Industry analysis wireless broadband

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This gives a holistic view of the way the Indian internet broadband industry has grown over the years

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Industry analysis wireless broadband

  1. 1. India’s Internet Broadband IndustryAnalysis 1
  2. 2. Agenda1. Industry Understanding2. Key Players 2
  3. 3. 1. Industry Understanding 3
  4. 4. • The Indian internet wireless broadband industry - one industry that is definitely worth a watch. More like a James Bond pot-boiler (or Agent Vinod, in the Indian parlance?), this industry seems to have all the twists and turns to make the audience be at the edge of their seats. A’la the Home Alone series, this was the one child of the Telecom family that was terribly forgotten in the great Indian Telecom growth story. While the entire world watched the India Telecom industry bursting to its seams in terms of the lowest call costs in the world markets, exponential increase in customer base etc., images of farmers and sadhus boasting their cell- phones doing the rounds, the internet broadband market was the one playing a sideshow besides this entire extravaganza.• “Modest” might be a modestly correct word that might be used to describe the growth of the internet broadband industry in India. February, 2011 4
  5. 5. Internet usage trends vis-à-vis wireless users Internet subscriber base (in million) Wireless subscriber base (in million)  Despite the fact that India adds 8-10 million cellular connections each month, the rate of growth for the internet services in India has been modest  While the internet subscribers base has been growing at 25% from 2004 to 2007, the actual consumption of bandwidth has been a poor 87 Gbps  Sluggish broadband growth for both retail and small enterprises February, 2011 5Broadband subscriber base (in million) Source: TRAI
  6. 6. • The alarming thing to note is the sluggish growth of the internet consumption for the enterprise and retail segment. Applications of broadband in the fields of telemedicine, healthcare, video-on-demand are unheard of in India and even the localised online content ( a sound judging parameter) is negligible. All this might be the results of a legacy of permit policy and apathy of successive governments in the access of international bandwidth at the submarine landing points February, 2011 6
  7. 7. Key insights on the sluggish growth of Indian internet services market  The pricing structure of broadband in India is arguably one of the highest in the world, making it an elite or luxury item, denying the common man the right to information  The cost of bandwidth in India is high primarily due to the near monopolistic policies over the past decade exhibited at landing points of submarine links  The usage based pricing model deters the retail users from using the latest internet multimedia services like VOIP , video sharing, streaming etc.  Poor quality of service (QoS) leading to a weak demand for internet related services accounts for one of the main reasons of the sluggish growth of broadband in India Country Price/MBPS Country Price/MBPS (USD) (USD) South 034 China 23.18 Korea Sweden 0.65 Thailand 30.36 Germany 5.33 Sri Lanka 40.90 United 11.31 Slovakia 51.48 Kingdom Poland 13.33 India* 88.61 February, 2011 7Source: White Paper “On the state and guiding principles of broadband in India, Ashwin Gumaste
  8. 8. • The internet broadband story started with the launch of the internet services by the Indian government in August of 1995. One Mr. Singh and Mr. Rao opened the gates to private operators via a liberal licensing regime in the November of 1998. The internet service in India was formally anointed with the launch of the Broadband Policy in 2004 which described Broadband as “an “always on” data connection that is able to support interactive service including Internet access and has the capability of the minimum download speed of 256 Kbps to an individual subscriber from the Point of Presence (POP) of the service provider”. As on March 2010 there were 16.18 million internet subscribers. Besides the numbers mentioned before, there are 117.87 million wireless data subscribers who are accessing the internet through wireless (CDMA and GSM) networks (TRAI)• Though this child had long been forgotten with disastrous results, not for long, the focus seems to be back on this area. The big boys of the industry viz. the CII, Dept. Of IT and Dept. of telecom & IT have now formulated a utopian vision for the broadband industry as summarized below. 8
  9. 9. Indian Internet Broadband Industry: An overviewAs per the Broadband Policy 2004,Broadband is defined as an “always on” data connection that is ableto support interactive service including Internet access and has the capability of the minimumdownload speed of 256 Kbps to an individual subscriber from the Point of Presence (POP) of theservice provider Opening of access Market opened for network to wireless Launch of private operators access technologies internet services Broadband policy via a liberal (3G, Wimax) ( August 1995) launched (2004) licensing regime (November 1998) BWA auction (January, 2010)  There were 16.18 million Internet subscribers on 31st March 2010 as compared to 13.54 million on 31st March 2009*  Besides the internet subscribers mentioned above, there are 117.87 million wireless data subscribers who are accessing internet through wireless (GSM and CDMA) networks *  The number of Broadband connections on 31st March 2010 was 8.77 million compared to 6.22 million as on 31st March 2009 *  The focus is on sustenance of fixed networks & TRAI has proposed support to the tune of Rs. 2000 crores every year for three years. Broadband connections on copper has increased from 5.36 mn. in March 2009 to 7.6 mn. in March 2010 (41.7% of overall increase) * February, 2011 9
