The Hindu Business Line : Stuck in the last lap

They are large private corporate groups with impressive telecom networks. But the last-mile link to provide retail broadband Internet access for the home customer eludes them.

THEY may be the largest private corporate groups in the country but the Tatas and the Reliance group are yet to make any kind of splash on the retail broadband Internet access scene.

For all their name and fame and for the size of their pockets, they are simply not able to reach the home user in an effective way.

These are corporates who, at a national level, have large fibre-optic backbone capacities. The Tatas say they have a nearly 40,000-km network in place and the Reliance group a 60,000-km network.

Yet the last home run stretch, from their various city nodes to the elusive home customer, has become almost impossible to negotiate.

Sometime ago, the Tatas-owned Videsh Sanchar Nigam Ltd advertised Tata Indicom broadband services in Mumbai.

The demand came like a deluge in Mumbai, and the company had to stop advertising because it simply could not reach its customers, admitted a senior official with the company.

"Sorry, our services are yet to reach your locality, but we shall inform you as soon as we have a presence there," one was told when one called up for their services.

By this time, several customers who pro-actively wanted broadband services in the city had turned to public sector company Mahanagar Telephone Nigam Ltd.

Some of the city exchanges of MTNL have run out of application forms for Tri-band, the company's broadband service. Customers are offered photocopies of the same.

Elsewhere, in other parts of the country, it is state-owned Bharat Sanchar Nigam Ltd that is making any kind of progress.

Still, with both these operators rolling out the red carpet to customers, and with the cable-Internet broadband players who have a scattered presence in the country (Iqara Broadband, Hathway, and several others), and other multiple-technology players such as Sify, the total number of broadband customers (speeds of over 256 kbps) in the country was 7.5 lakh as of end November, 2005.

By December end, for which statistics are not yet available, it would barely have reached 1 million, say industry experts. This is two-thirds short of the target of 3 million that the broadband policy for the country had drawn up.

VSNL had acquired the DSL business of Dishnet through which it got some DSL customers, around 30,000. Even today, the Tatas have barely built on that, with around 70,000 broadband customers, according to an official.

Reliance Infocomm has barely any retail broadband customers. Its metro-ethernet plan involved bringing fibre right to the buildings; the company has wired up thousands of buildings across the country.

However, this is largely for commercial localities and for those residential localities largely populated by high net worth individuals from whom one can recover the cost of laying such a network. Fibre-to-the-Home is expensive and can be viable in very few localities, say officials with both VSNL and Reliance Infocomm.

VSNL then started to tie up with some cable operators to offer Internet access over cable. And Reliance Infocomm too was said to be talking to them.

Now, local cable operators are a whimsical community where business ownership can change hands erratically. They have to be provided equipment and training and good commissions as well.

Says a telecom analyst, "Going through cable is all right for a Zee or Hathway who are in cable operations or for British Gas subsidiary Iqara Broadband, which is content with being present in a clutch of cities. It is hardly the way to go for someone with pan-India ambitions such as the Tatas or Reliance."

Of course both these groups are Unified Licence providers, both initially started off with licences for fixed telephony operations.

However, they both got into mobility where the business was, and this preoccupation meant that their fixed line (wireline) plans had to be put on the backburner.

Had they got fixed line customers, they would have had a last-mile link for retail broadband as well, something that BSNL and MTNL, with their customer base of over 40 million, are now exploiting through DSL and ADSL technologies.

Now private companies are complaining that broadband in the country is stagnating because BSNL and MTNL are refusing to unbundle (allow others to share) their 40 million fixed lines.

According to the Association of Unified Service Providers of India, private wireline connections numbered 2.13 million as on December 31, 2005, while private fixed wireless (where the connection from the exchange to the home is wireless) numbered 6.09 million and CDMA mobile 16.79 million.

The largest AUSPI members are, of course, Reliance Infocomm and Tata Teleservices, who account for the bulk of the AUSPI customer base as well.

So now, are the Tatas and Reliance paying dearly for not concentrating on their wireline business?

"No, it was the same problem then too, laying a wireline was very expensive, especially if one was not guaranteed enough customers in a locality, as compared to getting a mobile or even fixed mobile customer," says an official with one of the companies.

Now the companies are thinking of other methods of offering broadband access to homes.

Both the groups are checking out WiMAX (Worldwide Interoperability for Microwave Access) technology, VSNL is already checking out vendors for this.

WiMAX is a technology that offers wireless broadband access, something like Wi-Fi (wireless fidelity) but with better performance over longer distances. Reliance Infocomm is additionally thinking of DTH (Direct to Home) technology, where the link would be provided by satellite connectivity, says an official.

According to officials with these companies, there is no question of losing any opportunity from the delay in organising last-mile connectivity.

First of all, according to them, the number of potential broadband users will go up dramatically, the PC owners that one sees constitute only the tip of the iceberg that is there, waiting to emerge.

Second, they say, although BSNL and MTNL may have over 40 million fixed line users, less than 10 per cent of these lines are capable of broadband delivery, and at some point, this will make them face delays as well.

But there is yet another lot of `broadband providers' who are quite successful in pockets. These are the smaller Internet companies and local cable operators who offer Internet access, whose feature is that it is `always on' but well under 256 kbps.

"Not everyone wants these speeds. It may not be all that secure, but it is fine for a small-time user and much, much cheaper," says one `assembler' of computers who recommends these cable operators to his customers in Mumbai. Of course these customers are outside of the statistical net and no one knows how many they are.

kripram@thehindu.co.in

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