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May 5, 2000


Will Sankhya Vahini ever take off?

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Neena Haridas in New Delhi

The Sankhya Vahini project has set off a fierce skirmish on the political chessboard. The government's gambit -- the proposal to establish the Rs 10-billion broadband data network -- was swiftly met with a fierce counter-attack by the saffron brigade and the opposition, which asked for a probe into the project. The government on its part parried forcefully, spurning the demand for an investigation and infuriating the opposition further.

The project is now embroiled in a raging controversy and whether it will ever see the light of day depends upon the government's dexterity at lobbying and convincing its rivals.

However, considering the keenness of government to get the broadband data network going and Prime Minister Atal Bihari Vajpayee willing to seek consensus on the matter, the project might not just yet be checkmated.

But what is the scope of this ambitious project? Sankhya Vahini will provide 10,000 kms of connectivity in the first year, and will cover the entire country in three years. The starting bandwidth will be in the range of 2.5 giga bytes per second, or gbps, which will go up to 40 gbps subsequently. (GBPS means "giga bits per second". It is a measure for speed at which data travel over a computer network. Computer data are built up of a series of 0s and 1s; each 0 or 1 is called a binary intiger or "bit"; a gigabit would be a billion bits; so a 1 gbps means 1 billion binary intigers or bits or 0 or 1 per second. That is the speed of data transfer. One byte equals 8 bits.)

Currently, there is no nationwide broadband data network for multimedia and Internet activities in the country. Thus, Sankhya Vahini could actually help meet the growing bandwidth demand in India.

The Department of Telecom Services, or DTS, will hold 45 per cent equity, the Ministry of Information Technology 2 per cent, and educational institutes 4 per cent in Sankhya Vahini.

IUNet, an organisation set up by the Carnegie Mellon University of the US, will hold 49 per cent equity in the company the authorised share capital of which will be about Rs 10 billion.

Part of the investment by IUNet will be in the form of equipment. DTS' investment, on the other hand, will be in the form of hard currency. At the same time, it will provide 10,000 km of single pair of fibre optics (within 90 days of the agreement), office space and the right of way for the project.

Here lies the genesis of the problem. To begin with, the very credibility of the joint venture partner IUNet is being questioned.

The Congress party feels that the government is not agreeing to a probe because "there is something under the carpet."

The Bharatiya Janata Party, or BJP, parliamentary party leader Venkaiah Naidu however says, "Several issues regarding Sankhya Vahini are being raised outside Parliament. But these should be discussed within the party and doubts, if any, should be promptly cleared by the leadership."

Naidu says that the prime minister is willing to issue a clarification on the issue to whosoever seeks one. This was a reference to the RSS' onslaught over the conduct of the government in awarding the joint venture project to a US-based company IUNet. However, it is not just the RSS that is at loggerheads with the government. Cabinet ministers and Department of Telecom Services' members too have taken umbrage at the issue.

Information Technology Minister Pramod Mahajan has written to the Rajya Sabha that the firm has not been rated for creditworthiness for lack of sufficient history and information.

His contention is that the information provided by the Indian embassy in Washington after obtaining it from the leading rating agency Dun &Bradstreet has shown that no rating was assigned for lack of sufficient information about the company.

The problem is that IUNet was incorporated only after September 1, 1999 in Pennsylvania with a Pittsburgh address. In fact, IUNet was not even registered while the MoU was signed in October last.

This means that at the time the joint venture was given the go-ahead, the government had no clue about the company, its shareholding pattern or its creditworthiness. The company which had secured the Vajpayee government's nod to be partner in a Rs 10-billion business has just two employees -- Paul Christanio and Jeffrey W Bolton.

The project was signed after Union External Affairs Minister Jaswant Singh and the Andhra Pradesh Chief Minister Chandrababu Naidu as co-chairmen of the infotech taskforce recommended the project.

Communications Minister Ram Vilas Paswan, however, kept out of it and let the then telecom secretary Anil Kumar sign the project.

The standing committee report on the issue has outlined the following problems:

  • The project would put national security at risk as important state secrets would be exposed to espionage and interception;
  • The memorandum was signed even before the IUNet was constituted;
  • The government cleared the project without undertaking any study about the technology available with the company;
  • That IUNet would become a 49 per cent shareholder without investing any cash as the sale price of its products to be purchased by the proposed joint venture would represent its equity.

The report raised many an eyebrow. The Rashtriya Swayamsevak Sangh, or RSS, along with domestic telecom manufacturers are opposing the project alleging non-transparency in the selection of the foreign partner and the purchase of equipment.

A senior DoT official said, "DTS did not go through any selection procedure in finalising IUNet as its joint venture partner. Moreover, as per the proposal, all equipment purchases would be made by IUNet. The project would require equipment worth about Rs 10 billion. How can IUNet be given the responsibility of purchasing the equipment when the government owns 51 per cent equity in the project? There should be complete transparency in the purchase of equipment."