  10. 10. India’s Broadband vision “ Drive ubiquitous broadband for every Indian, accelerating India’s economic development and improvement in quality of life ; in the process of making India one of the top five broadband countries in the World by 2010” – CII and DOIT & DOTMCIT,GOI Targets  10million subscribers by 2010 and 35 million subscribers by 2020 in urban India across homes, enterprises and public kiosks  Broadband coverage for at least 50% of the rural population by 2010 and 100% by 2020 through rural broadband kiosks  Appropriate and locally relevant e-education, e-health, e-governance, entertainment and e-commerce to be made available via broadband connectivity to all cities, towns and villages in India Projected Investments Demand Targets for Urban Market February, 2011 10Source: CII and DOIT & DOTMCIT,GOI
  11. 11. Broadband technology options for urban market Parameters Technology Options xDSL on Copper HFC-Cable Fiber- Ethernet Wireless Satellite Bandwidth Downstream- From In principle same Practically no limits Wide range possible High bandwidth possible – 1.5 Mbps to 12 Mbps as DSL – Japan and Korea based on technology possible for Downstream/U Upstream - From 256 QoS in cable plan up to 40 Mbps option downstream. Very pstream Kbps (on ADSL) to architecture may to home on fiber Wi-Fi used for limited use of two 12Mbps (on SHDSL) be an issue. During systems typically 200+ kbps way transmission in upstream connectivity . With satellite systems symmetric high WiMAX/MMDS, up to bandwidth could be 10 Mbps connectivity costly is possible Leverage on Leverages existing Leverage existing Fresh access While it is possible Reusable satellite existing twisted pair reducing Digital TV class networks will be that wireless solutions systems and infrastructure incremental costs HFC systems required in most can draw on the communication reducing places . However existing hard spectrum for incremental costs over time , when infrastructure used in satellites. New CPE prices decline, fiber mobile phone, the would be required might be used to technology replace the existing infrastructure copper cables spectrum requirements and even OSS/BSS would totally be new Maturity of Fairly stable – over 355 of the global Prima facie mature Some technologies are 2 way satellite is solution 60% of the global broadband and established . mature but no not yet mature broadband services subscriber based on However compared standards exist are on DSL cable – fairly stable to DSL /Cable , has a (LMDS/MMDS) and mature low installed base Standards evolving ( solution Wi-Fi, WiMAX) likely to mature in future February, 2011 11Source: CII and DOIT & DOTMCIT,GOI
  12. 12. Broadband technology options (contd.) Parameters Technology Options xDSL on Copper HFC-Cable Fiber- Ethernet Wireless Satellite Long term No long term Might be replaced by Fully optical Depends primarily on Less likely as high prospects prospects due to FTTH as fiber costs systems will remain spectrum availability costs involved imminent fiber go down over time the “key” wired & costs but will have replacement networks place for mobile usage Global Exists Exists Exists Standards evolving Not clear Standards Equipment Relatively low Cable costs are the Fiber costs are Right now costlier Costs high Costs lowest in absolute coming down than DSL/Cable/Fiber terms Capability of Major players will be Fragmented industry, Only strong players Mostly strong players – Solution providers players likely to strong not savvy on as commitments wireless voice the likely players take up this technology or required serious telephony players, technology professional ISP’s Key Insights from the analysis  Wireless broadband connectivity services are likely to be used in rural networks where density of usage is much lower or for hotspots kind of niche locations  Unlikely that true broadband connectivity to home on wireless would be rolled out on a city-wide basis in a major way in the next 2-3 years February, 2011 12Source: CII and DOIT & DOTMCIT,GOI
  13. 13. • Now we know that there is actually a vision. If so then what is going on the ground for achieving this grand vision. As true to our nature as pot is to soot, there surely lots happening; in terms of spectrum scams (2G) and hence a huge ensuing hullabaloo that has somehow helped the attention right back to where it should ideally have been from the beginning.• Finally the long awaited opening of access network to wireless access technologies happened via the Broadband wireless auction (BWA) conducted in the month of January 2010 and hence a new era of high speed data accessibility was introduced to the Indians. Auction happened for the 22 circles and went to different players while Reliance Infotel emerged as the singled Pan India licensee to this access.• This auction holds huge potential in terms of possible future growth and is all set to spawn an entire ecosystem of services associated with a typical high broadband connection. More so, due to pathetic state of internet broadband penetration (fibre/wireline networks) in India, adding to ease of reaching an end user without a wire. February, 2011 13
