Indian Broadband sector adoption challenges

The broadband in India witnessed slow growth in the past year and expected to grow at lower rate. The YoY growth rate in FY12 was 13.79% with total subscriber base of 13.79 million (>=256 Kbps). The FY 13 would end with total subscriber base of 15.2 Million with a growth rate and teledensity of 10.2 % and 1.24% respectively. Moving forward the broadband sector subscriber and ARPU would grow at a modest rate of 12 to 15% & 10% YoY. According to TRAI document, Top 10 ISP contributes 93.1% of the total userbase whereas the total number of registered ISP stands at 159.It raises simple query about the growth potential in broadband sector in India. In my point of view, the broadband sector would face uphill task to grow to make the profitable return of investment. With the higher addition of around 25 Million Smartphone, Tablet, Notebook, Netbook and desktop PC offer opportunity for ISP to convert new device owner as customer. Private ISP’s launched co-ordinated advertisement program by investing around 10% of total revenue and managed to capture only 20% of the market share and rest are still with the government owned ISP’s. The price to performance also plays a crucial decision making factor for subscriber as taking a connection require one time investment by consumer for devices. In a price sensitive market like India, it impacted the overall adoption trend. Secondly, in recent years change in the taxation of telecom service, subscriber experienced additional cost of around 20% due to service and other tax which is playing as negative factor. Post the landing charge reduction by the ILDO’s, it was expected to have higher competition in the broadband sector and price point going down but the growth rate is still dismal.
In NTP-12 document released by DoT to “Provide affordable and reliable broadband-on-demand by the year 2015 and to achieve 175 million broadband connections by the year 2017 and 600 million by the year 2020 at minimum 2 Mbps download speed and making available higher speeds of at least 100 Mbps on demand” again looks over commitment. Most of the ISP’s have done huge investment with a hope of friendly regulatory environment but the happenings in the last 2 years on the licensing, spectrum, coverage, pricing and many hidden impactful moves dented ISP’s ability to be in the game.
In conclusion, to achieve set vision in NTP-12, ISP need stimulus in terms of friendly regulation, tax waivers on investment and offered service, innovation credits to make it more affordable for end subscribers and subsequently enabling ISP’s to take a shot to achieve set goal in NTP-12.

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