet's bulwark. The data centers have rows and rows of racks that contain multiples of high-powered servers that host an estimated 7-8 million websites and make the internet run in its present form and ensure that the sites are up at all times.
Some well-known names Internationally include Exodus,, and WorldCom, and Indian players include Satyam Infoway, WiproNet, Bharti Enterprises, and Reliance InfoCom.

IDC s provide the following range of services:

  1. Co-location services include floor space and rack units where a company can co-locate any e-business infrastructure of its own choice. The company pays based on how much floor space or how many rack units it utilizes. 

  2. Most IDCs bundle some form of network services with their basic co-location services. For instance, Internet access is usually the most commonly offered network service. 

  3. Most IDCs offer a range of system management support services like rebooting servers on a scheduled basis, or in response to a failure; monitoring network capacity utilization; monitoring availability of applications; monitoring performance of applications; and load balancing. 

  4. Many IDCs offer managed storage services, which include backup, redundancy and can also support data replication.

  5. Those companies, which operate multiple-location IDCs, offer services like distribution of content to multiple storage facilities and routing of requests for content to the storage facility. 

  6. Many IDCs support managed Web hosting and maintenance of websites.

Hard facts:
Many Indian companies wanted to host in India initially when IDCs started due to factors like: lower cost of bandwidth, increase performance and response time. But later opted for the US option, as it was cheaper, better traffic performance and the value-added services were much better.

What is the truth?
VSNL owns a significant part of the domestic as well as the International bandwidth in the country and even that was quite clogged until recently due to lack of alternate options and increased usage. 
Most of the IDCs have been established in Mumbai where the VSNL Gateway was situated resulting in better bandwidth. Even the international bandwidth rates are high in India due to shortage of bandwidth. Since VSNL has the monopoly access to international bandwidth, all the domestic players have to go through VSNL thus allowing VSNL to command a premium.

Present Scenario:
When the dotcom boom was touching feverish pace during 1999, data centers too flourished. But now there has been a considerable slowdown in demand due to Internet meltdown. Companies like Bharti Telesonic, i-STT (a Singtel data center company), AsianFrontiers, Exatt Communications, Intel, Reliance, NetMagic, Global Tele, Enron and Cyquator chalked out ambitious plans to set up data centers in multiple locations but now adopted a wait-and-watch approach. 

The estimated market is around Rs 120 crore by end of 2001 with VSNL as the market leader followed by players like NetMagic, Satyam Infoway, Global Tele and WiproNet. Presently, Bharti Enterprises and Reliance InfoCom have put their IDCs plans on hold while they expand their nationwide backbone and telecom presence. Enron, which was among the first to start an IDC in India, is keen to exit due to MSEB-Enron face-off. Intel Online Services has put its investment plan of setting up IDCs on hold in spite of taking large rack space from Global Tele Systems. Thus leaving VSNL as the largest player followed closely by Satyam Infoway, with two large IDCs spread across 20,000 sq. feet in Mumbai and Chennai. 

Indias competitors in the Asia-Pacific region are China, Japan, Korea, Singapore and Hong Kong due to better under-the-sea cablelines. Those who host locally are largely the companies whose web traffic emanates from India, or those which have set up a 'mirror server' in India. (Mirror servers are set up to ensure that the local audiences access the site faster.) Also the sites with multiple locations can segregate Indian content as against UK edition or US. 

What is the future?
After initial denial, Band-X was recently given permission by the Department of Telecommunications and the Foreign Investment Promotion Board to set up India's first internet exchange where members (essentially the internet service providers) will be able to have peering points (Peering is the term used for interconnection between two networks whereby the domestic Internet traffic between two ISPs can be kept within the domestic confines through intelligent routing and save the precious international bandwidth.) to directly inter-connect to each other's networks like in the US and Europe. 

ISP-led ventures like Satyam Infoway, WiproNet, or the Tata Nova's planned IDC entry, have a slight edge as they can bring the group's respective infotech strengths in striking business like the applications management and also rope in the group companies and their customers.This, and the multi-location advantage that ISPs like Satyam and Wipro have is not readily available to standalone IDCs, which have been funded by VCs or through debt-equity route. 

The coming months could see data center companies entering into arrangements with each other whereby single unit (single city) data centers could end up offering multi-location advantage through tie-ups with similar single location data centers. Hence, one would see a Mumbai-based IDC for example entering an arrangement with a Delhi or Bangalore-based centers. 

With peering arrangements and an Internet exchange in place and cheaper bandwidth on the anvil, the scenario could change in next one year, thus marking start of a reversal in fortunes of Indian IDCs. 

This view is largely based on two assumptions:the first being fat submarine pipes of Bharti-Singtel, Dishnet and many others, which will connect the country with the rest of the world : the second is that once VSNL s monopoly ends early next year more bandwidth sellers will enter the market ,thus resulting in lower bandwidth prices .
The dotcom bust has affected the IDC potential in India in the short-term setback, but the businesses now coming on to the internet are more carefully thought out and will have a lasting internet presence, making the IDC business also stable in the longer run. But how many of the players will scale through the rough phase is anybody's guess!