The Internet and broadband market continued to shine reaching Rs 5,359 crore in FY 08 from Rs 2,040 crore in FY 07. However, considering Indias large population and increasing purchasing power, there is a huge potential market that needs to be tapped in order to strengthen broadband penetration in the country. The country is standing at mere 39 lakh broadband subscribers at present.

According to VOICE&DATA (sister publication of Dataquest) estimates, among the players involved, Bharti emerged as the leader with total revenue of Rs 1,628 crore. The company is operating in ninety-four cities with plans to expand further.

Reliance grabbed #2 spot in broadband market at Rs 1,367 crore, followed by BSNL which attained the third place. Despite the largest subscriber base of an estimated 20 lakh in the broadband segment, the incumbent operator, which primarily focused on rural India, garnered total revenue of Rs 850 crore.

The other prominent players included Tata Communications, MTNL, Sify, and YOU Telecom.

According to VOICE&DATA estimates, total broadband subscribers in India reached 3.9 mn in FY 08, as compared to 2.6 mn in the previous year. Total number of Internet subscribers is also estimated to be around 11 mn, a majority of which represented the home user segment.

Market Movements
Bharti Airtel, which emerged as a top player in terms of broadband revenue, is looking at options to take the broadband initiative to rural areas through alternate technologies like Wi-Fi and WiMax. This is because of the unique demand and challenges of rural India like lack of power supply, low network reach, limited availability of vernacular and relevant local content, training issues, etc

The total broadband subscriber base of Airtel stood at 7.95 lakh in FY 08, as compared to 5.98 lakh in FY 07. The company is looking for more fixed line investments to achieve broadband penetration in SME and high-rise apartments. Additionally, they are also looking at strategic tie-ups with ISPs to launch SaaS, delivered through broadband in order to hieghten its broadband penetration among SMEs.

Out of the 39 lakh broadband connections in the country, BSNL owns an estimated 20 lakh. The company provided low-cost PCs in bundled packages with different broadband plans.

Continuing its efforts to connect rural India, BSNL aims to add 1.5 mn users from rural India by the year-end. For that they have 38,000 exchanges in the country out of which 23,500 are being connected.

Declining bandwidth costs and increased adoption of technologies like Wi-Fi and WiMax ensured high growth

Another prominent player, Reliance Communications, is currently operating in forty-four cities in India, with over 787,000 buildings connected directly to their network, serving over 1 mn access lines. The companys Metro Ethernet LAN technology gives them a significant edge in delivering high bandwidth data services.

YOU Telecom, the emerging broadband player, has also increased its total subscriber base to over 175,000 across twelve cities.

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. 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, was acquired by YOU Telecom in early FY 08.

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

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. It has recorded an estimated revenue of Rs 172 crore in the broadband market, and this is expected to increase significantly in the FY 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.

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 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 08 as compared to 179,000 in FY 07.

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.

Almost all major players including Bharti, Reliance, and BSNL realized the need to shift broadband focus to rural India

In the DTH front, Reliance is 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.

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.

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.

Jatinder Singh
maildqindia@cybermedia.co.in

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