Broadband Spend Down in 2009

The economic recession had a deep impact on IT spending of
enterprises in the country. As per V&D-IDC Enterprise Broadband Satisfaction
Survey 2009, the average spend of enterprises on broadband services has gone
down to Rs 21.60 lakh. Last year, as per the 2008 survey, the average spend on
broadband was Rs 22.81 lakh. The fall can be attributed to enterprises, across
all verticals, taking cost-cutting measures. Some even going to the extent of
reducing the number of working hours or implementing strict working hours.

The maximum impact could be seen in ITeS and IT companies,
though their average spend was maximum among all verticals, this year as well.
The average spend of ITeS enterprise was Rs 23.81 lakh. The fall was recorded in
all verticals. The manufacturing vertical had an average spend of Rs 10.93 lakh
in 2009 (around Rs 2.5 lakh less than last year) and it recorded the lowest
among all verticals.

More than half of the enterprises, 56%, had a bandwidth
consumption of 2-4 Mbps. The highest bandwidth consumption was seen in the BFSI
vertical. As many as 30% of the BFSI enterprises have 8 Mbps or more bandwidth
consumption. It is followed by the IT sector. The minimum consumption was
recorded in the manufacturing vertical.

3G and WiMax

The survey has a bad news for service providers who are banking on 3G and
WiMax for the coming year. As per the survey, future of WiMax and 3G is bleak
for the next two years, as enterprises are going slow in the adoption of these
technologies. It may be recalled that the government will auction 3G and WiMax
spectrum in January next year. The base price for 3G spectrum is Rs 3,500 crore
while for WiMax it is Rs 1,750 crore. Industry people believe that prices are
very high.

Of the 146 enterprises surveyed in the study, 89% have no
definite plans to deploy WiMax is the next two years, at least. Service
providers' hopes lie with IT/ITeS vertical only. As many as 25% of the IT/ITeS
enterprises are looking forward to the adoption of WiMax in the next two years.

The study found that enterprises are showing a lack of
interest in technology, as 48% (of the total number of enterprise have not
adopted WiMax) and have no demand for large bandwidth. While 36% are not
contemplating the idea as WiMax requires heavy investment. 17% of the
organizations lack WiMax enabled devices/products.

Similarly, 92% of the enterprises have no intention for
deployment of 3G in the next two years. Only 2% have plans to go for 3G services
in the next one year. The worst is with the retail segment, with no plans for
the next two years. The 3G services have a little hope with manufacturing, BFSI,
and IT sector enterprises as 10% of the enterprises in each vertical are
contemplating adoption.

Even the present picture for these technologies is not
bright. Only 9% of the enterprises surveyed have deployed WiMax. The maximum is
ITeS enterprises with 16% adoption, followed by 10% in retail. BFSI is the worst
with 3% adoption of WiMax. The adoption of 3G among the enterprises is as low as
47%. Enterprises in the manufacturing segment led with 14% adoption. While
verticals like ITeS and retail have not adopted any 3G technology.

Satisfaction @ Service Provider

Tata Communications as per the survey, topped not only in the overall
satisfaction but also across all parameters. The company scored 93.9 out of 100.
It is closely followed by its two competitors-Bharti Airtel and Reliance
Communications. Bharti Airtel scored 92, while Reliance Communications scored
92.3 BSNL was ranked the lowest among all the competitors with 83.7 points. MTNL,
on the other hand, bagged 91.1 points.

The enterprises were adjudged on four parameters including
maintenance support, customer care and billing (weightage of 29.1%);
implementation stage (21.6%); pre-implementation stage (23.5%); and network
quality and QoS (25.8%).

When asked which service provider accounts for the maximum
portion on broadband services spend, the answer came as Tata Communications and
Bharti Airtel. Each was the choice of 21% enterprises surveyed. Similarly both
Reliance Communications and BSNL, were preferred by 18% of the enterprises. MTNL
was the choice of 19% while the rest of the 3% went to others such as Idea, Sify,
etc.

The choice makers give topmost preference for the ability
to take end-to-end responsibility, when it comes to selection of broadband
services provider. It is followed by network robustness, reliability and
redundancy, total ownership cost/price and understanding of business
connectivity needs. Last but not the least, is the commitment of SLAs.

Overall, ability to take end-to-end responsibility is the
most important criteria for an enterprise to select a service provider. This is
followed by network robustness, reliability and redundancy, and total cost of
ownership. Besides, understanding of an enterprise business and SLAs committed
are other factors which play a critical role in an enterprise's decision to go
in for a particular service provider. For MTNL's customers also, taking
end-to-end responsibility is the main criteria. Airtel's customers have opted
for it because of network robustness, Reliance enterprise customers believe that
the total cost of ownership is the prime criteria for opting for it. The same is
true for Tata Communications. For BSNL customers, network robustness is the
prime factor behind its selection.

Buying Behavior

Most of the time the decision regarding IT services and infrastructure is
centralized at the headquarters. Decision on IT and broadband services is
centralized in 70% of the organizations.

CTOs, CIOs, and IT heads are the primary decision makers
in 56% of the enterprises, while in 36% it is the director/CEO and COO. While 4%
of the enterprises still rely on IT department staff, the rest of the 4% have
committee, operation heads, etc.

Though the IT division staff have a little say in the
decision-making process, they have a great influence on broadband services
(74%), followed by CTO/CIO/IT head. CFO and VP finance have 14% influence, while
MD/CEO/COO have 7% influence. External consultants have 3% influence on
broadband services.

The new year would be good for the service providers, as
the recovery has already started. The economy is showing healthy signs. The
consumption is increasing and the auction of 3G and WiMax spectrum will also
give the industry some boost.

Akhilesh Shukla

akhileshs@cybermedia.co.in