The Next Level
The last financial year saw a lot of discussions related to taking broadband to the next level. Almost all major players realized the need to shift focus toward rural India. And taking a step in the direction, YOU Telecom entered into a joint venture with Red Snapper, a Malaysian Wi-Fi major to deploy wireless broadband in twelve cities. The new entity named YOU Snapper intends to invest over Rs 80 crore for the deployment. Also, Ahmedabad-based ISP IceNet, included in VOICE&DATA 100 rankings last year, was acquired by YOU Telecom in early FY 2007-08.

Interestingly, despite improving PC penetration, cyber cafes still remain the most prominent point of access. According to industry experts this trend clearly reflects the benefits of the shared-PC model used in cyber cafes. This model not only provides employment to local talents, but also brings down the total cost of access to the end-user by distributing fixed and operating cost components over several users.

The broadband market has shown a healthy growth rate of over 50%. However, it is still quite far from the government's ambitious target of 20 mn by 2010.

There is also a strong need to learn from the success of mobile in India. The success of mobile started with the success of PCOs, which influenced the individual's need and importance of getting connected. Industry experts feel that the PCO model, i.e., Cyber café is missing in the broadband scenario in India. Although, the number of cyber cafes has increased significantly in the last couple of years but they are mainly restricted to metro cities.

Companies like Sify are providing broadband access to people with over 3,000 cafes under the brand name of Sify i-way, in over 150 cities. Sify is presently focusing on making broadband more relevant to customers and offering them value added services. The company is presently looking beyond metro cities to increase coverage and to offer broadband across the country. The company has recorded estimated revenue of Rs 172 crore in the broadband market, and this is expected to increase significantly in the FY 2008-09.

In addition to Wi-Fi and WiMax, the Industry has also witnessed the introduction of IPTV services in FY 2007-08 by the incumbent operators. The private telecom operators are also on the verge to introduce IPTV services aiming to offer a triple play opportunity. The introduction of broadband speeds of up to 8 Mbps for the home segment was another key development in the last fiscal. Bharti Airtel was the first player to offer the same. Furthermore, the year saw the availability of a large number of services online and the ability to download content like music and movies, which in turn resulted in an increase in demand for bandwidth.

In a move to popularize broadband among youth, Airtel has launched services like games on demand, besides the introduction of services like video surveillance, which run on broadband equipment. The company is also offering services like NetXpert and Airtel Live, to enhance user experience.

The company has also expanded its broadband and telephone network to cover 94 cities across India and renamed their brand as Airtel Telemedia Services from Airtel Broadband & Telephone Services. The company is planning to bring speeds of up to 16 Mbps and even higher in FY 2008-09.

Industry experts strongly believe that to improve the broadband situation in the country, there is a strong need of practical improvements from the government and service providers. The government needs to take some real-time decisions to promote PC penetration in the country, reduce service tax and license fee on broadband revenues, zero excise and customs duty on broadband equipment, and proper utilization of the USO Fund.

MTNL, another incumbent operator with operations in Mumbai and Delhi has grabbed a revenue share of Rs 287 crore and had a total broadband user count of 570,591. The company, launched a new Internet telephony service with Aksh Optifibre to make international long distance calls for as low as Rs 1 per minute.

On similar lines, Tata Communications has also planned to connect 200,000 retail customers through WiMax in FY 2008-09. The company is looking at an investment of $500-600 mn by 2010 to roll out broadband using WiMax technologies. The company has increased its broadband user base to 219,000 in FY 2007-08 as compared to 179,000 in FY 2006-07.

Starting with Bangalore, the company hopes to cover the top 10-12 towns in India. Post-Bangalore, the company will look toward Delhi, Mumbai, and Hyderabad.

Furthermore, it has also shown keenness on enhancing its operations in mobile broadband, which is presently not allowed in India due to regulatory restrictions. Its revenue from broadband stood at Rs 605 crore in FY 2007-08.

In keeping with customer usage patterns and market demands, Sify has also launched unlimited night broadband plans at affordable prices. Under the plan, it is targeting mid- to home-size users. The company in collaboration with iPass has also launched its Roam Connect International service in India, which will enable Sify customers to access high-speed, reliable, and secure wireless broadband service when on the move. Customers will benefit from accessing their data from more than 100,000 broadband locations globally including airports, hotels, conference centers, and retail venues.

In the WiMax space Reliance has acquired global WiMax operator eWave World and is looking to invest $500 mn over the next three to five years to build and acquire WiMax networks globally.

