Credit rating agency Icra has projected nearly ten-fold increase in the country’s Internet subscriber base to 8.3 million in the next five years.

"Internet subscriber base in India will expand from a level of 0.85 million presently to about 8.3 million in 2005," Icra said in its latest ‘Indian internet business report.’

The highest growth rate would be witnessed by digital subscriber line (DSL) and cable connections. However, dial-up connections would still account for the largest share of the internet connectivity segment. Besides, with the stabilisation of the wireless technology, Icra foresees a 15 per cent share for mobile connections by 2005.

The rating agency expected the total number of internet users in India to go up to 21.52 million by 2005 from 3.97 million presently.

So far, around 325 companies have been given internet service provider (ISP) licences. However, only around 70 of them have actually started full-scale operation, Icra said.

In case of international gateway, just about five of the total number of licensees are planning to start operations by the end of current fiscal, it said, adding Videsh Sanchar Nigam Ltd (VSNL) was the largest player but Satyam Infoway was the fastest growing among private sector ISP.

Stating that cable connectivity was expected to be one of the major drivers of growth in the number of internet subscribers, Icra said though many companies including Zee telefilms, Star TV, Hindujas and Business India group, are entering into the cable connections, cable-based ISPs were yet to become a major force in the ISP market.

Most of the domestic connectivity in India was still being established through the construction of optical fibre network, Icra said, adding the department of telecommunications was planning to provide a national internet backbone (NIB) based on optical fibre technology.

The NIB project connects six cities with a 34 mega bytes per second (MBPs) line, eight cities with an 8 MBPs line and 31 smaller towns with a 2 mbps line.

Icra expected consolidation in the internet business with most large companies following the merger and acquisition route to widen the portfolio of products and services, increase geographical coverage and reduce the marketing costs and gestation period.

"This will lead to emergency of application service providers (ASPs) that provide complete spectrum of services including system designing, systems implementation, hardware supplies and provision of networking infrastructure at one point to the end-client," it said.

In the long term, all media of communication would converge into one to give rise to broadband, Icra said adding there would be just one channel, which would be used for all communication and entertainment.