VSAT: Policy Changes Revive

The transition from license raj to revenue sharing was a boon to the VSAT
industry, considering the fact that it had performed very bad last to last year
when it registered a growth of less than one percent. But 2001-02 was a good
fiscal for the industry, with growth on all fronts. The VSAT equipment market
was estimated at Rs 252.4 crore, a growth of 17.5 percent over the previous
year. On the cumulative installed base on the shared hub front, the industry
added 1,639 VSATs in 2001-02, taking the overall tally of VSATs to 8,062,
registering a growth of 25.51 percent in unit terms.

HECL, the traditional leader was adversely affected by shortage of
transponder space, last year. Viasat emerged as the clear leader in the DAMA
space with around 71 percent market share while Gilat led on the TDMA front with
around 69 percent market share. HNS occupies the number two slot, both on the
TDMA and DAMA fronts, with market shares of 28.6 and 19.5 respectively.

Opening up of Market

With the government allowing Ku-band transponders in the country, VSAT
terminals was now available at Rs 1.25 lakh. This has helped the service
providers as well as vendors to focus on VSATs in the SME as well as dealer
distribution network. This has had a positive impact on the industry. On the
TDMA front, the industry sold 9,685 terminals–a growth of 128 percent. There
was an equally good growth on the DAMA front as 1,410 terminals were sold in the
FY 2001-02, which is a growth of around 105 percent over the previous year.

In 2001-02, the shift in policy paved the path for a good growth for the
industry in years to come. The industry moved from the license raj to a
revenue-sharing regime. Revenue sharing for VSAT was fixed at 10 percent whereas
for captive networks it was fixed at Rs 16,000 per annum per VSAT subject to a
minimum of Rs 16 lakh per annum. The government lifted the 64-kbps barrier and
the cap is now placed at 512 kbps. This will facilitate faster data
communication. Service providers also got the option to go for foreign
satellites whereas earlier they could avail of only Insat series of satellites.

Companies like HECL, HCL Comnet, Comsat Max, and Bharti Broadband, have
already deployed Ku-band hubs while Essel Shyam is in the process of deploying
HNS hubs in the country. Also, all the operators will be focusing on the
broadband market in the country. NIC has presently surrendered extended C-band
transponders and is planning to go for Ku-band transponders. Even Telstra V-Comm
surrendered Ku-band hubs, as it was unable to start Ku-band services in the
country.

Major Projects

The year was very good for the VSAT industry as a large number of big
tenders were awarded. Indian Oil is planning for a dedicated hybrid network and
is planning to deploy 100 DAMA and 100 TDMA terminals, which were awarded to
Gilat and Viasat. The ITC order was bagged by Comsat and it has deployed around
100 VSATs in Madhya Pradesh for the e-Choupal project in the state. It plans are
to deploy around 500 VSATs within a year’s time frame. The Playwin Lottery
project was won by HNS and plans are to deploy 15,000 VSATs by 2003. At present,
the company has deployed around 1,000 terminals. Sahara India project was bagged
by Bharti Broadband, which helped push the VSAT numbers up for Bharti Broadband.
The company is planning to deploy 1,420 two-way SkyBlaster terminals for
parabanking applications. Department of Treasury, Government of Karnataka has
also gone for VSAT terminals for effective management of cash. Distance learning
project for the Andhra Pradesh government and video-conferencing network for the
UP government were also allotted in the last fiscal.

Future Applications

The much talked about VSAT project for VPT applications came to a reality as
the first order for VPT applications was bagged by Gilat from Tata Teleservices,
the fixed service provider in Andhra Pradesh. Gilat has its Dial@way IP VSAT
product for VPT applications, which will be used to serve public payphones and
fax kiosks for rural Andhra Pradesh. Each unit supports a PC/LAN connection and
up to six toll quality lines. The company has ordered for 1,000 VSATs for VPT
applications, which will act as a catalyst for future demand on the VPT front.
Even BSNL has come out with a tender for deployment of 17,000 terminals, of
which 12,500 are 14.4-kbps and the rest 2.4-kbps. The cost per terminal as
quoted by the lowest bidder UTL, which is partnering with Paragea of the US,
comes around Rs 90,333 for 2.4 kbps and around Rs 85,192 for 14.4 kbps. The L2
bidder is ITI along with Gilat, which has quoted a price of Rs 124,733 per
terminal for 2.4 kbps. For 14.4 kbps, it is Bharat Electronics along with STM,
which has quoted a price of Rs 129,576 per terminal. We may see other basic
service providers like Shyam Telelink, Hughes Tele.com, HFCL Infotel, and Bharti
Telenet, also opting for a mix of technology with a major portion going to VSATs.

Pravin Prashant