State-owned Bharat Sanchar Nigam Limited (BSNL) is one of the leading telecom operators in India, with the largest fixed line network in the country and an extensive wireless network. It is the largest Indian company in terms of revenue generation, with revenues of Rs 388.96 billion in 2007-08. It is, moreover, the seventh largest telecom company in the world.

Over the past few years, the company has been leveraging its fixed line network to expand its broadband offerings, in line with the government's thrust on increasing broadband penetration. Today, the broadband and internet segment is a key focus area for the company.

Despite being a late entrant into the segment, BSNL overtook incumbent Tata Communications (then VSNL) in September 2003 to become the largest internet service provider (ISP) in India. In February 2005, the company launched its broadband services under the brand name DataOne in Bangalore, Chennai, Hyderabad, Kolkata and Karnataka.

Currently, BSNL offers internet services in 23 circles and broadband services in over 3,200 cities. Over 53,000 km of optic fibre, spanning almost 500 towns and over 6,000 cities, has been deployed under the National Internet Backbone Phase I (NIB I) project, launched in May 2003. Based on a multi-protocol label switching (MPLS) system, the network offers over 436 nodes and 432 points of presence, covering most district headquarters. BSNL's Rs 1.2 billion NIB II project is due to be launched soon.

With a broadband subscriber base of 2.25 million and an internet subscriber base of 5.64 million, BSNL accounts for over 50 per cent of the country's broadband and internet market as of March 2008. The broadband subscriber base has increased by more than 100 per cent over the past one year. The company is way ahead of its competitors including Mahanagar Telephone Nigam Limited, Bharti Airtel and Tata Communications, which have 2.46 million, 1.27 million and 0.65 million internet and broadband subscribers respectively. BSNL's revenue from the internet and broadband segment increased by over 200 per cent (albeit on a small base) from Rs 1.62 billion in 2005-06 to Rs 5.14 billion in 2006-07.

BSNL has made significant investments on broadband infrastructure in the past one year. Today, BSNL's broadband network covers around 80 per cent of all district headquarters, 30-35 per cent of all block headquarters, 60 per cent of all cities and more than 24,000 villages. The company is now on its path to making broadband coverage available to every citizen in the country.

In 2008, BSNL plans to invest Rs 15 billion to extend its broadband coverage to all cities and 1,40,000 villages. The company is working on expanding its broadband capacity base from 1 million ports to 9 million ports, and has recently invited bids for 8 million new customer premises equipment. In mid-2007, the company granted a joint contract to Ericsson and Nokia Siemens Networks (NSN) for supplying 800,000 new ADSL connections. Aided by these measures, BSNL is likely to add nearly 7 million connections by 2010.

BSNL offers a range of tariff plans for residential and business users. Some tariffs are fixed according to the volume of data transmitted, while other plans offer unlimited downloads. The company has some of the lowest tariffs in the industry. For example, the Home Plan 125 for residential users offers 150 MB of downloads with speeds of up to 2 Mbps at a monthly fee of Rs 125.

Broadband applications
Over the past 18 months, BSNL has increased its focus on broadband applications. In March 2007, the company became one of the first telecom operators to launch IPTV services. The service, launched in Kolkata, Pune and Bangalore, has garnered about 1,500 subscribers as of June 2008. BSNL now intends to launch IPTV services in about 98 more cities, and has already allocated contracts to about seven franchisees. Service in some of the new cities will be launched by August 2008, while all 98 cities are scheduled to be covered by end 2008-09.

In October 2007, the operator launched mobile TV services in the eastern and north-eastern regions. While the service was initially available on select Nokia handsets, it was soon extended to Sony Ericsson and Motorola handsets as well. Now available in 21 circles, the mobile TV service allows BSNL subscribers to access about 35 TV channels. Since local content is critical for increasing penetration, BSNL is in the process of finalising deals with several content providers to broaden its mobile TV portfolio.

Technology upgrade
While the company had 31 million fixed lines as of May 2008, not all of them were capable of providing broadband services. To address this issue, BSNL has been steadily upgrading its copper infrastructure and now, its entire fixed line network is capable of delivering broadband. BSNL has deployed ADSL2+ technology for its broadband services. The company already provides broadband through optic fibre cable.

