Broadband
to take India’s Growth to the Next Level
Telecom boom has already happened in
India. Telephone connections in India
have just crossed the 100-million mark,
ranking India fifth after China, USA,
Japan and Germany. The total number
of connections up to 1995 was 2.2 crore.
Another fact is that out of these 100
million connections, the share of mobile
phones is 54 million and the number
of landlines is around 46 million. Telecome
companies like VSNL, Bharti, Reliance
and Tata are expecting that this base
is going to treble in two years’ time.
The Minister of Communications & IT,
Government of India, Mr. Dayanidhi Maran,
says, “By 2007, India will have 250
million telephones and the teledensity
will be about 22 per cent. By that time,
the entire country shall be carpeted
by telecom network and all the villages
connected by phone.” According to Mr.
Maran, “Currently, 15 million people
in India own PCs and there are 5 million
Internet connections in the country.
The aim of the Indian Government is
to increase the number of people owning
PCs to 75 million and the number of
Internet connections to 45 million by
2010.”
So, after the telecom boom and exponential
growth in data communication or Internet
connections, the natural move is towards
convergence, which is purely based on
broadband services. It is a fact that
the use of Broadband services, which
supports bandwidth-hungry applications
like e-commerce, e-health, telemarketing,
e-governance, video-on-demand, etc.
contributes to GDP. As per a report
by the Internet and Online Association
of India, the total value of e-commerce
activities during 2004-05 touched Rs.570
crore. The report estimates over 300-per
cent growth rate during the next couple
of years and estimates that a whooping
Rs.2,300 crore worth of e-business will
be generated within the country by the
year 2006-07.
Although the broadband connectivity
is at a nascent stage, yet the market
grew by 291 per cent, reaching 183,000
subscribers in March 2005. Sniffing
the role to be played by broadband towards
the national economy, the Government
came out with a comprehensive broadband
policy in October 2004, which enables
to create various technologies for providing
broadband services. It is to provide”“an
always-on” connectivity speed of 256
kbps to support all types of applications.
There is an expectation of 9-million
subscribers by 2007, which will grow
to 20 million by 2010.
Vinnie Mehta, Executive Director, MAIT,
says, “There is a huge push on broadband
in the country. BSN and MTNL have already
launched Rs.250 package Broadband connectivity.
There are about 30,000 electronic exchanges
in the country. There is readiness from
the Government side to handle the next
wave of communications.”
On the other hand, from the technology
perspective, the low power indoor and
outdoor usage of WI-FI and WI-MAX Systems
has been delicensed in certain bands.
The SACFA/WPC clearance has been simplified.
The National Internet Exchange of India
(NIXI) has been set up, which is a step
towards bringing down the international
bandwidth cost substantially, making
the broadband connectivity more affordable.
The incumbent telecom players BSNL and
MTNL have planned to provide 12.32 lakh
and 5.5 lakh broadband connections,
respectively during the current financial
year. C-DOT has focussed its programmes
on three major areas and Rural Broadband
and the Wireless solutions feature number
one in it.
Similarly, telecom providers like BSNL,
MTNL, Bharti, Reliance and Tata are
betting on VoIP, wireless, broadband,
making significant investments in these
technologies. Sudhir Narang, Sr. Vice-President
- Service Provider & Government, Cisco
Systems, India & SAARC, echoes the same
view. He says, “The year 2004-05 witnessed
broadband take-off in India in earnest.
The leading service providers such as
the state incumbent BSNL and the private
operators like Bharti invested heavily
in building their telecom infrastructure
to drive broadband to the masses. The
Government, on its part, drafted a specific
policy to promote broadband usage throughout
the country. The indicative size of
the broadband market in India is around
Rs.500 crore (Voice & Data). This is
roughly the size of deals struck last
year. Going forward, as broadband usage
gains greater impetus,
Dayanidhi
Maran Hon’ble Minister of
Communications & IT, Government
of India
Sudhir
Narang Sr. Vice-President
- Service Provider & Government,
Cisco Systems, India & SAARC
K.
Krishna Senior Director -
Marketing, HECL
Vinnie
Mehta Executive Director,
MAIT
this figure is only set to grow exponentially
in the future. According to the telecom
Regulatory Authority of India (TRAI),
the broadband user base in India had
crossed 4.5 lakh at the end of July
2005 - up from the 0.49 lakh in 2004.
Clearly, broadband uptake in India is
on the rise.”
Drivers of Broadband
Today, enterprises more than ever before
are relying on the Internet to exchange
information, improve processes and communicate,
as it reduces costs and drives greater
efficiencies.
