"The fresh investments will be for consolidating our existing operations/infrastructure and our planned expansion. The investments will be made over a span of two years," discloses CEO EVS Chakravarthy.

According to him, British Gas has already invested a similar amount in India since it started the broadband operations here in 2001.

Offering its Iqara Broadband brand net over cable service in Mumbai, Surat, Baroda, Ahemadabad, Pune, Chennai, Hyderabad, Bangalore, Vishakapatnam and Gurgoan, BG Broadband India plans to expand its operations to 8/10 more cities.

"This would include B class business cities/towns like Mysore, Coimbatore and Tiruppur. We are present in cities that commands nearly 70 per cent of the broadband market," he adds. The company - a category A Internet service provider (ISP) and Infrastructure Provider 1 licence holder- is fast ramping up its subscriber base in the cities where it operates.

According to Chakravarthy, from a subscriber base of 6,000 at the end of 2002, BG Broadband India grew its base to 25,000 in 2003 to 50,000 currently.

"We hope to close this calendar/financial year with a subscriber base of 80,000-1 lakh." In terms of revenue, this would translate to Rs80 crore, a jump of Rs60 crore from 2003''s turnover of Rs20 crore.

Broadband in India is a much misused term. Anything over the dial up speed of 36 kpbs was termed as broadband whereas overseas a minimum speed of 128 kbps was considered as broadband.

With the entry of net over cable players broadband was defined here as access speed of 64 kbps (actual delivery is around 50 kbps) and above.

Curiously the Telecom Regulatory Authority of India (TRAI) in its consultation paper has termed broadband service as the one that offers access speed of 256 kbps and above.

Given this position, a new term `wideband'' is now coming in vogue to denote ISPs offering net access speed between 36 kbps and 256 kbps.

Netting the subscribers at high speed

Meanwhile Chakravarthy claims that BG Broadband India is the only company in the country that offers a dedicated speed of 256 kbps to each of its subscribers. "The ramping up of our subscriber base and the voice quality of our Internet telephony service is the proof of our pudding. We have one fibre node for every 1,000 homes and the maximum distance between two amplifiers is 600 metres," he adds.

Within four months of its silent entry into select areas of the Chennai market, BG Broadband India claims to have enlisted around 600 subscribers, some migrating from Hathway Cable and Datacom Pvt Limited, the incumbent service provider.

Speaking about BG Broadband India''s pricing strategy Chakravarthy says that traditionally broadband in India was started at a price point of Rs1,000 per month targeting on those who spent more than that sum.

"As per our study 38 per cent of the dial up subscriber did not spend more than Rs400 per month towards net access. Another thirty per cent spent around Rs800-the middle segment- and only 32 per cent of the dial up subscribers spent over Rs1,200-1,500 per month."

In order to attract the middle segment - deterred by the fixed rate plan and modem cost/rent- BG Broadband India came out with its aggressive pricing plans. "We were the first in the country to introduce data transfer/usage based tariff," he remarks.

Further the subscribers were allowed to carry forward their unused entitlement, a facility denied by others to their subscribers. Unlike its competitors, the company provides the cable modem free on receipt of a refundable security deposit.

"Eighty per cent of our subscribers have gone for data usage based plans." Apart from poaching customers from other net over cable players, BG Broadband India poses a serious threat to the digital subscriber line (DSL) service providers like Bharti, Bharat Sanchar Nigam Limited.

As the till box rings with cash (average revenue per user Rs1,000 per month) due to prepaid connections, the default and cost of collection is really very low for BG Broadband India.

"We are also trying to match Trai''s expectation of offering broadband service for a monthly charge of Rs600. However that is possible only when the bandwidth prices come down further," Chakravarthy remarks. The company sources around 45MB from the Hong Kong based Reach and plans to increase the bandwidth purchase to 155MB by the end of this year.

Agreeing that the competition is severe now Hathway Cable''s head (sales, marketing and customer services: south India) Karthik Bhaskaran says, "It is we who brought down the prices by passing on the reduction in bandwidth prices. It should be remembered that we are the number three ISP in the country and continue to add subscribers at a faster clip." According to him, Hyderabad, Bangalore, Chennai and Mumbai are the four fast growing cable net market.

Facing the competitive heat in terms of employee and subscriber poaching Hathway Cable is now roping up subscribers offering modem free of rent.

Adds Chennai branch manager Ranjith Menon, "More than pricing subscribers look out for post sales service and with our round the clock call centre and online resolution of problems, we will retain our subscriber base."

With Internet business becoming more or less like a commodity business, the only differentiating factor is the post sales customer experience, Menon adds. Hathway Cable indeed has an efficient call centre and is backed by prompt service engineers.

On the after sales service aspect Chakravarthy remarks, "Our churn ratio is less than two per cent. Presently post sales service is taken care of by the company staff. We are in the process of centralising the call centre operations in Mumbai to be managed by Accenture."

Apart from the residential segment, BG Broadband India is looking at small and medium enterprises. "We have control over the infrastructure end to end unlike some of the stand alone ISPs."

The company has set up disaster recovery centres in Surat and Mumbai and is targeting software and other companies. Referring to setting up of Internet cafés he adds, "The dynamics has changed now. So we will look at that at a suitable time." However the company does offer connectivity to individual Internet café operators.