“VSAT has an important role to play”

Given its vast geographical spread and strong demand for reliable communication infrastructure, India has emerged as one of the biggest global markets for very small aperture terminals (VSATs). VSATs offer significant advantages over traditional leased line networks. These include ubiquitous coverage and high reliability. VSATs also offer low costs and an effective solution for last mile connectivity owing to their ability to penetrate areas that cannot be accessed by cable or fibre. Capitalising on these advantages, Hughes Communications India Limited (HCIL), one of the leading VSAT providers in the Indian market, has been witnessing strong growth in recent years. The company has a 60 per cent share in the Indian VSAT market and has registered a year-on-year growth of 20 per cent over the previous year.

Partho Banerjee, president and managing director, HCIL, spoke to tele.net about the recent trends, key growth drivers, and the company’s initiatives and achievements in the past one year. Excerpts...

What are the current trends in the Indian VSAT industry?

A key trend is that the industry is moving towards the rural and suburban market segments. Areas like banking, e-governance and some retail segments also have huge potential and present a major opportunity. Given the limited availability of telecom infrastructure, especially in certain pockets, satellite usage is growing rapidly. Therefore, segments like e-education and rural banking are witnessing high uptake. Similarly, provision of internet and broadband services through satellites is a trend to watch. With the limited reach of telecom in remote and rural areas, VSAT has an important role to play in the internet and broadband space. We also see the e-kiosk business, using satellites, gaining momentum. A recent trend is that of small and private players entering the satellite space.

How has the VSAT industry performed in the international market?

Globally, the VSAT industry has been growing at a fast pace, especially in segments such as the internet, cellular backhaul and retail. Even in a country like the US, where telecom infrastructure is robust, the growth of internet service provision through satellites has been phenomenal.

What have been the key growth drivers in the VSAT industry?

Currently, the most important growth driver for the VSAT industry is the banking sector. In the long term, we see internet services, satellite backhaul and media delivery emerging as the key growth areas for this segment. HCIL has also been aggressive in media delivery and has dominated the digital movie distribution market in the country through customers like UFO Moviez. The company supports a range of customers with media distribution applications such as FM radio broadcasts to transmitter towers; IPTV services to consumers and businesses; and specific content delivery to private TV channels.

How has HCIL performed in India over the past year?

The past year has panned out well for the company. We are growing rapidly and improving our position in the market steadily. We have recorded a year-on-year growth of almost 20 per cent in terms of market share. Over the past 10 years, the company has witnessed annual growth rates of 20-45 per cent.

Our standing in the industry has improved over this period. Currently, we have a market share of almost 60 per cent in India. Our performance has been recognised by the industry as well. We won the award for the best VSAT player in India at both the tele.net Operator Awards and at Frost & Sullivan’s annual telecom awards. Therefore, the going has been good so far and I am happy with the company’s performance. Going forward, we can do even better since new opportunities are coming up.

What are the upcoming business segments for the Indian VSAT industry?

The key new segments are digital content delivery, satellite backhaul, and broadband services in the unserved and underserved rural and remote areas. Among the existing business segments, education and banking will continue to generate significant demand. In India, the company launched the HughesNet Global Education service in 2002 and has established a significant coverage.

Another segment that is viewed as a major demand booster is the large government networks that are coming up. The union government has been implementing e-governance projects like providing connectivity to schools, community centres and rural businesses. The government’s support is often dependent on a long-term and viable business model, and VSATs, coupled with strong value-added services, are one of the major solutions for achieving this.

What have been the key achievements of your organisation?

We have pioneered several services in the VSAT business, especially from the connectivity perspective. The company has also entered the managed services space. In December 2010, HCIL signed two major managed network service contracts with Indian public sector banks. Under the first contract worth Rs 400 million, which was awarded by Allahabad Bank, the company had to provide broadband services connecting 1,400 locations with satellite terminals and 1,000 sites with terrestrial multi-protocol label switching links. The second contract, valued at Rs 125 million, was awarded by the Central Bank of India to deploy a network comprising 1,955 satellite terminals.

We have entered segments like digital cinema, digital delivery, education, e-kiosk and broadband services. The company has also worked on banking services. HCIL’s VSAT platforms are used by the networks of some of the world’s largest banks including national central banks. At the service level, the company is believed to have a 35 per cent share of the Indian banking market where it expects to witness rapid growth in the number of offsite ATMs – all of which are served by VSATs, which are the most cost-effective option.

How is the company placed as compared to its rivals?

We are both consolidating our position as well as increasing our market share. HCIL is the leader in the Indian VSAT market and we intend to strengthen our position further.

What are the challenges and concerns that need to be addressed going forward?

Several initiatives need to be taken by the regulator to introduce the next generation of satellite services. Two key focus areas are rationalisation of administrative processes and a reduction in the fees for satellite services. A more channelised administrative set-up and a revised fee structure can help the satellite industry grow in India. Bringing in new technologies in this space is also important.

What are some of the key opportunities for the company?

The key opportunities going forward are internet services, e-education, rural banking, content delivery, government tenders, etc. Upcoming next-generation technologies and systems will also give a fillip to the industry. In a country like India, which has a large population, each of these segments holds enormous potential. Internet access, for instance, is still not available in rural and semi-urban areas. There is a huge untapped potential in this segment.