Broadband penetration in India stood at only 1 per cent as of June 2012, as against a teledensity of 79.58 per cent. The factors responsible for the modest broadband uptake include low computer penetration, limited wireline networks, challenges in last mile access, right-of-way issues and spectrum scarcity.

However, with the launch of 3G and 4G services, the scenario is likely to change significantly. The government is playing an important role in promoting broadband services in the country. The National Telecom Policy (NTP), 2012 recognises broadband connectivity as a basic necessity and aims to provide broadband on demand by 2015.

The government’s National Optical Fibre Network (NOFN) project, requiring an investment of Rs 200 billion, aims to provide broadband connectivity to 250,000 village panchayats with speeds of up to 100 Mbps.

Market size and growth

India’s internet and broadband subscriber base stood at 22.86 million as of March 2012. Of this, 13.81 million were broadband connections (internet services with a minimum speed of 256 kbps).

The broadband subscriber base witnessed a compound annual growth rate of 20 per cent over the past decade. The segment has gained momentum in the past three years due to increasing internet service uptake, and decreasing PC prices as well as tariffs.

Broadband services in India are being provided through several platforms including cable modem, digital subscriber line (DSL), optic fibre cable (OFC) and wireless technologies. So far, DSL has been the most widely used technology. As of March 2012, 85 per cent of the total internet and broadband subscribers were accessing services through DSL. With the launch of 3G services and broadband wireless access (BWA) network roll-out, wireless technologies like HSPA, HSPA+ and long term evolution-time division duplex (LTE-TDD) are also gaining traction. Bharti Airtel is currently the only BWA service provider, while others are aiming at a mid-2012 launch.

Service provider update

As of March 2012, there were 189 licensed broadband service providers in the country. However, the market is largely dominated by players like Bharat Sanchar Nigam Limited (BSNL), Mahanagar Telephone Nigam Limited (MTNL), Bharti Airtel, Reliance Communications (RCOM), Hathway Cable & Datacom Private Limited, Tikona Digital Networks and Sify Technologies, which together have a 95 per cent broadband subscriber market share.

tele.net takes a look at the current status and future plans of select operators, internet service providers (ISPs) and BWA players…

BSNL

BSNL is the country’s largest broadband service provider. It uses asymmetric DSL (ADSL) technology to provide these services. The company has entered into a partnership with ZTE to install devices that support ultra high speed ADSL2+ and next-generation VDSL2 in order to augment its network capacity.

In October 2011, BSNL took the unexpected step of surrendering its BWA spectrum in 17 circles.  The operator has been reporting losses for two years and plans to utilise the BWA refund fee to restructure its debt and expand its network. Also, the company was forced to cancel its plans of launching broadband services using the Wi-Max platform as all private operators opted for LTE.

However, BSNL is partnering with RailTel and Power Grid Corporation of India Limited for the implementation of the NOFN. As part of a pilot project in Ajmer, the operator will roll out an OFC network in 30 village panchayats by October 2012. The company is also in talks with London-based satellite service company Inmarsat to offer broadband services through satellites in remote areas.

Bharti Airtel

Bharti Airtel is the second largest broadband service provider in India. It offers these services through DSL technology and has a pan-Indian network comprising 157,886 route km of OFC and over 4,150 MPLS and SDH points of presence (PoPs). In line with the Telecom Regulatory Authority of India’s (TRAI) recommendations, Airtel has increased the minimum speed of its wireline broadband services in 13 cities – Delhi NCR, Lucknow, Chandigarh, Bengaluru, Chennai, Hyderabad, Coimbatore, Mumbai, Pune, Ahmedabad, Indore, Bhopal and Kolkata – to 2 Mbps.

In April 2012, Airtel became the first operator to launch 4G services in the country. The services, which were launched on the LTE-TDD platform, are available in Kolkata and Bengaluru. Currently, users can access 4G services only through indoor customer premises equipment. The operator is planning to introduce “mifi” – a compact, battery-operated, wireless device – to allow 4G service access through 3G handsets. The operator plans to launch these services in Pune and Chandigarh under the next phase of roll-out. It has awarded network roll-out contracts to ZTE, Huawei, Nokia Siemens Networks and Ericsson for the Kolkata, Karnataka, Maharashtra and Punjab circles respectively. According to market estimates, each of these contracts is valued at $75 million-$100 million.

Bharti Airtel recently acquired a 49 per cent stake in Qualcomm’s BWA business. Qualcomm has authorised the operator to provide 4G services in the former’s four licensed circles – Delhi, Mumbai, Haryana and Kerala. Airtel is likely to roll out 4G services in Delhi and Mumbai by December 2012. The company is also planning to partner with Aircel to expand its 4G network.

MTNL

MTNL is the country’s third largest broadband service provider. It uses ADSL2+ technology to provide these services. In March 2012, the company launched gigabit passive optical network (GOPN)-based fibre-to-the-home broadband services. The service roll-out, which involved an investment of over Rs 800 million, is expected to add 15,000 subscribers on MTNL’s network by September 2012. The operator also plans to introduce femtocell technology, which will allow wireless broadband access indoors.

MTNL also wants to surrender its BWA spectrum and is awaiting government approval for the same.

RCOM

RCOM offers broadband services in over 500 towns. It provides last mile connectivity through its OFC network spanning over 190,000 km and across 1,400 towns/ cities. The operator’s primary building access technology is metro Ethernet with ring-based fibre uplinks. In 2011, the company launched CDMA wireless broadband services with a downlink speed of up to 3.1 Mbps and 1.8 Mbps uplink. Also, RCOM’s Reliance Netconnect Broadband service, which was launched in 2009, currently covers 24,000 towns and 600,000 villages.

