The broadband segment in India has failed to replicate the success witnessed in the wireless telephony space. Broadband penetration in the country continues to stand at a dismal 1 per cent, with only 60 million subscribers using these services out of a total telecom base of 910.16 million. Although the auction of 3G/broadband wireless access (BWA) spectrum in 2010 received an enthusiastic response from the industry, it led to little improvement in broadband coverage during the initial years of service launch. It is only in the past one year that 3G services have attracted significant takers, resulting in a surge in data usage and ARPUs. However, coverage is still patchy and service is largely restricted to urban pockets.

The 4G scenario is no different. This space continues to witness limited activity even after four years of spectrum auctions. Until recently, Bharti Airtel was the only BWA spectrum holder to roll out long-term evolution-based 4G services in the country. The operator launched the service in early 2012 in Kolkata and has expanded its reach to other licensed circles since then. In July 2014, Aircel joined the 4G league by launching service in three licensed circles in the country. Though Reliance Industries-led Reliance Jio Infocomm Limited (RJIL) has created a stir in this space by rolling out extensive infrastructure in the past 18 months, the company’s lack of commitment regarding a final deadline for service launch has evoked mixed reactions from the industry.

As far as wireless services are concerned, Wi-Fi has witnessed limited uptake over the past many years. However, the scenario is now improving. With a surge in data usage, operators are offloading their data traffic on the Wi-Fi platform to reduce network congestion. Also, public Wi-Fi services are gaining traction in the country.

Wireline-based broadband services have continued to grow at a slow pace. The fibre-to-the-home market continues to be underexplored on account of various challenges such as right-of-way (RoW) issues and service pricing. In the future, fibre, with its high bandwidth capacity, will emerge as the key delivery medium for high-speed data services, although high RoW costs are preventing operators from investing in fibre as the last mile access platform. The National Optical Fibre Network (NOFN) project, which aims to connect all gram panchayats in the country by providing fibre-based broadband connectivity, is already facing multiple delays and significant cost overruns.

Gearing up for a turnaround

The industry expects a major turnaround in the broadband segment in the next two years, driven by the increasing uptake of mobile broadband services, the successful completion of the NOFN project and increasing availability of affordable smartphones. The past year has been very promising from the point of view of 3G adoption. Operators such as Bharti Airtel, Vodafone India and Reliance Communications (RCOM) have witnessed significant growth in their 3G subscriber base, while Idea’s 3G base doubled between March 2013 and March 2014. At the industry level, 3G adoption in India saw a year-on-year growth of 146 per cent in 2013, as per the MBit Index report from Nokia Networks (erstwhile Nokia Solutions and Networks). The rationalisation of 3G data tariffs by operators in order to bring them in line with 2G data tariffs has also attracted users to 3G technology. Financial reports of all major operators for the quarter ended June 2014 show a marked improvement in 3G data usage and ARPUs. Further, the lifting of the ban on 3G intra-circle roaming agreements will go a long way in increasing service uptake.

The mobile broadband user base will grow further as more players join the 4G bandwagon. The BWA licence agreements signed in 2010 require operators to partially launch their services by 2015. Therefore, significant service launches by BWA players over the next six months can be expected. Further, service launch by RJIL, which holds pan-Indian BWA spectrum, is expected to be a game changer for the broadband market. The Reliance Group is known for its market-disrupting low-price model, which, coupled with a strong and modernised network, will give an edge to RJIL over its peers.

The market will also see the entry of many non-BWA players in the 4G space. Several operators had acquired liberalised spectrum in the 1800 MHz band in the spectrum auction conducted in February 2013, and have announced plans to venture into the 4G space in the next two to three years. Further, the government’s plan to allocate spectrum in the 700 MHz band will attract significant operator interest as it will enable them to cater better to the high speed data demands of their customers.

The objective of the National Telecom Policy (NTP), 2012 to make broadband available to all at a minimum download speed of 2 Mbps, highlighted the government’s intent to push broadband services in a big way.  The Telecom Regulatory Authority of India (TRAI) has recently notified that the minimum broadband speed has been raised from 256 kbps to 512 kbps. Further, the NOFN project, though currently progressing at a slow pace, is a landmark project for India’s broadband ecosystem. If concluded by its revised March 2017 timeline, it has the potential to change the Indian broadband and rural telecom landscape.