Limited infrastructure in the wireline space and the unavailability of additional spectrum in the wireless segment are proving to be major hurdles for broadband evolution in India. However, the implementation of the National Telecom Policy (NTP), 2012, increasing affordability of devices enabling broadband access as well as the development of content and application systems are bound to boost the uptake of services like 3G and 4G. Industry experts share their views on the way forward for broadband in the country…

What are the key challenges faced by the broadband segment in India?

Kunal Bajaj

As far as the wireless segment is concerned, the biggest challenge that operators face is the unavailability of additional spectrum. Besides, building a stronger backhaul network is also a major concern. For providing improved broadband connectivity, the number of towers needs to be increased. Also, there is a need for higher broadband speeds and additional capacity on towers.

On the other hand, issues related to right-of-way (RoW) are a major concern for the wireline segment. Obtaining clearances from multiple authorities for the development of infrastructure to provide broadband services is a tough task. As a result, there are a limited number of successful players in the wireline broadband space. Thus, the biggest challenges facing the Indian broadband industry revolve around the core enablers – spectrum, backhaul and RoW.

Abhishek Chauhan

Some of the key challenges faced by the broadband segment in India are as follows:

•  Limited wireline infrastructure is resulting in bottlenecks in backhaul networks, leading to low service accessibility. Further, wireline infrastructure expansion is facing a slowdown due to complicated RoW procedures.

•  High cost of devices, including cost of customer premises equipment (CPEs) and access devices, is hindering the growth of fixed line broadband.

•  Inadequate spectrum is also responsible for the slow broadband growth in the country. So far, only 5 MHz blocks of spectrum have been allocated to 3G licence holders.

•  Poor quality of service (QoS) and billing discrepancies are slowing down the adoption of mobile broadband services.

•  Lack of compelling applications and content is also hampering the uptake of broadband services.

Other factors impacting broadband growth are lack of infrastructure in rural areas, concerns over the safety of installations, and high capital and operating costs.

Mohammad Chowdhury

So far, broadband growth has not only been slow but has also taken place predominantly in urban areas. Over 60 per cent of broadband subscribers reside in the top 10 metros and Tier 1 cities, and over 75 per cent connections are in the top 30 cities.

Prior to 3G/Broadband wireless access (BWA) service roll-outs, broadband demand was primarily served by wireline networks (such as digital subscriber line, cable modems and fibre). The limited reach of wireline networks is considered one of the key reasons behind the low broadband penetration in the country. This constraint has been removed with the roll-out of 3G services. However, 3G service uptake has not been at par with industry expectations. The wireless segment accounts for only 4 per cent of the total broadband subscriber base. The low uptake of 3G/BWA-based broadband services has been mainly due to the high prices charged by 3G operators, driven by the high charges they paid for spectrum during the 2010 auction.

Wireless is the apt medium for achieving the desired level of broadband penetration as envisaged in the National Broadband Plan (over 100 million subscribers by 2015). However, high tariffs, taxes (25 per cent of what end-consumers pay goes to the government as service tax, charged at 12.3 per cent), spectrum usage charges (3-6 per cent) and licence fees (6-10 per cent) will result in subdued uptake for the next two to three years.

Another challenge is the limited PC/laptop base in the country. While the prices of these devices have come down over the years, they are still expensive for the majority of the Indian middle- and lower-middle-class population.

Besides, Indian consumers still use the internet mainly for entertainment and information search. The uptake of services like e-commerce, online banking and e-governance is much below that in developed markets. Further, there is limited content in vernacular languages. Most of the content that is available online is in English, which limits the internet’s utility as a medium for information/service delivery.

How far will the NTP, 2012 help in promoting broadband uptake in the country?

Kunal Bajaj

The NTP, 2012 as a policy, per se, does not have anything concrete to offer. The policy is more of a vision document highlighting key focus areas in the telecom sector for the government in the future. Clearly, broadband is one of the focus areas of the NTP, 2012. However, there are no specific pointers in the policy that lay down the steps the government must take to help broadband growth in the country.

Abhishek Chauhan

The NTP, 2012 aims at providing affordable and reliable “broadband-on-demand” by 2015 as well as achieving 175 million broadband connections by 2017 and 600 million by 2020 at minimum 2 Mbps download speed. It also aims at achieving higher speeds of at least 100 Mbps on demand.

The government proposes to build the overall broadband ecosystem in the country, including setting up a broadband network (comprising access, core and last mile networks), providing affordable access devices and CPE as well as creating a robust application environment.

The National Optical Fibre Network project, approved in 2011, aims to provide optic fibre connectivity to about 250,000 villages by 2014. This fibre network can be used by service providers to strengthen their backbone network and provide broadband services to end-users. It is also expected to clear the RoW issues plaguing the sector, which would help reduce the backbone bottlenecks in the country. Further, the development of indigenous telecom manufacturing facilities will lower the overall capex required for network deployment.

The policy also proposes to make available 300 MHz spectrum by 2017 and another 200 MHz by 2020. A clear policy road map will go a long way in resolving the spectrum crunch. But more clarity is required on issues like spectrum refarming.

Mohammad Chowdhury

The NTP, 2012 is more of a vision statement that lays down the government’s objective of achieving significant broadband penetration in the country. The policy shows the Department of Telecommunications’ intent to increase broadband access in India and bring it at par with that in developed nations. The government has taken some policy initiatives towards achieving these goals, such as laying fibre networks in rural and semi-urban areas, increasing the contribution of private telecom operators to the Universal Service Obligation Fund and focusing on the e-governance initiative. The targets set up by the NTP, 2012 appear ambitious. However, they can be achieved with a facilitating regulatory regime and a competitive telecom market.