Aircel

The operator has BWA licences in eight telecom circles and is reportedly planning to roll out services between October and December 2012. It has selected LTE-TDD as the technology platform for 4G services and plans to invest Rs 27.57 billion in network roll-out. It is likely to launch these services from the Tamil Nadu circle. The operator will reportedly offer 4G services through dongles and devices that support broadband internet, video-on-demand, education and health care services and broadcasting. Currently, Aircel is leasing and deploying an OFC network to meet the growing capacity demand.

Meanwhile, the company has been increasing its presence in the Wi-Fi segment as part of its data offload strategy. In 2011, it set up 50,000 Wi-Fi hotspots across the country, and formed partnerships with Tikona Digital Networks and O-Zone Networks to offer public Wi-Fi services.

Tata Communications Internet Services

Tata Communications Internet Services’ OFC network currently covers 60 cities and 125 PoPs. The company provides Wi-Max-based retail broadband services in Delhi NCR, Bengaluru, Hyderabad and Chandigarh, and has a subscriber base of around 50,000.

Infotel Broadband

Reliance Industries Limited-owned Infotel Broadband Services is the only company with pan-Indian BWA spectrum. The company has selected LTE-TDD technology to offer high speed data services and plans to launch services in 2013-14. It also intends to offer 4G-enabled data cards for tablets to provide data connectivity. Infotel’s plan to conduct service trials in Jamnagar has been postponed to August 2012.

The company has reportedly changed its strategy of leasing towers from Reliance Infratel and has decided to set up 100,000 greenfield towers. It recently signed an agreement with BSNL for sharing the latter’s 24,000 towers. It is reportedly in talks with Himachal Futuristic Communications for rolling out a 4G network.

Augere Wireless Broadband

Augere Wireless Broadband, which is promoted by France Telecom and private equity players, has BWA licences in the Madhya Pradesh and Chhattisgarh circles. The company has selected LTE-TDD for 4G service provision. Though the company had plans of launching 4G services in India under the Zoosh brand, it is reportedly considering an exit from this market by selling its BWA licences due to fund shortage and regulatory uncertainty.

Tikona Digital Networks

Tikona is the only ISP in India to use unlicensed spectrum for offering BWA services. It uses spectrum in the 5.8 MHz and 2.4 GHz bands, and has deployed 42,000 base stations across 40 cities. Tikona has addressed the issues of poor service quality on unlicensed spectrum by using the fourth-generation multiple-input, multiple-output platform and technologies such as orthogonal frequency division multiplexing and smart antennas.

The company is preparing for the second phase of its Wi-Fi network expansion, primarily in the southern states. Tikona acquired 4G spectrum in the 2010 BWA auctions in the Gujarat, Himachal Pradesh, Rajasthan, and Uttar Pradesh (East and West) circles. It has selected LTE-TDD technology for 4G service roll-out and plans to launch services by October 2012. The company is likely to initially focus on Tier 2 and Tier 3 cities and has planned investments of over Rs 10 billion for the next two years.

Sify Technologies

Sify provides wireless last mile connectivity to over 650 cities through 1,200 base stations. It offers broadband services through 1,800 e-port cybercafés. The company recently partnered with US-based Vidyo, Inc. to provide next-generation videoconferencing services for enterprises and emerging businesses.

Hathway Cables & Datacom Limited

Hathway Cables & Datacom Limited, the largest cable-based broadband service provider in the country, has been providing internet and broadband services based on the data-over-cable service interface specification technology since 2000. Currently, the company provides broadband services in 22 cities and has 15,000 km of hybrid fibre and coaxial cable networks. It plans to leverage its existing cable network to expand its broadband reach.

You Broadband & Cable Limited

You Broadband & Cable Limited is a Category A ISP and offers high speed internet, voice and video services through the cable modem platform to residential, small and medium enterprise and corporate customers in 12 cities. The company provides last mile connectivity through an OFC network of over 1,155 km and 4,000 km of coaxial cables.

Others

Tata Teleservices Limited has been providing the Tata Photon+ broadband services on the EVDO platform since 2009. Also, Sistema Shyam TeleServices Limited, which provides broadband services under the MBlaze brand, has been expanding its footprint in India since 2009.

Going forward

Internet and broadband services play a key role in a country’s social progress and economic development. It is estimated that a 10 per cent increase in broadband penetration translates into a 1.3 per cent increase in the country’s GDP. Broadband is an enabler of opportunities related to education, governance, entrepreneurship, etc.

Moreover, with the voice telephony segment reaching saturation point, data is expected to drive the next level of growth in the Indian telecom space. According to industry estimates, about 60 per cent of the telecom revenue growth in 2011 was driven by data and value-added services.

The penetration of 3G and 4G services will increase over the next few years, which will provide a fillip to the broadband segment. The growing popularity of broadband applications like net telephony, IPTV and direct-to-home services will also contribute to the segment’s growth. Further, smartphones and high-end mobile devices are likely to replace computers as the dominant internet access device.

The development of an ecosystem to support the roll-out of wireless broadband; availability of access devices like USB modems/dongles, PC cards, routers, personal Wi-Fi hotspots, smartphones and tablets; and growth of the gaming segment are the key factors that will determine the level of broadband service uptake. Other important factors include the development of advanced last mile access technologies, and the availability and affordability of end-user access devices.

Wireline broadband is also expected to play a key role in the evolution of the Indian broadband market. Bandwidth-intensive applications are best supported through OFC networks. Also, operators are increasing investments in fibre-based backhaul networks to accommodate the increasing data traffic.

Government initiatives such as the NOFN and NTP, 2012 will be the key investment drivers for the Indian broadband market. Several wireline and wireless projects are also being implemented under the Universal Service Obligation Fund.