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The Indian wired broadband story until now in 2015

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BENGALURU: The wired broadband internet market in India is dominated by the public sector company Bharat Sanchar Nigam Limited (BSNL), which as per numbers reported by the Telecom Regulatory Authority of India (TRAI) had an all India market share of 62.63 per cent as of  July 31, 2015. India’s wired broadband universe was 158.4 lakh, and BSNL had 99.2 lakh subscribers as on July 31, 2015. Please refer to Fig 1 below.

Note: (1) 100,00,000 = 100 Lakh = 10 million = 1 crore

(2) TRAI reports indicate data in millions of numbers. Hence it is assumed in this report that a figure of 0.47 million subscribers for You Broadband for July 31, 2015 would be granular to the nearest 10,000. While percentages perforce have been mentioned up to the two decimal places, the accuracy may vary, depending upon the exact number.

(3) Industry sources say that TRAI numbers in the case of ACT for May 31, 2015 are incorrect at 0.66 million and the correct number would be 0.693 million. Also the subscription numbers mentioned for ACT for August 31, 2015 and September 31, 2015 are industry estimates.

(4) This report examines performance by the top five broadband players in calendar year 2015, and also considers TRAI data for December 31, 2014 and November 30, 2014 to compare growth/declines.

(5) In all the charts and figures in this report, the acronym for the period indicates the last date of the month. For example, Dec-14 means December 31, 2014 and Jul-15 means July 31, 2015. 

The Indian wired broadband subscription universe has expanded by 3.39 per cent (5.2 lakh) in calendar year 2015 since from the December 31, 2014 number of 153.2 lakh to 158.4 lakh as on July 31, 2015. Among the top five wired internet service providers in India, the top three – BSNL, Bharati Airtel (Airtel) and Mahanagar Telecom Nigam Limited (MTNL) also provide voice (telephone) services and many of their wired internet customers use both services – voice and data. According to industry sources, Airtel has used separate Fibre to the home (FTTH) or Fibre to the curb (FTTC) in some places for data, but in general, broadband is carried on voice lines by the three big players. The other two companies in this report are ACT (Atria Convergence Technologies) and You Broadband India Private Limited.

It is significant to note that wireline telephone voice subscribers have been declining at an average rate of about 0.49 per cent per month. The total number of wireline voice subscribers declined by 3.32 per cent (almost equal to the above mentioned 3.39 per cent increase in wired broadband internet subscribers) to 26104333 from 27000105 between December 31, 2015 and July 31, 2015, as per TRAI reports. Please refer to Fig 1A below

graph2

Among the top 5 players, the two public broadband service providers have shown a slight linear declining to flat trend in terms of number of subscribers, but since the overall universe is growing, their market share has been slowly declining. 

Please refer to Fig 2A below for BSNL’s numbers. BSNL’s subscriber base declined by 0.6 per cent between December 31, 2014 and July 31, 2015. In fact, BSNL reported an almost flat subscriber base of 99.8 lakh between December 31, 2014, and February 28, 2015, with numbers declining as on March 31, 2015 to 99.6 lakh, declining to 99.2 lakh as on April 30, 2015, and further declining to 99 lakh as on May 31, 2015 before increasing to 99.1 lakh and 99.2 lakh as on  June 30, 2015 and July 31, 2015 respectively. At the same time, its market share declined 251 basis points from 65.14 per cent during the period under consideration in this report.

graph3

Please refer to Fig 2B. The private players have reported a growth in wired broadband internet subscriber numbers and market share. ACT has shown the largest growth. (Please refer to Fig 2C below for ACT numbers).

Airtel and You Broadband have both shown an increase in number of wired broadband internet subscribers as well as in terms of market share, while the public sector MTNL has reported a decline across both the parameters.

MTNL’s wired broadband internet subscribers grew from 11.3 lakh on December 31, 2014 to 11.4 lakh on January 31, 20155. The company’s numbers remained flat at 11.4 lakh until May 31, 2015 before declining to 11.3 lakh on June 31, 2015, a status which continued even in July 2015. Hence it has shown no growth in its broadband wired internet subscription base during the period under consideration in this report. However, its market share declined 25 basis points from 7.38 per cent to 7.13 per cent during that period.