For the future, BSNL is betting big on broadband wireless technologies like WiMax and 3G. The company is ready to launch 3G services and is currently awaiting allocation of 3G spectrum. Meanwhile, it has earmarked $750 million for its Wi-Max initiative. Following the Tata TeleservicesVirgin Mobile deal, BSNL has decided to adopt the franchisee model for rolling out wireless broadband services using Wi-Max technology. For this, the company recently invited bids from prospective partners on a revenue-sharing basis. BSNL wants to be the first operator to roll out wireless broadband in the 2.5 GHz band. While private telecom companies have to bid for spectrum in this band, BSNL will be allotted spectrum automatically.

The company has already chosen Usbased Soma Networks to roll out Wi-Max across three states –­ Gujarat, Maharashtra and Andhra Pradesh. In the remaining circles, according to the expression of interest document floated by BSNL, the franchisee will be selected through a two-stage bidding process. Successful bidders will have to install one base station each in an urban and a semi-urban area at their own cost and undergo a pre-qualifying test for conformity in range, capacity and throughput requirements.

According to Kuldeep Goyal, chairman and managing director, BSNL, the incumbent has started the process of migrating to next-generation networks (NGNs) to provide broadband linkages, making the transition from equipmentto software-driven technologies. The NGNs will first be laid in all district headquarters and panchayats, and thereafter in district boards, zilla parishads and over 600,000 villages across the country. The company intends to complete the migration to NGNs by 2015.

In the pipeline
After gaining a firm foothold in the broadband space, the public sector unit (PSU) is looking to position itself as an end-to-end broadband player. It is planning to foray into broadband equipment manufacturing, and has plans to set up a joint venture (JV) with an original equipment manufacturer (OEM) for manufacturing broadband equipment at its factory in Kolkata.

The proposed JV will design and develop a range of ADSL2+ customer premises equipment for the PSU and for the market. Apart from investing in the production line, the OEM partner will be responsible for raising funds to meet the working capital requirements of the JV. After meeting BSNL's requirements, the JV will be free to sell its equipment in the market.

Going forward
The government has set a target of 20 million broadband connections by 2010. BSNL is targeting a market share of about 60 per cent of this, which works out to approximately 12 million subscribers. However, given the current broadband subscription level of 4.15 million, the company clearly has an uphill task ahead.

There are a number of issues that need to be addressed. Key among them are the lack of consumer awareness and low PC penetration levels. According to a BSNL official, "While a PC costs over Rs 15,000 in India, the cost is considerably lower in advanced countries."

The company has sought to capitalise on its ownership of fixed lines and other advantages. It has made appropriate new investments to expand the range, scope and quality of the services that it offers to its consumers. At the same time, it has resisted pressure from the regulator and competitors to share its local loop and backbone. While the company has chalked out an ambitious growth plan for the broadband segment, it remains to be seen whether these initiatives will lead to accelerated growth in the company's subscriber base.

Recent broadband contracts

Optic fibre cable: BSNL awarded two contracts worth Rs 1.07 billion to Sterlite Technologies in June 2008. The first was for the supply of ribbon fibre optic cables, which BSNL will install in about 900 city sites across the country. Under the second contract, Sterlite will provide 102,000 paired copper telecom cables to support the growing demand for ADSL-based broadband and basic telephony in rural and urban India.

IPTV: BSNL recently tied up with Aksh Optifibre to provide IPTV services. The cost of the project is expected to be Rs 5 billion, and BSNL aims to acquire 10,000 subscribers within nine months of launching the service. In April 2008, BSNL entered into a partnership with Goldstone Technologies to deploy triple-play (IPTV, video-on-demand and internet access) services under the Goldstone brand. The two companies have conducted trials in Hyderabad and intend to launch the service soon. The service will be available to all BSNL customers.

Rural broadband: Under the government's National e-Governance Plan, the PSU will set up 50,000 common service centres in villages. BSNL recently granted a greenfield rural tender to NSN for providing broadband connectivity in 25,000 villages in India.

Wi-Max: BSNL has formed an alliance with US-based Soma Networks for implementing mobile Wi-Max networks in Gujarat, Maharashtra and Andhra Pradesh.

VOIP: BSNL has announced plans to float a global tender for a technical tie-up to offer VOIP services across the country. It intends to offer international calls for as low as Re 1 per minute.