  14. 14. Growth prospects of the wireless broadband market Growth drivers: Consumer base & enterprise penetration Consumer centric Potential to grow at wireless devices will CAGR 74% & comprise lead to increase in of 86% BB user base by market penetration 2015 Share of non-voice revenues to reach 30% of operator revenues by 2015 February, 2011 14 Source: Analysys Mason, TRAI
  15. 15. Growth in the service delivery ecosystem (wireless broadband) • Telecom operators and ISPs have made total investment of ~ INR 1,000 bn (USD 23 bn) for 3G and BWA Service spectrum, and are entering into ecosystem partnerships for delivery of data-intensive services Providers • Device vendors are launching mass market access devices such as INR 7,000 (USD 150) smart-phones and INR Device 14,000 (USD 300) net books, and partnering with operators to bundle video capable handsets OEMs • Technology vendors, both Indian and global, are developing platforms such as SDPs for integrated and seamless Delivery & multi-screen experience, ODPs for easy discovery and activation, and enabling platforms (such as advertising, Enabling elevance, content management and commerce) for enhanced experience and ease of use Platform Providers • Data-focused as well as mass market product and application platforms offering services such as mobile / Product broadband TV, online gaming and rural VAS are being developed by various local vendors/Application Providers • Content providers are aggregating and developing both popular entertainment content such as music / videos, Content and mass market content such as utility applications and educational content, customized for the small screenAggregators/Developers February, 2011 15 Source: Analysys Mason, TRAI
  16. 16. Scope of WiMAX in India Low penetration in India can be emerging world’s lowest markets like end to end cost India provide for WiMAX tremendous India predicted growth to have 27 mn. service market opportunities users by 2012 ( for WiMAX 20% of world India slated to WiMAX market) become largest WiMAX market in Asia Pacific by 2013 (projected annual growth of 130%) February, 2011 16
  17. 17. The future of wireless broadband: Wimax or LTE? • Reliance Infotel , the • Samsung demonstrates sole pan India license Wimax 2 as counter to holder for 2.3GHz LTE spectrum opts for LTE • Wimax is a stable • Aircel goes for LTE with technology with cheap Nokia-Siemens equipment , adoption by • Qualcomm supports players while LTE is a LTE by supporting 3G new technology and will India Forum take a few years to • LTE is touted as the so stabilize called future of wireless broadband offering more bandwidth in same spectrum February, 2011 17Source: WiMAX Forum
  18. 18. 2. Key Players 18
  19. 19. BWA Auction, 2010 Telecom Circle Successful Operator Winning Price ( Rs. crore) Delhi Infotel and Qualcomm 2,241.02 Mumbai Infotel and Qualcomm 2,292.95 Maharashtra- Goa Bharti Airtel and Infotel 915.64 Gujarat Infotel and Tikona 613.85 Andhra Pradesh Aircel and Infotel 1,059.12 Karnataka Infotel and Bharti Airtel 1,543.25 Tamil Nadu Infotel and Aircel 2,069.45 Kolkata Infotel and Bharti Airtel 523.20 Kerala Infotel and Qualcomm 258.67 Punjab Bhari Airtel and Infotel 332.27 Haryana Infotel and Qualcomm 119.90 UP East Tikona and Infotel 142.50 UP West Tikona and Infotel 183.87 Rajasthan Tikona and Infotel 97.32 Madhya Augere and Infotel 124.66 Pradesh West Bengal Infotel and Aircel 70.97 Himachal Pradesh Tikona and Infotel 20.66 Bihar Infotel and Aircel 99.28 Orissa Aircel and Infotel 63.63 Assam Aircel and Infotel 33.02 North East Infotel and Aircel 21.27 Jammu and Kashmir Aircel and Infotel 21.27 February, 2011 19
  20. 20. Internet Subscriber Base & Market Share of ISP’s ISP Service Area Subscriber base Share (%) Bharat Sanchar Nigam Ltd. All India 10172299 56.84 Mahanagar Telephone Nigam Ltd. Delhi & 2362245 13.20 Mumbai Reliance Communications All India 1829707 10.22 Infrastructure Ltd. Bharti Airtel Ltd. All India 1381921 7.72 Hathway Cable & Datacom All India 333717 1.87 Pvt. Ltd. You Broadband & Cable All India 251702 1.41 India Private Limited Tata Communications All India 231610 1.29 Internet Services Limited Tikona Digital Networks Pvt All India 174950 0.98 Ltd Sify Technologies Ltd.* All India 162808 0.91 Data Infosys Ltd. All India 104586 0.59 February, 2011 20Source: TRAI
  21. 21. Growth achieved by the top 10 ISP’s inthe last Quarter February, 2011 21
  22. 22. Consumer feedback on existing BBproviders in Madhya Pradesh (TRAI) Most of the broadband users are not happy with the maintainability of the broadband service being provided to them and a significant number of the customers stated their dissatisfaction with the broadband connection and modem provided by the service provider Service providers should improve their processes for resolution of billing complaints Network performance will play a critical role in acquiring broadband market share in the future with high uptimes and higher speeds to customers February, 2011 22
  23. 23. Possible growth areas Assessing LTE for future growth perspective Value Added Service s Tie-ups with Tie-ups forMobile financial orgs. online Online Enterprise Tech-enabledhandsets for Utilities in for online healthcare education mobility governmentincreasing BB vernacular transaction services to facility applications servicespenetration utilities remote areas Last Mile Content Infrastructure development Improvement in QoS February, 2011 23

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