n-Logue's digital edge to the rural India

Chennai: Even as big Internet service providers (ISPs) are struggling to provide wireless broadband in the metropolitan cities, n-Logue Communications, a small ISP, is offering the same in several Indian villages.

Unlike the other agencies attempting to bridge the digital divide that exists between the urban and rural India, n-Logue goes one step ahead by giving the villages the digital edge.

Funded to the tune of $1 million by Ray Stata, chairman of the US-based Analog Devices, Venture East, a venture capital fund, Andhra Pradesh Industrial Development Corporation and Vishal Bharat Com Net, n-Logue is a part of the Telecommunications and Computer Networks Group (TeNet) of the Indian Institute of Technology, Madras (IIT-M).

n-Logue through its cyber café chain Chiraag, helps the villagers to save their crops and animals, offers e-education for village children, sells tractors on the net, provides a video conferencing facility, and takes passport size photos and many other things for a charge.

Innovative ideas to realise the Internet potential
A visit to a Chiraag kiosk at Melur taluk near Madurai in Tamil Nadu will tell you the real power of the Internet and how it can change the lives of rural people. Farmers of Ulagapitchampatti, a village near Melur taluk, vouch for that.

Losing their crop of ladies finger every year to some plant disease, one farmer approached the Chiraag operator with the problem. The 12th standard pass operator, S Sukanya, scanned an affected vegetable using a web cam and mailed it to the Tamil Nadu Agricultural College and Research Institute, detailing the problem. Diagnosing the problem, the institute emailed the solution bak, helping the whole village to save more than Rs 1 lakh worth of crop.

Women empowerment is the spin-off benefit as the villagers look upon the kiosk operator with great respect. The ladies finger could be substituted for cataract-infected eyes or a sick chicken and the agricultural institute with an eye hospital or veterinary hospital. The process and the solutions are similar. The villagers also get the market conditions for agricultural produce and can also sell on the Net.

There are Chiraag cafes that double up as a photo studio, thanks to webcam. Some kiosk operators also earn by teaching various Internet applications like email access etc. In a video conference interview, Sukanya says: “The kiosk generates around Rs 150 per day. And if there is phone facility, then the revenue will go up further.” (See ‘OOPS WeSee to go with corDECT’).

Steps are on to transform the kiosk into a virtual clinic with a doctor available via video conferencing link, who will guide the kiosk operator to use the special stethoscope fitted with a sound card and connected to a Net-enabled computer.

n-Logue is seriously looking at e-education. With rural school children finding English and maths very tough, resulting in high failures in the school public exam and drop out rates, video recorded lectures will be put on the Intranet so that students can select a particular topic and learn.

It is innovative ideas like this, and their beneficial impact on the rural populace, that are attracting talents like P G Ponnapa, the company’s chief executive officer, to n-Logue.
He was formerly COO, Wipro Net Kracker, an ISP, and prior to that was with Asian Paints for 10 years, launching and marketing several paint brands.

“Actually I spent two months to decide whether I can rise up to the challenge. After sometime in life, it is self-actualisation that matters and I decided to take the plunge,” says Ponnapa who joined the company a year and half ago.

Expressly prohibited from entering the urban areas, n-Logue runs around 400 kiosks and is one of the largest cyber café chain-operator in the country and has a monopoly in the rural areas. “Now we are a rural monopoly and we will continue to be for another two year’s time. By that time we would have established our presence.”

The company’s business model is quite unique. n-Logue occupies the top slot, next comes the local service provider (LSP) — a 50:50 joint venture between n-Logue and a local entrepreneur — and finally the kiosk operators. It is the duty of a LSP to find and motivate individuals to start Chiraag kiosks.

According to Ponnapa, it requires Rs 40 lakh to become a LSP. While n-Logue’s equity contribution is in the form of hardware (Rs 28 lakh) the local entrepreneur should bring in Rs 12 lakh. The company has found 16 LSPs/projects in seven states with Tamil Nadu and Maharashtra being the focus areas.

A kiosk operator will have to invest around Rs 55, 000 towards computer and other equipment to earn around Rs 3,000 per month. Till date the company has spent around Rs 4 crore in setting up infrastructure and Ponnapa has no reservations in admitting that the revenue numbers are not great now. “The future is bright,” he adds.

A formidable entry barrier with bus driver as competition
n-Logue has only two ways to go — either boom or go bust. And it cannot have an insipid performance like other cyber café chains. “My competition is bus driver and time. If I can meet the villagers demands faster than a bus driver at a comparative cost than I am in business,” says Ponnapa.

To fortify its existence and build entry barriers the company adopts a sound strategy of involving the respective state governments while entering a new market. It has also signed up with corporate majors like EID Parry, Tafe, TCS and others for content and other related services. And, above all, it has IIT-M as its public face, which builds enormous brand equity.

According to Ponnapa, the company is in the process of raising $1.5 million to connect 6.5 lakh villages. However, venture funds will be easier to come if the company could showcase atleast 10 LSP’s that are making profits and Chiraag kiosks that offer around 20 innovative services.

In the present set-up, for an LSP to see money he should have at least 200 kiosks or subscribers under his fold. “We are working towards cutting down a LSP’s fixed costs so that he can breakeven with 50 kiosks in a year,” says Dr Devendra Jalihal, associate professor, IIT-M and a core TeNet group member.

“The other focus is to increase the download speeds from 35kbps to 300kbps similar to 3G networks. This will enable videoconferencing with multi-casting facility, as well as sending video mails,” says Jalihal.

According to Ponnapa, discussions are on with a private bank and another dotcom to pay power bills through Chiraag kiosks.

With the central government insisting that private basic telephone service providers should fulfil their rural service obligations, a new revenue source has propped up the company. As it uses corDECT wireless telephony at its Chiraag kiosks, many private telecom operators are now approaching n-Logue to act as their rural telecom franchisee so that they can fulfil their rural service obligations.

n-Logue is in talks with Bharti in Madhya Pradesh and Tamil Nadu, and Tata Teleservices and Hughes Tele (Maharastra) for the purpose. Already Shyam Telelink is using n-Logue’s services in Rajasthan.

“However, the vision is to significantly enhance the quality of life of every rural Indian by driving the digital revolution profitably,” Ponnapa concludes