What is the current mix of wireline and mobile broadband in the country? Going forward, which platform is likely to become dominant for broadband usage?

Kunal Bajaj

Wireless broadband will continue to be the dominant platform at least in the medium term, as the segment has received maximum investments over the past several years. Wireless is also preferred over wireline as RoW-related issues make the latter less lucrative. However, going forward, wireless alone will not be able to cater to the growing broadband service requirement. Further, wireless networks will find it difficult to match the capacity and reliability offered by wireline networks.

Abhishek Chauhan

As of 2011, India had about 37.2 million broadband users, including about 13.35 million fixed line and 23.85 million mobile broadband users. Going forward, mobile broadband is expected to dominate the broadband space in the country.

Mohammad Chowdhury

Currently, wireless accounts for only 4 per cent of the country’s broadband subscriber base. However, considering the limited reach of wireline (there are currently just 32 million wireline subscribers and the market is already on a decline), only wireless can meet the expected demand for broadband services in the future.

Further, mobile broadband will be a major contributor to the overall broadband subscriber base with the advent of affordable 3G/BWA-enabled smartphones in the internet access device ecosystem. The growth of the wireless segment, however, will largely depend on spectrum availability, especially in the 700 MHz band.

What has been the impact of the launch of next-generation technologies in the broadband space?

Abhishek Chauhan

3G was first launched in the country by Mahanagar Telephone Nigam Limited in 2008. Post the 3G spectrum auctions, 3G services by private operators commenced in late 2010. Poor QoS, including erratic connectivity, low speeds and high latency, coupled with pricing issues such as high tariffs and bill shocks have put a damper on the growth of the 3G sector. At end-2011, India had around 18.5 million 3G subscribers.

However, today operators are slashing their 3G tariffs significantly and are actively improving their QoS by exploring opportunities offered by Wi-Fi offloading and femtocells. A key growth area has been the uptake of mobile broadband usage through USB dongles.

Another significant development in the next-generation technology space has been the launch of long term evolution (LTE)-based services by Airtel in Kolkata. Services are being offered through USB dongles and Wi-Fi routers. Initially, the CPE was available for more than Rs 7,750, but the cost has now been reduced to Rs 4,999. The LTE ecosystem is still in its infancy, and lacks adequate devices and applications globally. Efforts need to be made to support services such as voice over LTE and spectrum harmonisation, which will enhance end-user adoption of LTE services.

Mohammad Chowdhury

Though a lot was expected from 3G/BWA services considering the charges paid by service providers for spectrum, uptake has been slow. However, with the recent reduction in 3G tariffs by various operators and increased smartphone penetration, the market is witnessing improved service uptake. The impending BWA service roll-outs will also boost broadband penetration in the country.

How has the broadband application ecosystem evolved? Which are some of the promising applications in the broadband segment?

Kunal Bajaj

To further increase the reliability of wireless broadband, we need smaller cells and distributed antennas. The deployment of these advanced technologies will enable operators to achieve better signal quality and capacity. In the past, there has been limited innovation on the content and access device front. However, the scenario has changed and currently, Indian entrepreneurs are making endeavours for developing affordable devices that provide internet access such as low-cost tablets. Today, there is appealing content available in the education and health segments. Further, companies in the commerce and online business space are focusing on delivering innovative content to users through broadband. Online marketing strategy is becoming a critical part of their businesses.

Abhishek Chauhan

Today, the focus is on developing the network and device ecosystem, hence the growth in the application ecosystem has been rather slow. Despite increasing uptake of services such as social networking and video streaming, lack of localised and vernacular applications has deterred the adoption of broadband services. The utility application sector is still at a nascent stage, with slow adoption of mobile education, mobile commerce and mobile health services.

Going forward, applications like mobile TV, location-based services, mobile commerce, especially social commerce, can emerge as potential revenue grossers with 4G launch. 4G services will also pave the way for the adoption of services like mobile healthcare, mobile education, machine-to-machine services and mobile governance.

Mohammad Chowdhury

Some of the segments that are likely to witness innovations and quick growth in the next two to three years are:

•   mHealth – We have a very poor healthcare delivery system, especially in semi-urban and rural areas. Mobile devices can be used as platforms to increase the reach and improve the quality of preventive health care. There is a lot of scope for innovative applications in this space.

•   mCommerce – Driven by the recent changes in regulations with regard to money transfers introduced by the Reserve Bank of India, the operators are in the process of tying up with banks/non-banking financial services for launching their mCommerce offerings.

•   Mobile games – With the availability of higher speeds, interactive games are becoming a significant revenue source for application developers and operators.

•   Video – Video will be a key contributor to the uptake of these services.

Where do you see the broadband segment in the next two-three years? What will be the key growth drivers?

Kunal Bajaj

One of the biggest tasks for entrepreneurs is to get more people to access internet services wirelessly, which is still considered as an expensive option by the mass market. The cost of accessing broadband on the move continues to be high, both on account of high-priced devices as well as the high cost of using essential applications. The other challenge facing marketers in online business operations is winning the trust of Indian consumers as they still consider transactions and business conducted offline as safer and less complicated.

Abhishek Chauhan

By end-2015, the total number of broadband subscriptions is expected to reach 226.95 million. This will be predominantly due to 3G service uptake and growth in LTE services, which will be aided by a mature ecosystem. The availability of low-cost smartphones and mobility devices, increased government focus on broadband, and the availability of relevant, vernacular and innovative applications will drive the growth of the broadband segment.

Mohammad Chowdhury

The following are the key drivers of broadband growth in the future:

•  Increasing smartphone penetration in the country

•  Uptake of services like e-commerce, e-governance, m-commerce, educational applications, gaming as well as social networking

•  BWA service roll-outs and the possible auction of 700 MHz to meet the growing demand for video-based content