India is witnessing a paradigm shift in terms of data consumption and usage. Users today look for a seamless connectivity experience, be it while on the move or on a premises. Indoor data consumption, particularly in homes, has surged drastically in the past few years. Affordable data plans along with higher speeds have been major growth drivers in the wired home broadband subscriber base, which is now expanding at a rate of 4-5 per cent a year. Further, with the concept of connected homes becoming a reality, the amount of bandwidth required in homes is expected to go up significantly, promising significant future opportunities for players in the wired home broadband segment.
Market size and structure
The market for fixed home broadband services in India is fragmented and highly competitive. It is currently catered to by several service providers, which can be broadly categorised as telecom operators, cable TV broadband operators and pure-play fixed line internet service providers (ISPs). Amongst telecom operators, state-run Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL), along with Bharti Airtel hold a lion’s share of the market. Over the years, pure-play ISPs such as Atria Convergence Technologies (ACT) have managed to build a strong and profitable business case out of the wired home broadband segment. ACT is now set to be listed on the Indian bourses. Meanwhile, cable TV operators have also turned to the wired home broadband segment as their traditional businesses have been impacted by the emergence of over-the-top content and mandatory digitalisation. As per data from the Telecom Regulatory Authority of India, India’s wired broadband subscribers stood at 17.95 million on March 31, 2018. Amongst service providers, BSNL had a market share of 51.81 per cent (9.3 million), followed by Bharti Airtel with 12.14 per cent (2.18 million) and ACT with 7.29 per cent (1.31 million). In a bid to retain customers, most of the players in the segment offer highly localised and customised plans at affordable rates. Some pure-play ISPs claim to be offering speeds as high as 1 Gbps at rates of less than Rs 2,000 a month.
Key trends
Growing video consumption
The current data consumption trends in India paint a very promising picture for fixed line broadband uptake. Today, video has emerged as the single biggest driver of data traffic in the country. Needless to say, a good video viewing experience needs to be supported by a robust fixed line infrastructure that can handle such large bandwidth. Players in the home broadband segment are increasingly revamping their old copper cables by replacing them with high-speed supporting fibre networks.
Increasing policy impetus
The recently released draft of the National Digital Communications Policy (NDCP) 2018 talks about ensuring that bandwidth-on-demand through wireline (including cable TV and optical fibre networks) reaches 30 per cent of households in the country by 2020, and 50 per cent of households by 2022. For implementation, it lays emphasis on the speedy roll-out of infrastructure and proposes that right-of-way (RoW) permissions be granted to service providers at reasonable charges. Sharing of infrastructure and resources amongst service providers has been stressed under the policy. Apart from this, it suggests upgradation of cable TV networks for the delivery of converged broadcast and broadband services. It also emphasises the need to review the existing National Building Code so as to make it mandatory for city developers and builders to have pre-demarcated spaces for communication infrastructure in residential buildings and complexes.
Emerging role of cable TV operators
The lack of last-mile connectivity has been one of the major roadblocks in the expansion of wired broadband coverage in India. Cable TV operators and multiple service operators (MSOs) can fill this gap as they already have a well-established wireline infrastructure. For a start, cable TV operators have a huge territorial advantage at the moment, as their networks reach 110 million homes in over 1,500 towns in India. Second, they need not resort to a full fibre to the home (FTTH) build-out as they can easily and cost-effectively modify their existing infrastructure to provide faster speeds. Third, their personalised contact with households in a given locality and their familiarity with local preferences for content can help them better customise home broadband offerings.
Challenges and the way forward
The market for wired home broadband in India is fraught with challenges, such as the lack of last-mile connectivity, cost concerns and the absence of a robust wired infrastructure. The process of laying cables or wires is a slow one and involves huge costs. There are also cash flow problems that exist due to the declining business of traditional pay TV services. Other challenges that are hindering the growth of broadband networks are high regulatory levies of 13-14 per cent on operators and excessive charges for RoW.
Challenges notwithstanding, the increased demand for higher bandwidth and faster delivery speeds make the wired broadband business a highly lucrative one. Vodafone and Reliance Jio also have plans to enter this space soon, which will make the segment even more competitive.
Akanksha Mahajan Marwah and Rashi Gupta