Mr. Sudhir says, “A study has shown
that the Indian companies spend less
than one per cent of their total revenue
on IT, whereas Fortune 500 companies
spend about eight per cent of the revenue
on IT. Five years ago, such a statistic
didn’t matter, because Indian companies
were not competing globally. We had
a closed economy, where productivity
was not paramount. Competition didn’t
exist and the product quality was not
given much importance. Faced with intense
global competition, the domestic Indian
industry has realized the importance
of investing in Internet and IT infrastructure
to adapt quickly to rapidly shifting
market and consumer dynamics. Indian
enterprises are increasingly adopting
the latest networking and communication
technologies in more and more parts
of their business processes such as
communications, customer relationship
management, supply chain, billing, etc.
to drive down costs and improve productivity.
It is this dependence on complex networks
and bandwidth-intensive applications
that is driving broadband in the country.”
The banking and financial services segment
is the most aggressive sector to implement
broadband services because the applications
like ATM services, tele-banking, etc.
are the major drivers of broadband.
Media houses and the educational sector,
and medical applications are becoming
the second line of broadband consumers.
As far as the consumers are concerned,
hope is propped on the digital home
entertainment. So, applications like
distance learning, telemedicine, video-on-demand
and DTH have started to open up.
Since the consumer segment is a volume
market, the service providers have to
take a range of technologies including
ISDN/DSL, CATV (cable TV), VSAT, wireless,
etc. to address requirements like entertainment
to information, data communications
to voice and e-commerce. At the same
time, they have to take care of the
quality of services along with pricing.
Home users, on their part, are availing
high-speed Internet access for running
applications such as live streaming
and downloads. Given that India is an
entertainment-crazy country, high speed
Internet encourages users to download
movies and music and so on. As the prices
of equipment and accessories fall even
further, the home user will be further
encouraged to use Internet-based applications.
Mr. K. Krishna, Senior Director - Marketing,
HECL, says, “In 2002, IT, driven primarily
by broadband rollout, accounted for
50 per cent of South Korea’s GDP growth
rate. An analysis by the Confederation
of Indian Industry National Broadband
Economy Committee shows that the total
present value (2004) of benefit to the
Indian economy due to growth from broadband
is expected to be US$90 billion for
the years 2010 – 2020, with an 11-per
cent additional growth in labour productivity.
This activity is expected to launch
new business lines and increased efficiency
in existing businesses, leading to direct
employment of 1.8 million and total
employment of 62 million by 2020.”
Prasad
Babu, SE Manager (India & SAARC), Juniper
Networks:
Demand of broadband is pretty much here
in the Indian market, but the issue
is availability of content. Given the
kind of growth, the contents providers
would definitely not keep themselves
quite for a long. Bharti has recently
talked about investing Rs.1500 crores
in broadband infrastructure. With the
growth of PC penetration, broadband
will surely be a big market. People
are going to use VoIP to talk to their
friends and relatives staying abroad.
Applications like remote education:
universities of distance educations
provide study material available over
Internet; people will surely spend money
for it. Tele-medicine is another applications.
People in far-fetched areas can get
satellite-enabled diagnosis remotely
from big hospitals. Other applications
including voice and entertainment through
IP-TV or video on demand are going to
boost the broadband market. Gaming is
another application, which has potential
to drive broadband. In advanced countries,
people spend a lot on online gaming.
This is what is going to happen in India
as well. If 10 per cent of the population
subscribes to on line gaming, it takes
the subscriber base of broadband to
the tune of 10 million. So, things are
rightly falling in place. He adds, “Another
issue is QAS. The service providers
have to understand the pattern of the
subscriber. This is where companies
like Juniper offer the solution through
the service provider. As far as pricing
is concerned, it is the government to
drive the price and also the competition
in the market.”
What
would be the right technology?
Broadband
in India is in its nascent stage. As mentioned
earlier, the uptake is on the rise based on
a joint industry–government impetus. It is
my belief that if broadband in India is to
become a household feature, it would require
a blend of technologies that suit both the
rural and the urban landscape. Mr. Krishna
of HECL says that for broadband to truly succeed
and to truly derive the benefit all technologies
will need to coexist. Satellite Technology
(VSATs) has an inherent advantage and, therefore,
it has a special role for Internet and Broadband
in the rural India. The ITC eChaupal Project
with over 6,000 VSATs deployed in rural areas
is a shinning example of this.
Satellites are also uniquely designed to support
emerging bandwidth-on-demand applications,
whereby the end-user only pays for the bandwidth
consumed. (This may please be seen in contrast
to a lease-line wherein the user pays a fixed
cost 24x7 days irrespective of the bandwidth
actually consumed.)