Furthermore, the company is working toward international expansion of their wireless services. According to sources, the company is looking to start a phase-wise rollout in Sri Lanka and Uganda by the end of this financial year

In the DTH front, they are planning to launch the brand 'Big TV', which will be based upon MPEG 4 services with high definition TV facility. They have also signed an exclusive strategic partnership with Microsoft to create a strong platform for their IPTV offering. The technical trial of IPTV services has commenced and the company is looking forward to its launch this financial year.

In a strategic move to connect rural India, the Ministry of Communication & IT has announced to garner $2 bn to set up 112,000 community service centers in rural India with broadband connectivity in 2008-09. The project would be the extension of the Knowledge Mission initiatives taking by former Prime Minister Rajiv Gandhi. While $1.5 bn for providing broadband access to rural India will be generated through private sector, the remaining will be decanted from government sources.

The Ministry of Communication & IT will disclose its 3G service guidelines by June 2008, and it is expected that the government will declare its broadband policy for WiMax in FY 2008-09.

Setting the Trends
The year saw the emergence of technologies like Metro Ethernet and IPTV. With the emergence of IPTV, DSL, which is treated as ideal technology for offering broadband services in India is expected to allow triple play services on the same copper line in an effective manner.

The growth of IPTV depends significantly on broadband adoption. At the same time, increased customer awareness and importance of broadband service will lead to higher demand and even more widespread adoption.

According to estimates, nearly 82% Indian broadband subscribers have DSL connections, and the latest technology additions have been based on FTTx, Wi-Fi, WiMax, VSAT, etc. Service providers are fast developing alternatives to counter-balance the absence of unbundling the local loop.

In the coming few years, it is expected that residential users will eventually lead broadband services, which are currently driven by business subscribers. The residential users have gradually started to enhance their user experience from mere exchanging of mails, to more bandwidth hungry services like video/audio downloads. The said services, united with mobility could act as a crowd-puller, thereby helping service providers reduce churn rate.

Furthermore, with 3G waiting to happen, mobile broadband will define the next phase of upheaval. With more than 250 mn mobile users in India, there is an exciting and growing opportunity for content providers to capture the market. FY 2008-09 could witness an ever growing demand for wireless service providers, music and film companies, and game makers to aggressively enter the mobile content market for ring tones, gaming, streaming audio and video, etc.

Looking Good
The low teledensity and presence of youth driven market (below 30 years) in India represents enormous potential for broadband explosion.

The ability to deliver triple play services by ISPs in the country will lead to a larger market for high-speed data services and video applications in FY 2008-09. According to industry estimates, while demand for entertainment and lifestyle applications would be the major driving force for increased broadband penetration among the urban market, applications related to education, skill enhancement, health and agriculture will be more suitable for creating a wide impact, especially in rural India.

Services like gaming and e-commerce will also influence the market, and may even dominate it. The focus in the coming year will also be on more regional and local language content.

The changing concept of mobile to including browsing on the Internet, multimedia devices, etc, apart from voice-based services, will have significant impact on broadband, increasing its usage manifold. With the availability of Internet-enabled handsets for as low as Rs 2,000 and cost-effective plans by operators, it is expected that FY 2008-09 could see further rise in mobile broadband users.

To broaden the broadband reach among the masses, service providers need to work hard toward securing both wireline and wireless mechanisms.

Innovative applications and offerings in value added services will also accelerate broadband penetration among retail customers and corporate customers in FY 2008-09.

The constant need for higher speed and more connections will impel the demand for broadband in India. The demand of distance education, telemedicine and entertainment is expected to increase significantly in FY 2008-09. Broadband will be the framework on which these programs and services are offered and will further drive demand for higher speeds and increased connectivity. According to industry experts, pricing would not be an issue because India is a competitive market.

While BSNL, already a leader with 3 mn broadband connections, is all set to add nearly 7 mn connections by 2010, the remaining 8-10 mn does not seem as big when divided among the remaining players in the industry.

The emergence of new alliances in the Industry providing persuasive and appropriate content, broadband experience is critical for the adoption of broadband.

The content could be evaluated on two parameters-utility content that includes e-governance, healthcare, and primary/secondary education, and infotainment content such as movies, music, games, etc.

However, quality of service and service level agreements are few hiccups that need to be paid attention to, to improve to broadband scenario among enterprises in India. With mobile phones being a hot favorite among the youth, gaming should also be explored for broadband uptake.

Jatinder Singh
jatinders@cybermedia.co.in