The growth prospects for cable internet broadband suppliers is positive, E V S Chakravarthy, CEO, Iqara Telecoms India Private Limited, tells V Jagannathan.
Chennai: Cable internet service provider (ISP) Iqara Telecoms India Private Limited is planning to add 1.2 lakh new subscribers this year to its existing base of 1.3 lakh.
Iqara, established in Surat in 2001, has set up a state-of-the art fibre optic network in India. The company is also one of India's first ISO 9001:2000 certified companies in the dedicated broadband business.
Originally promoted by the British Gas group, the company changed hands in May 2006 when the promoters decided to exit the telecom business in India and Brazil. The group sold a major chunk of its holdings in the Iqara Telecoms to Citi Ventures Capital International.
Says CEO E V S Chakravarthy, "We are now present in ten cities and the target is to add 10,000 new subscribers per month. It is time for us to penetrate deeper in to the market."
With the average revenue per user (ARPU) steadily declining, expanding the subscriber base has become essential for the cable ISPs. When the cable ISPs first set up business, the ARPU was a minimum of Rs1,000. But it started thinning down when private telcos started offering broadband connection.
But the real lowering happened after with the entry of the Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) with their broadband service DataOne and TriBand respectively.
Agrees Chakravarthy, "The BSNL is setting the benchmark price for others to follow. Our ARPU is around Rs550 as against the national average that ranges between Rs450-500."
Continuing further he adds, "The entry of BSNL and MTNL has helped expand the size of the market rapidly. They have set a very healthy pricing benchmark in the market. This has helped the industry in general and set an excellent starting point to realise the Indian broadband dream of 1 crore subscribers by 2010."
Rationalising about the subscriber attrition he says, "It is natural for subscribers to try out the new players before settling down in favour of one service provider. That is what is happening to all players including Iqara Telecoms."
With the bulk of the company's subscriber base comprising households / small office home office (SOHO), Iqara Telecoms has decided to target the small and medium enterprise (SME) segment.
"We will offer services like security management, remote network management for the SME segment. The other area is gaming and we are talking to couple of players."
According to Chakravarthy, the company is now focussed on strengthening its high speed data offering along with a sound internet telephony layer. "Internet telephony has been growing at a slow pace. We believe that SIP based devises are going to accelerate the usage in future. Iqara Telecoms will be offering these services in the near future with good value for our customers." Excerpts:
What is the broadband internet access market size and how has its growth been?
According to the Telecom Regulatory Authority of India (TRAI) reports there are about 14 lakh broadband subscribers in India, growing at about 100,000-150,000 every month.
Which broadband access mode, in your view will see further growth in India - cable, digital subscriber line (DSL) or wireless?
India will see a good share of DSL and cable technologies. Wireless on a large scale is yet to be seen. New government initiatives on the spectrum release could have a positive impact on wireless access technology as a third option. The cable market is maturing fast in India.
Since rates have been coming down in recent times, do you foresee a further reduction in tariff by cable ISPs?
The rates are already most competitive in this region let alone the country. Ours is the most attractive rate for a subscriber. We offer 4GB for Rs1,100 and a speed of 512 kbps, that works out to 0.23 paise per MB.
One of your competitors is offering modems free and does not charge for uploads whereas you rent the modem for Rs99 per month and charge for uploads.
Today a cable modem costs around Rs1,500. We expect it to go down further. When that happens we may offer the modem free. Speaking of the free modem, the offer is only for select subscribers. Offering free modems does not make economical sense in the current situation.
The average cost of acquiring a customer works out to Rs2,500, that is, five months of average revenue. An ISP would require a minimum of five months to recover the subscriber acquisition cost. If the subscriber leaves the network in three months then the ISP loses heavily. Ours is the only cable network in the country that is 100 per cent two way. It helps in rapid scaling up.
Do you still offer dial up connection pack?
We do not offer dial up any more.
What is your bandwidth requirement and from whom do you source ? What is the market trend here?
The overall bandwidth we use is in the range of a few STMs. We do not resell bandwidth to any service providers. We do sell to SME segment and the revenue is about 25 per cent from this segment. The bandwidth prices have come down. Today 2MB bandwidth costs between Rs8-10 lakh.
One of the issues with cable internet is that the players are present only in a few cities and that, too, in small pockets. This is equally true of Iqara Telecoms. How do you plan to expand into newer cities or grow intra-city where you are currently present?
Service providers tend to set up the network where there is PC penetration and potential. Therefore it looks like we are present in islands unlike voice service where the penetration is high.
We are present in ten cities in six states. We offer service in Surat, Baroda and Ahemadabad (Gujarat); Mumbai and Pune (Maharashtra); Hyderabad and Vishakapatnam (Andhra Pradesh), Chennai (Tamil Nadu); Bangalore (Karnataka) and Gurgoan in Haryana.
Currently we are focused in increasing penetration in these cities and adding new services and providing the best customer support and nurture excellent customer relationships in the markets we are present.