Broadband

No wires for broadband

Although broadband penetration is on the lower side in India, wireless technology is set to accelerate its growth in 2007 and beyond. By Vinita Gupta

2006 was the year that broadband failed to deliver on its promise. During the year the industry grew by about 33 percent to reach a 2.1 million subscriber base, which is about a million lower than what Gartner forecasted. This makes the government’s target of nine million subscribers by end 2007 look farfetched to say the least.

That said 2006 did see the introduction of broadband services such as IPTV and faster connections albeit with ridiculously low data transfer limits. IMRB estimated that there were around seven lakh broadband homes in the country as of March 2006 (as per Icube 2006). This is likely to grow to 1.4 million homes by March 2007.

According to HCL, if we go by a specific definition of broadband prevalent in the market that involves a particular bandwidth capacity and certain broadband applications like e-learning and streaming content, the market for broadband ranged between 150 and 200 crores for FY 2006-07.

“Although 2007 has been announced as the ‘year of Broadband’ the picture is abysmal. India has the lowest broadband penetration rate of three percent, one of the lowest as compared to its Asian counterparts. This figure is also limited to the metros and the urban population, leaving rural India completely untapped. With the advent of innovative technologies such as enhanced Wi-Fi, 3G and WiMAX, the untapped market can look to being served,” says Dinesh Verma, President, Business Development, Tulip IT Services Ltd.

Any which way you look at it, the fact remains that the penetration of broadband is low in India.

The trouble with broadband

Broadband penetration in India is low because of a combination of low awareness, poor last mile connectivity, lacklustre e-commerce and value added applications and the relatively high cost of PCs. We are lagging in commercial, government and educational applications that can drive consumers to the Internet.

Broadband growth cannot effectively take place unless rural and semi-urban areas participate.

Neha Gupta, Senior Research Analyst, Consumer Services and Mobile Devices, Gartner agrees that India has low penetration of fixed lines, the traditional mechanism for delivering broadband. Low PC penetration also acts as a cap to broadband subscriber numbers.

She says, “A major hurdle to the growth of broadband in the county is the lack of last mile infrastructure. The government has not allowed unbundling of the local loop which is restricting growth. Other impediments in the Indian context are lack of content and applications. Access to games, on-line education and video downloading are some services that can help increase demand for broadband.”

According to Prateek Pashine, VP, Marketing and Technology, Retail Business, VSNL, the challenge of boosting broadband usage in India does not lie in just increasing PC penetration. Relevant content has to be created. In India there are many PCs that are simply not connected to the Internet.  Since most of the existing content is in English, many Indians who are unfamiliar with the language do not access the Internet.  Good video content like movies in locallanguages can help drive broadband penetration by inducing many people with PCs to avail of Internet connections.     

He says, “Unbundling phone lines from the Internet will increase the adoption of broadband in India resulting in enhanced competition and a further drop in tariffs.”

“High bandwidth prices, for both domestic leased lines and international ones, have kept broadband prices beyond the scope of most subscribers,” says Verma. Another key challenge is the non-availability of infrastructure in semi urban and rural parts of the country where 60 percent of India’s population is located.

“Countries with high broadband penetration have solved the last mile problem by unbundling the local loop. Covering the last mile afresh is extremely capital intensive and service providers have to interface with the local administration for digging up roads,” says Mohan Verma, associate director, PricewaterhouseCoopers (PwC).

Peeyush Agarwal, GM (Broadband) MTNL Mumbai and COO, Millennium Telecom feels that there is a need to penetrate rural markets with access to exchanges such as NCDEX and MCX as well as stock exchanges—the BSE and NSE. Besides, customised applications in regional languages have to be developed quickly for the rural segment. This could well trigger phenomenal growth of the Internet and broadband. Besides PC prices have to match what the Indian mass market consumer can afford.

According to Eapen Abraham, DGM, Broadband, Sify, the inability to use the existing infrastructure of incumbent service providers is a bottleneck.  Every service provider has to set up a parallel infrastructure which takes time and money.

“The majority of the copper infrastructure across the country is too old to support broadband technologies and this prohibits widespread propagation,” says D Mohanty, Associate Vice President, Telecom and Networking, HCL Infosystems.

The real time nature of application traffic—voice and video—coupled with the deployment of inter-office business applications such as ERP, inventory management and CRM will propel the expansion of the broadband market.