A similar project between Videsh Sanchar Nigam Limited, or VSNL, and British Telecom, or BT, was scrapped three years ago on the ground that VSNL had decided to take the MoU route. "There cannot be different rules for VSNL and DTS," he said

The venture for voice and data services was turned down on the ground that VSNL had chosen the MoU route rather than scouting for the best partner. After delaying a decision on the proposal for over two years, the Telecom Commission asked VSNL to invite bids from telecom majors for the selection of a partner.

The VSNL-BT project, first proposed in 1995, envisaged setting up of a $500 million sub-continental hub and terrestrial link for routing international traffic from neighbouring countries. The VSNL-BT venture was to provide high-speed telecom backbone network to meet the needs of high-speed connectivity for the country.

One of the arguments against the VSNL-BT project was that it would provide a backdoor entry to BT in the national long distance service segment. The DoT official alleged, "The Sankhya Vahini project will also provide backdoor entry to IUNet in the long distance service sector.

"In fact, the government directly went ahead and formed the joint venture with IUNet even though there were other alternatives available. In fact, the parliamentary committee has pointed out that the DTS was not able to clarify this point."

Incidentally, the most ardent resistance to the VSNL-BT project had come from P S Saran, member (services) of the Telecom Commission, who is now the secretary of DTS, and is now opposing the project because he feels it is skewed against the DTS.

However, his predecessor Anil Kumar who signed the project is defending it tooth and nail.

In the Sankhya Vahini project, the DTS secretary has not been able to give a convincing answer to queries on this to the standing committee.

According to the standing committee report, "Asked whether the Department of Telecommunications, or DoT, examined this technology, the witness confirmed that the DoT did not make any independent enquiry. It was the decision of the PM's taskforce to go ahead with the project.''

Moreover, according to the proposal all equipment purchases would be made by IUNet -- something that the domestic telecom manufacturers have opposed. They feel that IUNet will neglect Indian companies while placing orders for the equipment.

"The DTS has proper guidelines for the purchase of equipment which IUNet should also follow and domestic manufacturers cannot be neglected,'' says an official of the Telecom Equipment Manufacturers Association, or TEMA.

For their part, university officials defend the purchase clause stoutly.

Says V S Arunachalam, president and chief executive officer of Sankhya Vahini, a partner in IUNet, and a former scientific advisor to India's defence minister: "All purchases made by IUNet shall be scrutinised and surveyed by the recognised international valuers recommended by the president of IUNet and agreed to by the Telecom Commission.''

Defending the government's decision to select IUNet as a partner, Arunachalam says, "It is possible to invite tenders for buying equipment and for the services, but it is difficult to use this process to look for a strategic partner who provides a long-term relationship for technology, equipment and content.

"Collaboration with other telecom service providers or equipment manufacturers would have provided mere equipment and not content or long-term partnerships in the development of technology. Only universities are repositories of educational content and unbiased technological research and applications.''

Arunachalam says that the company will invest in research and development, and sustain the country's competitive edge in high-speed data networking.

It will also focus on activities such as tele-agriculture and tele-medicine. For instance, in case of agriculture, farmers would be able to conduct activities such as entomological diagnosis, soil analysis, and fertiliser determination with leading agriculture universities online. Farmers could also report new strains of pests quickly, according to Arunachalam.

Moreover, they will be able to keep themselves up-to-date on the latest yield-enhancing technologies, weather, price and market information.

As for tele medicines, Sankhya Vahini would help address two important issues the industry faces today: access and cost.

The company would provide the necessary bandwidth to allow physicians in smaller and rural hospitals and clinics to receive expert consultation from major medical centres -- an example being a second opinion by an expert radiologist on a digitised X-ray or ultrasonic images transmitted over the Net.

This would enable health centres to access medical technology, making higher quality medical attention available to rural patients.

The Andhra Pradesh chief minister who is very keen that the project gets going, is busy lobbying with the prime minister and the rest of the bureaucracy, saying that the project "may be implemented at the earliest" covering Hyderabad in phase zero. (Phase zero is likely to include the Bombay-Pune-Bangalore-Hyderabad-Madras region)

"I am aware there had been some questions about this project in the press and these appear more due to misinformation than anything else. But we had to recommended the project as it provides the best option for setting up a high-speed data network needed by our educational institutions and other organisations," says Naidu in a letter to the prime minister.

It was on Naidu's persuasion that Raj Reddy and Arunachalam had convinced the Carnegie Mellon University to participate in the joint venture. "They are also concerned with the delay in the project that has taken more than 18 months to reach this stage."

Sankhya Vahini issue in Parliament

Special series on Sankhya Vahini


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