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Broadband Broadband Document Transcript

  • Broadband in India Page 1 of 5 SIGN-IN | REGISTER | SIGN-OUT RETURN TO: Home > Our Services > Research QUICK SEARCH PRINTABLE VERSION EMAIL Broadband in India Research GO Date Published: 20 Jul 2007 ADVANCED SEARCH Today, a country’s stage of development is measured by the Telecom, PC and Internet Browse or search our research penetration it has. India has been focusing on establishing itself as a knowledge-based society by market, technology, region or and has seen rapid growth in telecom penetration all across the country; yet the Internet and keywords broadband penetration is significantly low. For a knowledge-based society to grow quickly and GO for various economic opportunities to become a reality, the spread of Internet and broadband is now being given top priority. THOUGHT LEADER FORUM Learn about the benefits of India has embraced the Internet with a degree of ambivalence. There is tremendous enthusiasm membership. among the dial-up users and an estimated 60 percent of users regularly access the Internet through cybercafés. However, when it comes to high-speed broadband access, there is LEARN MORE reluctance, and the rate of adoption has been slow. By the end of 2006, there were 2.1 million broadband subscribers – a penetration of less than 0.2 percent. After the Broadband policy was unveiled in 2004, customers have realized that there are alternatives to the copper infrastructure of Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Discover how we can help Telephone Nigam Ltd (MTNL). Operators such as VSNL Broadband Limited and Reliance your business Communications Limited have built a strong fiber optic backbone, and depending on the GO availability they offer multiple last mile choices to the end user. Unbundling of local loop could become meaningless in this current scenario. However, it is still required to promote a higher growth rate. The biggest problem is reaching the customer's premises from the Point of Presence (PoP) and laying down fresh infrastructure, which can turn out to be an expensive proposition. Learn how we can provide data and insight for your The preferred mode of delivering broadband has been through DSL (Digital Subscriber Line). specific requirements Operators that had basic telephony over copper loops such as BSNL, MTNL, and Bharti are offering DSL connectivity. Though these operators have a huge subscriber base (around 40 GO million), most of these basic telephony connections are not yet broadband enabled. However, for independent Internet service providers (ISPs) such as Sify Ltd and other small cable Sitemap | Disclaimer | Privacy operators, access to the incumbent's local loop for the last-mile has been denied. Private © Frost & Sullivan operators are therefore taking Ethernet/cable or fiber route to reach the end user. With almost eight lakh route kilometers (~ 0.8 million) of fiber having been laid in India, the backbone of all the ISPs is typically on fiber optics. Given the geographical diversity of India, last-mile connectivity has always been a challenge for telecom operators. In the case of business centers, laying down fiber and wiring up old buildings may cause delays. This, coupled with the time required for paperwork for digging and laying down fiber/copper, makes it difficult to provide high-bandwidth and reliable connectivity. Further, after the broadband policy failed to unbundle the copper loops of BSNL/MTNL, private operators have been aggressively pursuing the fiber/wireless route to deliver high-speed connectivity. Subscriber Base and Penetration The Indian broadband services market is still at a nascent stage. By the end of 2006, the subscriber base had touched 2.1 million with a household penetration of less than 1 percent. The current subscriber is way off from the target (3 million, 9 million and 20 million for 2005, 2007 and 2010 respectively) set by the DoT. In Asia, India has one of the lowest broadband subscriber penetration rates. However, with various policy measures and Government initiatives to promote broadband, the market is expected to increase to 30.1 million subscribers by the end of 2013 (household penetration rate is expected to reach around 8.9 percent by 2013) and come close to the goal set by the Government. Industry Challenges http://www.frost.com/prod/servlet/market-insight-top.pag?docid=102369021&ctxixpLink... 27-Sep-07
  • Broadband in India Page 2 of 5 The challenge for any service provider is to optimize its network and enhance user experience. For instance, one of the major issues facing broadband networks is the congestion created by peer-to-peer traffic on those networks. Peer-to-peer traffic on a broadband network can be anywhere from 50 to 85 percent. The networks are not designed for that kind of traffic on which the service providers have no control. This creates an entirely new paradigm for how traffic is generated and controlled on the network. The question of penetration determinants needs to be addressed by the regulator. To make any country broadband rich, the main determinants should drive down costs, encouraging initial telecom infrastructure Capex, bring together people/markets/goods using broadband for organized e-trade, and most importantly for the selection of prime movers/applications. Even if service providers have enough bandwidth, they find it difficult to ensure quality of service. To take broadband to the lower levels and make it popular among the masses; the user experience of broadband usage needs to be enhanced. Important Factors for Broadband Growth Growth of broadband is mainly driven by three factors, namely, Infrastructure, Access devices and Content. Infrastructure: Currently, DSL is the major technology used in the country for broadband access. Cable, VSAT, and DTH are alternatives to DSL and Fiber Optic. Fiber has been recognized as a preferred medium to deliver high-quality voice, data, and video in the converged environment. Already 0.5 million Km of optic fiber has been laid by BSNL/MTNL and another 0.3 million Km by their private counterparts. Most of this infrastructure is mainly in urban and semi-urban India and hardly exists in rural area. Access Devices: The low penetration of PCs in