Airtel has a pan-India presence. It grew by 6.38 per cent by adding about 90,000 wired internet broadband users between December 31, 2014 and July 31, 2015, thereby increasing its market share from 9.20 per cent to 9.47 per cent. Airtel’s contribution to the all India increase of 5.2 lakh in wired broadband internet customers during the period under consideration was 17.31 per cent.

You Broadband offers high speed internet, voice and video services through cable modem platform to residential, SME and corporate customers in 12 cities in the country. The company grew 11.9 per cent by adding 50,000 subscribers between December 31, 2014 and July 31, 2015 and grew its market share by 23 basis points from 2.74 per cent to 2.97 per cent during the period under consideration in this report.

graph4

Headquartered in Bangalore, the regional player ACT is spread across the towns and cities of Karnataka, Andhra Pradesh, Telangana and Tamil Nadu. ACT presently has 10 lakh plus subscribers that include cable as well as FTTH broadband. 

Among the five top wired broadband internet service providers in India, ACT has shown the largest growth, both in absolute numbers and in market share. Please refer to Fig 2C below. Overall, the company’s subscription numbers increased 22.95 per cent as on July 31, 2015 to 7.5 lakh from 6.1 lakh on December 31, 2015. Industry sources say that ACT had a subscriber base of 7.9 as of September 30, 2015 and of 7.7 lakh as of August 31, 2015. Hence, the company added 1.2 lakh subscribers between December 31, 2014 and July 31, 2015, or added 26.92 per cent to the all India wired broadband internet subscriber base growth of 5.2 lakhs mentioned above during the period.

ACT’s market share during the period from December 31, 2014 to July 31, 2015 increased by 75 basis points to 4.73 per cent from 3.98 per cent (Please keep the granularity of reportage of 10000 subscriber numbers in mind). The company’s wired internet broadband subscription base is now at about 50 per cent of the behemoth Airtel. 

Though the breakup in regions has not been indicated by TRAI in its reports, it would not be surprising if ACT is the largest private player in South India, maybe ahead of even Airtel. Among the non-voice ISP’s ACT’s broadband subscriber base of 7.5 lakh as of July 31, 2015 certainly makes it the largest player in the country. 

raph5

Concluding remarks

Quality of the product and services as well as after sales services speak for themselves. Pricing also plays the most critical role in a price sensitive market like India. The bigger players such as BSNL, MTNL and Airtel have been insensitive to these aspects while riding on the brand value of their other business operations such as wireless. They seem to have not noticed the simple fact that internet is rapidly becoming an integral part of everyday life and more so wired internet when the user is in the office or at home. For them, wired broadband is just one more product that adds a small fraction to their topline and bottomline. Wired broadband is the stepchild. It is here that the smaller players have stepped in and offered a superior product and prompt service and after sales service at a price that is often a fraction of what their bigger peers offer. 

It is the smaller regional players such as ACT and You Broadband that have focused on the customers while not losing sight of their bottomline at the same time. In the case of the telecom companies, product quality and sensitivities to the customers’ requirements and after sales service are sorely lacking say some of their users. 

Companies such as ACT and You Broadband have been so far plucking low hanging fruit. They started by offering internet services in the areas where they had cable television subscribers. ACT is now expanding in adjacent areas, and exploring newer territories. ACT has recently started operations in Coimbatore in Tamil Nadu. FTTH certainly offers a better experience to the consumer when compared to other modes such as copper that the traditional voice service providers have been using, or wireless or DOCSIS 2.0 or 3.0 that many an MSO has started depending upon to increase ARPUs.

With cable MSOs, satellite, WiFi, and 4G wireless service providers vying for their customers, the internet ecosystem in India is rapidly changing, and for the better in India. Telecom service providers are facing some of the fiercest competition in decades in the wired broadband internet space. The industry expects that one of the biggest game changers in the internet ecosystem will be Reliance Jio. As MSOs slowly start focusing more and more on wired internet through DOCSIS, the race for numbers and profits is going to get even bigger. 

Personalised high quality services that the next door cable operator can offer could play a big difference in who will get more traction. Industry sources claim that Airtel has started taking the competition from the regional wired internet players seriously by improving its after sales service and offering differentiated and competitive packages in the areas where the regional players operate, while product quality when compared to the smaller players is still work in progress. Reliance Jio is so far an unknown quality… only time will tell how the King (customer) will benefit and who it will chose to offer it what is now becoming a basic need for every human being. 

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