Quality business applications and entertainment are likely to be the key drivers of broadband. Applications such as gaming and video-on-demand will drive demand for broadband in the home segment hence operators should focus on developing content that will attract customers to sign up for high speed broadband access.

“Another key element is to alleviate the cost factor for the masses whether it is the cost of the CPE or broadband connectivity. Broadband aggregation points can be used to tap rural consumers,” says Sunil Dhingra, Head, Business Development- Service Provider, Cisco- India and SAARC.

IMRB believes that the key driver for broadband is affordable and fast Internet access, followed by new applications in the P2P and entertainment space (song or movie downloads and gaming).

According to Balendu Shrivastava, Research Director, eTechnology Group, IMRB providing last mile access with quality networks that do not compromise on speed will give users an unlimited Internet connection at an affordable cost.

WiMAX: the magic bullet

WiMAX is a standards-based wireless technology that provides high-throughput broadband connections over long distances. That’s why it is tipped to pump up demand for broadband in 2007.

M Srikaunth, Vice President – Marketing and Strategy, You Telecom points out that WiMAX will increase the demand for broadband particularly in unwired areas where the infrastructure for broadband delivery is not in place. In wired zones, cable and DSL will continue to dominate because of better cost structures.

According to Gupta, WiMAX is being pushed aggressively by the government. She adds, “The biggest advantage that WiMAX offers is its range that spans about 30 kilometres, which will help increase broadband penetration in rural areas where the provisioning of wired connections has been difficult.”   

WiMAX is a new technology and is yet to prove itself commercially on a large scale. Much will depend on the extent to which service providers are able to deploy the technology in a cost-effective manner to end consumers, believes Dhingra who adds, “If successful, the technology indeed has huge potential in increasing the availability of broadband in far-flung rural areas and in concentrated business districts in cities.”

Standards based Wi-Fi mesh technology is a mature solution for wireless broadband. A key advantage here is that most PCs today come with Wi-Fi receivers. This technology has been deployed at many locations world-wide to cover urban and rural areas.

Umesh Srivastav, Managing Director, Accton Ei-En India (parent company of SMC Networks) agrees that WiMAX can take broadband to far flung areas that cannot be penetrated by wire line services due to lack of accessibility or viability.

The 3G effect

Demand for broadband depends on two factors—speed and mobility. Current technologies provide either speed (DSL, Cable, etc.) or mobility (WAP, GPRS, 2.5G, EDGE, etc.). There is no technology that provides both. WiMAX, 3G and 4G will help bridge this gap.

Sujata Dev, MD & CEO, Time Broadband Services believes that 3G has the potential to revolutionise the mobile industry. However it needs to arrive with the right kind of security. 3G is going to be a platform for delivering broadband entertainment.

She adds, “End users will be able to see short duration video like promos, trailers, news clippings etc. However for longer duration videos, the viewer will still require broadband connectivity.”

According to Dhingra, 3G and WiMAX will only help in extending the proliferation of broadband. Consumers will access broadband through different technologies depending on where they are, what’s available and the compatibility of their access devices.

“3G will enhance the broadband base. It will not be a competing technology but will facilitate broadband access for the GSM user segment,” says Agarwal.

Srikaunth believes that 3G will benefit the voice segment more than broadband.

He adds, “3G will mean better capacity utilisation for voice delivery. Data delivery over 3G is not big even in developed countries.”

According to Mohanty, 3G networks though they are much hyped, have certain inherent limitations. For instance, 3G networks get saturated if only six percent of subscribers view video, so you need a technology that meets on-demand pervasive broadband requirements. This might be one of the reasons for delays in the introduction of 3G services by operators.

Pashine feels that the mobile handset and the PC offer different experiences to the customer and fulfil different needs. For instance one cannot watch a full length movie on a mobile phone although it offers the advantage of continuous connectivity. Hence multiple technologies will coexist.

An emerging market

As per IMRB research, most large enterprises have already connected their offices using broadband connections. This is because enterprises are employing communication technologies such as VoIP, video conferencing, Web conferencing and instant messaging which are driving broadband penetration.

From a service provider perspective, broadband enables them to offer managed services to the enterprises and SMBs and high speed Internet access and revenue generating entertainment based services to residential customers.