India is one of the major constraints for the Broadband penetration. The current PC penetration in India was estimated to be around 2 percent in 2006. While the PC penetration in urban area is increasing considerably with every passing year, the penetration in rural areas has been very low. The cost of PCs and language of operating system play a major role in spread of the Internet to rural areas. Content: Since 2004, the focus has shifted from content for the general Internet to content for broadband services. Focus over localized content has now given way to data and multimedia-rich content for high-speed connections. Almost all broadband service providers have plans for content delivery, not necessarily content development. Content developers and service providers have come together to provide Live TV, webcasts, telecommuting, streaming audio/video applications (VoIP, Video Conferencing), gaming, software on demand, remote education, telemedicine, entertainment to name a few. This content has become a major driver, as these applications pull new customers and lead the current ones to migrate from narrowband to broadband. Broadband Applications Broadband allows huge volumes of data over the wire and thus gives rise to new communication and application means. These applications have been the main drivers for Internet users (both enterprises and consumers) to go for the broadband services. Some of the main applications are discussed below. VoIP: Voice over IP has reduced the voice communication cost drastically (especially for international calls) making the PC to PC call almost free. VoIP not only allows PC to PC calls but also allows PC to landline/mobile phones at a much lower cost than a landline/mobile to landline/mobile phone. Video and Music: Video and digital music downloads are one of the killer applications driving the growth of broadband across the globe. Additionally, video conferencing reduces the cost required to travel to different locations to meet people for business http://www.frost.com/prod/servlet/market-insight-top.pag?docid=102369021&ctxixpLink... 27-Sep-07
  • Broadband in India Page 3 of 5 reduces the cost required to travel to different locations to meet people for business. Telecommuting: In the past, a major challenge facing the companies was to provide required connectivity to traveling employees, as they were unable to provide them an office to work for. With wireless broadband, it has now become possible for the travelers to remain connected with their offices continuously. Remote Education: India, which has a huge geographical spread, needs an alternative way to impart education to its masses especially in rural areas. Broadband has been able to help students to take up courses not offered in their region. Telemedicine: This could be one of the applications that could drive the broadband in the future. The availability of video and high speed data transfer allows the patient to consult a specialist doctor in a far away place. Emerging Technologies In 2006, around 83 percent broadband subscribers were on DSL technology; whereas the remaining 17 percent were accessing broadband using Cable modem, Ethernet LAN, Fiber and Radio. Wired technology such as DSL can reach only up to 5 kilometers from the central office and since India does not have a comprehensive wired infrastructure in place, it makes wired broadband an expensive and unrealistic option for rural areas. For broadband to have a reach all across the country (both in urban as well as rural areas), service providers will have to look into various emerging technologies, mainly wireless. All the available broadband technologies should be promoted by the Government. Some of the emerging technologies that are expected to make a huge impact in future have been discussed below. Wi-Fi: Wi-Fi is the Wireless LAN based on the 802.11 standards. This technology has gained tremendous acceptance for providing wireless broadband connectivity in local areas of approximately 100 feet and is mainly used to create hot-spots in commercial complexes, hotels, airports, etc. Wi-Fi has been quite successful in developed countries but its adoption is still not significant in developing countries and the same is true for India as well. The biggest problem with Wi-Fi is in its ability to scale to become a wide area network. WiMax: Worldwide Interoperability for Microwave access (WiMax) is a wireless system based on the IEEE 802.16 standards. WiMax provides wireless access over long distances (Metropolitan areas network) delivering point to point links to full mobile cellular type access. This technology is especially important for India, as the wireless infrastructure is not as widespread as in developed countries especially in rural areas. The technology is also expected to take care of last mile issues in future. Bharti, BSNL, VSNL, Reliance and Sify have acquired the required WiMax licenses and are currently in various stages of trials/deployments. WiMax is seen as a technology that can play a major role in providing affordable broadband access in rural India. One of the biggest challenges with WiMax is the access device. Currently, the minimum cost of PC and a modem, necessary for WiMax broadband access, is in the range of INR 17,000. Thought this cost is considerably low, as compared to the minimum PC price 2/3 years earlier it still remains unaffordable for a large urban population and for most of the rural India. WiMax technology is relatively new and has not yet been really successfully deployed any where worldwide. 3G (EVDO/WCDMA/HSPA): 3rd Generation is the latest mobile technology, which provides considerable higher download speed (minimum transmission rate of 144 kbps in mobile environment and up to 2 Mbps in a fixed environment) than the existing 2G/2.5G http://www.frost.com/prod/servlet/market-insight-top.pag?docid=102369021&ctxixpLink... 27-Sep-07 View slide
