Time to gear up broadband penetration

Having recognized the importance of broadband
, the country still has a dismal
8.75 mn broadband subscribers by the end of March 2010, as against the target of
20 mn broadband subscribers by 2010, set by the Broadband Policy 2004.

The broadband revenue grew by 20% to Rs 9,000 crore in FY 2010 from Rs 7,500
crore in FY 2009. Reliance Communications is the market leader with 30.3%
revenue market share, while BSNL is the leader in terms of subscriber-base. Sify
is the only company to record negative growth. MTNL and You Telecom had single
digit growth, while Tata Communications' revenue growth was nil.

The net broadband addition per month is just 0.1-0.2 mn in contrast to 15-20
mn mobile connections per month. Presently, more than 60% of the broadband
subscribers belong to the top ten metros and tier-1 cities and more than 75%
subscribers belong to top thirty cities.

State owned BSNL holds 55.91% of the market share. MTNL is the second largest
ISP with 0.71 mn subscribers followed by Bharti Airtel having 0.71 mn
subscribers.

The ISPs

As of March 2010, India has as many as 103 ISPs. The top ten ISPs together
hold 95.93% of the total Internet subscriber base, rest of the ninety-three
players command less than 5% of the market share. The two PSUs-BSNL and MTNL
control about 70% of the broadband market.

BSNL, MTNL recently launched two new Universal Service Obligation Fund (USOF)
broadband plans at Rs 150 and Rs 250 per month for the rural areas of the
Maharashtra and Goa telecom.

Recently, BSNL announced free upgradation of broadband speed for certain home
and unlimited combo plans at free of cost. The plan charges were kept same while
the broadband speed was increased for selected plans forever.

Similarly, MTNL was offering unlimited broadband 320 Kbps at Rs 395 for MTNL
Mumbai Triband users.

The PSU also entered a pact with security services provider F-Secure, to
provide online protection to its broadband customers. The MTNL PC protection,
offering the latest antivirus, is available free to subscribers for the first
thirty days and after that, customers will have to pay Rs 2 per day for using
the security services.

Bharti Airtel, the largest private players in the segment, offers the highest
broadband speed of up to 16 Mbps. Airtel broadband connection does not block
existing telephone lines and allows one to use the phone while surfing the net.
The company also offers various on-demand services including speed, antivirus
software, music and games. It also offers various Internet and data solutions
for SMBs and large enterprises as well.

Bottlenecks

Low literacy is a major concern to improve the broadband utilization. As per
the National Readership Survey, India has 818 mn population with twelve years of
age and above. Total English literate population is only 91 mn and the total
computer literates are only 87 mn. Nearly 25% of the Indian population stays in
cities, out of which, 32% of them are computer literate.

The growing user base of wireless telephony and wireless devices could hamper
the growth of fixed broadband. In India, by the end of 2009, 149.03 mn people
subscribed to wireless data, most of them were on handheld devices or say mobile
phones-a rise of 47.41% from the 101.1 mn subscriber by the end of December
2008.

Broadband wireless could be a major setback for the wireline broadband.

The Road Ahead

The fixed line

broadband would have a great opportunity in the future,
considering the government's aim to connect rural areas of India with broadband.
The government aims to connect all the Panchayats in the country with broadband
facility by 2012. Further, service providers are also pressing the services to
increase the penetration.

However, challenges will be more than opportunities available in the space.
With the arrival of WiMax-that is offered by BSNL and MTNL as of now-fixed
broadband faces a tough challenge. The battle will become intense after the
private players, who had won the spectrum recently, will jump into fray.

It will help in increasing broadband penetration among the masses and in
rural areas. Further, high cost of PCs and other access devices commonly known
as CPEs is one of the major impediments in the spread of broadband and Internet.
The cost of CPEs is high and not affordable to the masses. There is a need to
provide suitable options like use of thin client, recycling of old PCs, laptops
to make CPEs affordable.

Low cost notebooks and small devices with heavy applications running on the
back-end can be one of the possible options.

Akhilesh Shukla

akhileshs@cybermedia.co.in