For an entertainment crazy country like India, broadband allows users to download the latest chart toppers music and movies at the click of a button. The challenge is really with SMBs.

“The propagation of broadband in the SMB segment is still at a nascent stage. The good news is that most of these companies have already deployed or are in the process of deploying inter-office connectivity infrastructure. Thus, complete adoption of broadband is not far away,” says Mohanty.

According to Agarwal, the global economy is evolving into an Internet driven economy with a shift to e-commerce, e-business, e-marketing, m-commerce and m-marketing. The same is slated to happen in India as well. Large scale broadband adoption will be a crucial component in this shift.

DSL rules broadband

Owing to the existing network of phone cables already laid across the country, DSL is currently the dominant mode of delivery when it comes to broadband services. However, most new network infrastructure build-outs are happening on Metro Ethernet as service providers are aware that it is the ideal technology to deliver high speed access and services in metros and major cities.

According to Dhingra, broadband in India has been offered through technologies such as DSL with variation in the downstream and upstream speeds based on the distance from the central office. Metro Ethernet on the other hand can offer constant speeds of up to 100 or even 1000 Mbps without any distance to bandwidth variation in downstream and upstream speeds.

“DSL upgraded to ADSL2+ and VDSL are powerful technologies for delivering extremely high bandwidth with triple play. This delivery mechanism is possible on existing last mile infrastructure and so is more viable economically and can be deployed quickly. DSL has given the true taste of broadband to Indian Internet users,” says Agarwal.

He adds, “Shift of analogue cable to digital and IPTV on DSL are redefining the television viewing experience. This has helped incumbent service providers control churn.”

Verma believes that ADSL, including ADSL2 is currently the most widely deployed broadband access technology, as there is no need to install new cable or infrastructure between homes and telephone exchanges.

According to Shrivastava, the cable industry is fragmented resulting in poor growth of cable-based broadband deployment. Mobile broadband is just making an impact again due to delayed deployment by operators.

Mohanty adds, “As it was literally the first technology to establish the broadband service concept in India, we can say that DSL is presently the dominant technology. On the flip side, for it to propagate throughout the country, the copper infrastructure needs to be fairly new, something which it is not.”

Srivastav of Accton Ei-En India feels that DSL-based wireline services are being offered by service providers and wireless broadband have failed to attract the attention that they deserve. If all issues vis-a-vis policy and regulations are ironed out, especially when it comes to allocating frequency spectrum to operators, taking broadband to masses can become a reality as service rollouts will be much faster that what we are currently seeing.

The role of e-governance

e-governance applications are not bandwidth intensive. However, e-governance will enable faster adoption of the Internet across all strata of the population. This will also encourage the purchase of PCs which, in turn, will enable access to the Internet. Since consumers will be interested in using broadband instead of dial-up (if price is right) to access other applications (song downloads etc), we can safely say that e-governance initiatives will indirectly stimulate the growth of broadband.

According to Srikaunth, any technology’s benefits can be reaped in full only when you take the technology to the common man.

Agarwal of MTNL says, “e-governance will lead to healthy practices rather than directly influencing broadband penetration in India in the short term.”

e-governance applications can act as a catalyst for the penetration of broadband, believes Dhingra.

He adds, “In order to run applications such as land registration, taxation-related services, tele-medicine etc. broadband is required. The setting up of State Wide Area Networks (SWAN) by States and the National e-Governance Plan (NeGP) is a step in this direction.”

The future of Indian broadband

Broadband’s future lies in home networking and digital TV on a converged platform. Convergence and consolidation of products and companies will simplify consumer choice.

According to Abraham, broadband has already become one of the main drivers for PC purchases. Be it exam results, ticketing, online banking, entertainment on the Net—broadband will become a necessity to access all these. 

“Broadband will help steer the knowledge economy and drive competitive advantage. Like how India or China became the back-offices of London and New York, the next trend will be for rural India to become the back office of urban India,” says Srikaunth.

According to Gupta, the country provides a huge opportunity for broadband growth. However, the future of broadband is highly dependent on where the government wants to steer it. It has placed the responsibility of driving broadband heavily on BSNL in rural areas through WiMAX.

According to IMRB, the penetration of broadband in India is picking up steadily now and hence by March 2008, there would be more broadband connections than dial ups. In a vast country like India, wireless technology is the fastest and most cost-effective way to deliver broadband especially over the last mile.