VSNL is also considering a slew of value-added services to its subscribers in India shortly. Company officials are currently busy with chalking out a detailed business strategy on this front, say company insiders.

When contacted, an official spokesperson said: "The company is evaluating several options to counter the stiff competition. We are planning to make an official announcement within a couple of weeks."

A VSNL official said the company was aiming to achieve an Internet customer base of 10 lakh by April, 2001. "This is not a huge number considering the potential of the Indian market," he added.

According to an IDC report, the total net subscribers will touch 7.5 million by 2003 from the estimated one million users by end 2000 in India. Following the reduction in the prices of IT hardware products, the home and corporate segment will now be able to afford the services.

Company officials said VSNL and Indiainfo.com were framing the formula for the proposed value-added services. However, officials declined to comment whether the company will come out with a free ISP service package or not in the coming weeks. The strategy will be part of the co-brand building initiative announced by VSNL chairman SK Gupta and Indiainfo.com chairman Raju Koneru last week.

It is interesting to see that the state-run company was still adding about 10,000 customers a month. Recently, VSNL increased its user-base to 3.6 lakh from 1.8 lakh in the previous year. During the fiscal 1999-00, the company is likely to achieve a revenue of Rs 200 crore against previous fiscal's Rs 80 crore.

The decision to unveil a multi-pronged strategy comes in the wake of another player in the segment, Caltiger.com announcing its plans to offer a free ISP services in the Indian market place. "The ISP market is going to witness a major tariff war in months to come," an analyst with a local stock broking firm said.

The current situation was predicted by Rediff.com chairman Ajit Balakrishnan at the Nasscom 2000 event in Mumbai. He had said the domestic e-commerce business will explode once the country's ISPs offer a free service to its customers. Balakrishnan also hoped that free Internet services in the country will not be a dream.