India has grown by leaps and bounds in mobile penetration but in the wireline broadband segment, the country is lagging its global peers. With data consumption on mobile hitting the roof and to bring all rural areas under the ambit of connectivity, there is a dire need of expanding the broadband network through fibre. At a mobile base of over 1 billion, there are about 560 million internet users, including 21.25 million wireline broadband users. Of the total wireline base, state-run telecom player BSNL holds over 58 % market share with 12.35 million users, followed by Bharti Airtel with 2.24 million users.
The wireline broadband segment will be a big opportunity for the industry going forward, especially for telecom players which are facing acute financial stress. It could be the next growth engine along with TV/DTH services. The wireline broadband subscriber base can increase to 100 million households by the fiscal year 2024, and the revenue generated from these segments could expand to Rs 80,000 crore as against Rs 14,500 crore now, according to a report by research agency Icra.
Turn to Fibre
However, the way to achieving this feat is fraught with hurdles, mainly infrastructure, according to many experts. “The first and foremost challenge is of replacing copper with fibre. Unfortunately, we had no plan as many other countries had about fibre deployment. The UK, for instance, had fibre by 2010. In India, currently, operators don’t have resources to replace the entire copper network,” Faisal Kawoosa, founder, consulting firm TechArc said.
The Indian telecom industry has mainly invested in mobile networks, ignoring the wireline segment which could have become an alternate source of revenue for them, he said. “The wireline broadband penetration in India is much lower as compared to international standards and presents a significant opportunity for telcos. In India, the wireline broadband coverage would largely expand through the Fibre to the Home (FTTH) networks which have the capability to deliver high speeds with stability in the network,” Harsh Jagnani, sector head & vice president – corporate ratings, Icra, said.
The new telecom entrant Reliance Jio has announced mega plans for fibre broadband – JioGigaFiber. Apart from that, only a few players have shown interest in this segment. Just like Reliance Jio has created disruption in the mobile market, it is expected that a similar impact could be seen in the wired broadband segment. High-speed broadband is crucial for the government’s ambitious programme to connect the country through Digital India. A project to connect rural hinterlands BharatNet is already underway which is expected to connect 2.5 lakh gram panchayats by March this year (over 1.5 lakh GPs have already been connected through the optical fibre in the first phase)
Kawoosa adds the off-track performance of flagship projects such as BharatNet have also been a reason for the slow growth of broadband in the country. “These projects have time and again been failing their timelines, which is depriving a large unconnected population of the benefits of digital infrastructure.”
New digital communications policy
In the new digital communications policy, the government aims to provide ‘Broadband for All’ by 2022. To achieve this, the government plans to soon revise the minimum speed of a broadband connection to over 2 Mbps immediately and then upwards to 5Mbps. Currently, the minimum broadband speed stands at 512 Kbps. The last revision in broadband speed was done in 2011 when the minimum speed was revised to 512 Kbps from 256 Kbps. A revision has been pending for long. The proposal was mooted earlier as well but did not see the light of the day.
The proposal, when finalised, will mean the download speed cannot go below 2 Mbps on a wired broadband connection. This is bound to improve the quality of services in terms of data speed and access. But, experts say this means huge capex investment by the telecom players.
To provide last mile connectivity, the department of telecommunications has envisaged setting up 5 million public WiFi hotspots by 2020 and 10 million by 2022 through a National Broadband Mission. A Fibre First Initiative will also be implemented to take fibre to the home. Currently, there are around 38,000 WiFi hotspots across India via official estimates. Though, experts say the number could be higher to around 60,000.
FTTH will allow it to be the bedrock for content delivery to homes, thereby encompassing an umbrella of services including wireline voice, wireline broadband and television. Increasingly, the television industry is shifting towards content on demand and high-quality videos/content, Jagnani said.
According to Icra, the wired broadband base as on September 2018 was only 18 million, accounting for less than 7% of the total households, much lower than 44% in Brazil and 99% in France. In the television segment, while the total penetration is around 66% of the total households, of this, around 65% are provided over a copper cable, on which the capability to provide high bandwidth services are limited and not fully developed.
Internationally, in order to monetise the wired broadband networks (copper or FTTH) better, players in many mature markets like USA, UK, Germany offer integrated services – television, wireline services and home broadband through a single tariff plan, at a significant discount to individual services. A similar trend is expected to play out in India as well, Jagnani said.