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Broadband the next big revolution

Thomas K Thomas | February 07, 2004

There's new action in the telecom sector. The giant telcos like Reliance Infocomm, Bharti Tele-Ventures, Tata Teleservices and even the state-owned Bharat Sanchar Nigam are squaring off for a fight over broadband. They are hoping broadband will be the Next Big Thing after the mobile revolution.

Take BSNL, which launched its broadband service under the brand name DataOne in Bangalore last month. It has already notched up 6,000 subscribers. But BSNL executives say this is only the beginning. The target: 200,000 subscribers by year-end.

Or, look at how Bharti Televentures, among the first to hit the broadband market six months ago, is moving. It has already picked up 30,000 subscribers and plans to hook 100,000 subscribers in a year.

Bharti is planning a national roll out of its broadband services.

Though the company is offering only broadband Internet services at present, it will move into the entertainment segment with services like video on demand as well as gaming services in the next three months.

It is also going aggressive on wireless broadband with the introduction of wi-fi technology that allows access to high-speed data transmission even while on the move.

Then, there's Tata Teleservices, which is on the verge of acquiring Dishnet DSL -- a broadband company -- which will give it an inroad into the broadband market with 30,000 subscribers from day one. That apart, the company is in the process of laying an undersea cable between India and Singapore, which will enable it to offer 5 terra bits of capacity.

But the most ambitious plan, at least on paper, seems that of Reliance Infocomm, which is about to roll out its NetWay services. For the first time in India, television will be made available on broadband along with telephone and Internet services.

Reliance has been experimenting with its broadband services for the last few months in Jamnagar, Gujarat. The Ambani company has also worked closely with Microsoft to jointly create, test and deliver next-generation Internet Protocol-based television services such as video on demand, on-demand storefronts and interactive programme guides.

Sandeep Sibal, technology advisor to Mukesh Ambani, says, "High speed data rate will enable a new world. It will enable us to offer services that we could not so far." Reliance is also planning to introduce next-generation CDMA technology called CDMA 2000 1X EV-DO that will enable broadband on wireless terminals.

"With at least four companies committed to the broadband market, India is poised to join the rest of the world in the broadband revolution," says Ruchir Godura, country manager, UTStarcom India. "Operators will go all out in offering not just broadband Internet but also value adds like video."

Simply put, broadband is an always-on network that allows data transfers at high speeds of over 128 kilobits per second over a bandwidth of 2 mega bits as compared to a peak speed of 52 kbps speed offered by existing dial-up Internet accounts.

The technology allows operators to offer Internet, telephone, cable television and entertainment through a single cable, which would also mean single billing for consumers. Broadband can also be used for distance learning, e-medicine, and tele-conferencing.

Says Kishore Chaukar, managing director, Tata Industries, "Broadband will change the face of India. It will be used in the information sector, entertainment and e-governance and will increase productivity."

But why are operators jumping into broadband right now? Explains Ravi Sharma, managing director, Alcatel India, "Revenues from voice calls are dipping owing to the drastic fall in tariffs. Operators are looking to enhance their bottomlines through data traffic. Broadband technology is one of the best technologies for tapping this segment."

Currently, telecom operators earn an average of about Rs 500 from each customer. The calculation is that this will climb by another Rs 1,000 once broadband is introduced. Says Godura: "On average a consumer spends Rs 300 for cable services, Rs 500 on voice calls, Rs 600 on Internet and at least Rs 100 on video and entertainment per month. Telecom companies offering broadband stand to pocket all this, which will take the average revenue per user from Rs 500 to Rs 1,500 a month."

Interestingly, consumers won't be spending more because they already pay for all these services to different operators. In fact, consumers will have the convenience of a single billing system. For operators there's another advantage.

The churn, or the rate at which consumers shift operators, will fall because once you have taken a broadband connection, the operator owns the copper wires right up to the TV or the PC. Redoing the wiring would be expensive.

While this is good news for operators who are at present facing a churn rate of 6 per cent, it may be a negative for customers who will lose their freedom to choose.

Broadband will also give a fillip to fixed-line companies, which have been losing voice customers to the wireless operators. Broadband will enable fixed-line companies to use their existing infrastructure without much investment to generate additional revenues.

Apart from the obvious desire to increase revenues the other big reason for the sudden interest in broadband is that the overall conditions necessary for proliferation of such a technology has improved.

Badri Aggarwal, president, Bharti Infotel says, "Bandwidth prices have come down by 30 per cent to 40 per cent over the last few years, making broadband viable and reliable. We also offer SLA (standardisation agreements) of 99 per cent now, which was unheard of a few years back."

From the consumer's point of view, broadband not just simplifies systems with more choices, it also offers high speed connectivity. Says Alcatel's Sharma, "The broadcasting segment, for instance, is heavily unorganised, which makes it difficult for the consumers to even compare the tariffs or quality of services. If a large telecom company offers TV watchers will go for it. All you need to get is a single set top box for telephone, TV and Internet."

Globally too, broadband is picking up speed. From just over 17 million users in 2001, the number of broadband users in the world has crossed the 70 million mark.

In Korea 57 per cent of the population has a broadband connection. In China, the number of broadband users has touched 5 million within just one year. The Japanese broadband user base has crossed 6 million within three years.

Analysts predict that India too can grow big on broadband. But as of now the base of Indian broadband is not even 0.02 per 100 persons as against 57.5 in Korea. It's just 10 per cent of total Internet users. There are still a number of hurdles relating to regulations and technology to be sorted out.

That does not worry the telecom companies. Their immediate focus will be to get to the 60 million households, which have cable TV and the 7 million Internet users first. Expect a real prolonged battle on this one.

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