For the rural India market, VSAT technology
is fast emerging as a technology of choice.
This is largely due to the fact that rural
India is overall marked for low standards
of living, low levels of education and a high
density of population. In such a scenario,
VSAT can meet the requirements of a large
section of the population, thereby reducing
per unit the cost of broadband access in rural
India. Besides, given the socio-economic framework
of rural India, operators will not find it
commercially viable to set up a DSL/Ethernet-based
broadband access network.
Mr. Sudhir of Cisco says, “Broadband in rural
masses is on the rise. With successful implementation
of projects such as the Amrita–I SRO Village
Resource Centre initiative in South India,
broadband in rural India is fast becoming
a reality. Although not widespread currently,
the Government and the industry are making
a conscious effort to reach out to rural India
and we will witness greater uptake for broadband-based
applications by rural India.“
According to Mr. Krishna of HECL, Rural India
is evolving to be a large market. Therefore,
corporates have felt the need to create rural-oriented
content while upgrading the connectivity options
and infrastructure to reach out to the rural
masses. The content primarily focusses on
essential services like education, health,
e-governance and agriculture, the mainstay
of agriculture in rural areas. For example,
Bhoomi, Warana and Gyandoot are successful
e-governance initiatives, while the M. S.
Swaminathan Research Foundation and ITC’s
e-Chaupal have focussed on the activities
related to agriculture.
He asserts that as for connectivity, today,
providing a telephone connection in a remote
village costs almost the same as provisioning
a broadband IP connection. However, given
a favourable policy and regulatory environment,
new technologies can rapidly roll out modern
communication networks across rural India.
For example, satellite technology can provide
2Mb IP connectivity.
Most of the people advocate that wireless
technology is suitable for the rural areas,
as the geographies cover thick foliage and
hills. The glaring example is the Muslim-populated
and once the most backward Malappuram district
in the Malabar region of Kerala, which has
now been networked under the project Akshya.
This has been done by the Delhi-based Tulips
IT Services. The protocol that has been used
is WipLL (Wireless Internet Protocol in Local
Loop), which provides a bandwidth of between
4 and 8 megabites per second (MBPS). This
system uses radio frequencies to carry voice,
video and data, covering distances of 2 to
3 kms with a simple antenna, and up to 25
kms using a network of repeaters.
On the other hand, for urban and semi-urban
India, DSL seems to be currently in favour
with the operators. Already, the Indian scenario
has seen the emergence of alternate technologies
such as Metro Ethernet (Cisco and VSNL announced
the largest metro Ethernet deal in November
2004), which will dominate the technology
of choice going forward. That is because greater
adoption of ME-based broadband access will
lead to a reduction in the cost of providing
the service. As the growth of wireless telephony
has shown, a low cost base is the key to proliferation
of broadband in the country.
Issues
Since
the broadband market is at the nascent stage,
there are various issues related to it, including
standards, regulations, business models, consumer
value proposition, distribution, pricing,
etc. However, TRAI has played the role to
demystify the standard- related issues. Currently,
the service is defined as 256 Kbps and above.
On the standards front, a lot of upcoming
standards like WiMAX are being tried out.
However, this could prove to be a very expensive
step, considering the fact that the technology
is still in a nascent form and would take
time to mature. The QoS has not been properly
defined.
While 256 Kbps could be the access, what kind
of a quality of service would the user get
is not defined. As far as pricing is concerned,
today, still the regulatory levy is to the
tune of 25 per cent of the price of the service,
especially in the case of satellite broadband.
While the Government realizes that the only
way to penetrate into the rural and semi-urban
markets is through wireless medium, some sops
have to be offered to bring the price down.
However, BSNLis driving the price with Rs.250
tariff a month with 4GB download.
Finally…
Today,
the broadband market might be a small one,
but surely it is heading for a big market
in India. Governments and corporates are testing
various applications like tele-medicine, e-counselling,
video-on-demand, etc. E-governance is something,
which is at the forefront to drive the technology
to the edge of usage. It is now for the content
providers and service providers to spring
to action to provide enough content and QAS,
respectively. As Mr. Vinnie of MAIT says,
“India is a community-based society and if
one cannot afford to have any technology,
then a community can adopt it. So, nobody
avers any unique application and value-based
product. Pricing might be a constraint, but
it is not the deterrent for the technology
to be entered into the rural India. With the
volume increases, pricing will never remain
a stumbling block for the takers. So, it is
the vendors’ responsibility how to justify
the value in broadband connection’– be it
urban India or rural India.”