  • Broadband in India Page 4 of 5 mobile environment and up to 2 Mbps in a fixed environment) than the existing 2G/2.5G (GSM/CDMA 2000) technologies. This technology has been widely applied across the globe (launched in more than 100 countries) and has been quite successful. Some of the killer applications such music downloads have been driving the adoption of 3G services in developed countries like Japan. In India, the allocation of a spectrum license for this technology is in process and is expected to be completed in the next few months. 3G technology could be used to make broadband available to masses in India, as each subscriber would automatically be a broadband enabled subscriber. More importantly, 3G infrastructure could be easily and quickly deployed due its 2G underlay. Another important aspect is the 3G access device, which could be affordable not only to the rich class but also the masses, as is the case of current cellular devices. Advanced wireless technologies, such as WiMax and 3G, are expected to drive broadband growth in the country. These technologies have been successful in different parts of the world and India could also leverage them to achieve the next level of the telecom revolution. In the short term, the Government should release the required spectrum to roll out WiMax and 3G services, as these would help in reducing the digital divide and in achieving economic growth throughout the country. Rural Broadband The majority of semi-urban and rural areas do not have appropriate wire line network for data connectivity. Setting up a wired communication network across the country would not be feasible, as it would require huge Capex and a considerable amount of time. The most feasible way to provide broadband access would be through wireless technologies. Affordable connectivity to empower rural consumers is critical for the country’s economic growth. The real challenge in rural broadband lies in increasing the PC penetration. The Government should promote vendors to look at sub INR 10,000 PCs in a big way. This along with an attractive financial package and basic IT education (the computer and its application familiarity) would make PC affordable for rural India. Another challenge for rural broadband would be substantial and relevant content for the diversified Indian population, without which the possibility of success for broadband in rural areas is very low. The Government should play a leading role in developing and deploying applications (e-governance, e-education, agricultural services, healthcare services, etc) that could be used by the masses, especially, in rural areas. Apart from this, service providers should also be encouraged develop rich local content the same way they are encouraged for rural telecom expansion (fixed line, mobile and broadband) through the USO fund. Various government projects and corporate initiatives is drive the requirement of broadband in rural India. Some of such projects/initiatives are: ITC E-choupal to connect 10 Million farmers in 100,000 villages HUL Project i-Shakti (7,500 villages) Project Saksham :Microsoft India project to set-up kiosks in around 200,000 villages Golden quadrilateral project to create need for access kiosks Around 200 e-government projects in various states VICTERS (Virtual classroom on EDUSAT for rural schools) Microfinance invigorates rural credit HughesNet Fusion centers: Hughes is setting up 1,000 rural ICT kiosks Kisan Soochna Kendras: Jai Kisan (an NGO set up to introduce rural IT technology in Uttaranchal) to put up over 3,000 kiosks State Bank of India planning to set up 5,000 to 6,000 kiosks; has started a new rural initiative to encourage banking habits among the rural masses Such projects by the Government as well as corporate would lead to higher adoption of broadband in rural India and generate huge employment opportunities in terms of running and maintaining these kiosks (on an average each kiosk provides employment to 3 persons), new opportunities through e-commerce, Rural BPO, etc. There are around 600,000 villages with an average of 250 to 300 households per village. A kiosk in each such village would lead to direct employment of around 1.8 million as kiosk operators and greater indirect employment by presenting new business opportunities. WiMax is being promoted by the Government (DoT) for affordable rural broadband connectivity, as this technology can be deployed in a short time and the Capex requirement is much less as compared to the wired network. The Way Ahead One way to increase the penetration rate is to lay emphasis on infrastructure sharing between providers so that the cost of service comes down and services are offered at an affordable price to the consumers. Consequently, the issues of poor local-content availability in India should get resolved, as bigger broadband subscription numbers are likely to encourage more content providers. http://www.frost.com/prod/servlet/market-insight-top.pag?docid=102369021&ctxixpLink... 27-Sep-07 View slide
  • Broadband in India Page 5 of 5 The Government should make sure that the required spectrum, which is currently held by Department of Space and Department of Defense, is released and ensure that sufficient spectrum is available for the quick roll out of services. It must also encourage more competition in the market to create a situation where new participants can enter the market. Furthermore, unless local loop unbundling takes place, it will be difficult to achieve growth like the mobile sector. There have been differences of opinion between the DoT and the TRAI. They must abandon their confrontationist attitude, as it was only when the DoT stepped back that the telecom sector flourished. The recommendations of the TRAI should be considered seriously. It has to be realized that profitability of service providers and customer welfare cannot go hand in hand. However, with a customer-centric approach, everything else is expected to fall into place. Indian customers are price and quality sensitive; the broadband boom in India would only happen with the timely and inexpensive deployment of broadband access technology. This would make the access to broadband much more feasible for the large masses similar to the mobile subscriber boom the county is currently experiencing. Wide coverage, India specific Applications, cheaper access devices and improved speed are the need of the hour to make broadband a huge success and to ensure that India is at par) India at par with other advanced nations. For further info contact skaushal@frost.com BACK TO TOP http://www.frost.com/prod/servlet/market-insight-top.pag?docid=102369021&ctxixpLink... 27-Sep-07