labels: bharat sanchar nigam ltd, hathway cable and datacom, midas communication technologies, industry - general, telecom
BSNL hits the broadband highway news
19 January 2005

Public sector BSNL's Dataone is set to redefine broadband in India, offering 256kbps speeds at user-friendly prices. Venkatachari Jagannathan reports.

Telecom giant Bharat Sanchar Nigam Ltd's (BSNL) underground lines may be made of copper, but technological advances and rapidly changing business requirements have made them 'as good as gold'. At a conservative estimate, the corporation expects its existing copper wires to generate an additional revenue of Rs50crore per month from December 2005 onwards, having hit the broadband highway with its all new Dataone service.

Dataone broadband has been simultaneously introduced in four states - Andhra Pradesh, Tamil Nadu, Karnataka and West Bengal, where BSNL has actually reset the country's broadband internet access market in terms of price and speed. The Dataone entry-level service is priced at Rs500 per month for up to 1GB download at a 256kbps speed. Besides, the subscriber can simultaneously talk on the telephone while browsing the internet. BSNL offers a menu of schemes with varying downloads and speeds going up to 2mbps!

The revenue potential is amazing; BSNL projects a subscriber base of 1 million by December 2005. The projections for 2006 and 2007 are 2 million and 3 million subscribers respectively, and the minimum revenue potential is projected at between Rs100crore and Rs150crore per month! BSNL also has aggressive plans in the Wi-Fi and Wi-Max segments - it plans to install 300 hotspots in 15 cities and Wi-Max in five cities this year.

The great escape
Now that cell phones have officially overtaken landlines in sheer numbers, it is becoming clear to fixed line basic telephony service providers that their future is in promoting data connectivity and convergence. BSNL's problem is more acute, as its high-end customers are migrating to new service providers, who are providing 80 per cent of their new connections.

BSNL and its owner, the government of India, failed to see what hungry private telecos and internet service providers (ISP) had spotted much earlier. These private service providers started clamouring for a right to use BSNL's nationwide copper wire network to offer broadband access. The hijackers' argument was that the telecom service arms of the government had failed to popularise broadband connectivity and, so, private sector service providers should be allowed to pay them a fee and utilise their copper line infrastructure. This argument got a boost when the Telecom Regulatory Authority of India (TRAI) made a similar recommendation. It is a different matter that the private players themselves didn't succeed in offering real broadband to their subscribers.

But BSNL too, didn't do very well with its 128kbps internet connectivity, which it had offered aggressively under the DIAS brand. The service was offered only in 400 exchanges in 42 cities, with each exchange offering just 480 connections. But even this capacity was not fully sold.

Equity demands that incumbent companies should be first allowed to 'sweat' their assets. Only if they fail to do this should others be permitted to use them. Much to the disappointment of the private ISPs, the government corrected this weakness in its broadband policy.

The elephant dances
With that reprieve, BSNL heard loud and clear that it had to shape up or ship out, and could not expect protection at the cost of the public good. Soon the company finalised the purchase of 'asymmetric digital subscriber line 2 plus' (ADSL 2+) from two Chinese companies to offer the always on Dataone service.

A K Sinha"The total outlay for the project is Rs250 crore," says BSNL CMD A K Sinha. It is not only the high speed internet connectivity that BSNL will offer. On the anvil are other value-added services like video-on-demand, interactive gaming, live and recorded television programmes, multicasting, audio and video conferencing, internet telephony and distance learning.

Adds Lav Gupta, deputy director general (broadband), "Out of the total outlay, the investment for ADSL 2+ is around Rs200crore, while another Rs50crore is being allocated for providing the backbone for value-added services."

By February 2005-end, Dataone will be available in 198 cities in the 24 telecom circles. By 2007, the service will be offered in almost all cities, towns and villages where BSNL operates its services. Gupta says BSNL has the capacity to provide five lakh connections immediately, which can be increased on demand.

Following the success of its mobile services, thanks to wide reach coupled with attractive prices, BSNL is replicating its subscriber gains in the broadband arena. At a time when private service providers are offering similar or lower speeds at higher prices, BSNL has come out with a package that can knock the stuffing out of competition. (See: BSNL is more purse-friendly)

Agreeing that BSNL's schemes are aggressive, cable ISP provider Hathway and Datacom's vice president (networks and commercial), Jayant Changrani says, "The competition is tough and our task is challenging." He does not see Hathway being affected by BSNL's move. "Apart from cable internet, we also offer internet telephony, cable TV and digital video delivery services. Our subscribers will surely see a value in our proposition. The impact will be felt mainly by standalone cable internet players."

K KrishnanAirtel, on the other hand, is in the process of reworking its broadband tariff. Says K Krishnan, CEO and director (South) Bharti Infotel Limited, which offers services in Tamil Nadu and Karnataka, "We welcome competition. We are in the process of revising our broadband tariff rates. The new rates will be announced soon."

According to Sinha, BSNL hopes to rope in around 50,000 subscribers by the end of this March. Already, around 60,000 people have registered for the service. Subscribers of DIAS can migrate to Dataone without any problems. He said that the tariff rates for 128kbps speed DIAS would soon be revised downwards.

However, Midas Communication Technologies Pvt Ltd, which provides DIAS to BSNL does not feel threatened by Dataone as the company has upgraded its 128kbps speed to 256kbps (See: BSNL's Dataone not to affect Midas Communication).

The challenges ahead
Quoting statistics may be simple, but marketing and providing after-sales services to Dataone's customers is going to be a challenge for BSNL. The reasons are simple. Today, the penetration of personal computers is largely amongst the upper income segments - they are the real users of telephony and internet access. But it is precisely this class that is now switching over to the private sector service providers.

Besides, as Dataone is an always-on service (24x7x365), it requires round-the-clock back-end support to attend to customer complaints. Says deputy director general Gupta, "The service will be sold through our franchisees. The installation package for Dataone is simple. And for a small fee, our person will come and activate it." Gupta is confident that the targets are achievable and feels that BSNL will recover its investments within two years. "The government is working to bring in a low cost computer (See: GOI to encourage sub-Rs10,000 pc) and we will bundle our broadband service connection along with the computer," he says.

According to Bharti Infotel's Krishnan, "The market is sure to expand and become more competitive. We will be touching around 1 lakh broadband connections this fiscal." The union government estimates that the total number of broadband subscribers will reach three million by 2005, nine million by 2007 and 20 million by 2010.

Slowly but surely, the BSNL juggernaut has finally hit the broadband highway and started rolling. Early signs indicate it should overtake the others in a short time.

also see : BSNL is more purse-friendly
BSNL's Dataone not to affect Midas Communication
GOI to encourage sub-Rs10,000 pc

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BSNL hits the broadband highway