Amitabh Kumar, Director, Zee Essel Group
The realization of Indias fiber connectivity projects and increasing e-services is likely to outpace that of advanced countries.
Fixed line broadband, both via phone line and cable have been relative laggards in a telecom space which saw the emergence of mobile broadband at a disruptive scale in 2017. The action, it now appears may be shifting to fixed line broadband driven by FTTH technologies, for which 2018 is expected to be a watershed year.
The action plan for mobile broadband is now out in the open. With mobile data rates having fallen to Rs 10 for 1 GB per day and further fall not ruled out, data alone is unlikely to be a promising business opportunity going ahead with competition catching up. The focus is now on using mobile data for voice, where there is still an arbitrage between switched networks, with chargeable voice calls and pure IP networks with free voice calls. The latest TRAI mandate of reducing interconnect charge and doing it away altogether by 2020 shows that there is money to be made in using data for voice calls. Millions of feature phones will help make this transition in 2018. It is also quite clear that unless there are LTE broadcast technologies which can be used for TV, mobile data will be of little use in large-scale delivery of TV channels and VoD to homes as little spectrum will be left.
The battle for fixed line broadband has now begun, and it will lead to transformation of TV networks as the year 2018 advances. On the one side are the dozens of VoD and Live TV sites including those with original content, while on the other there are burdened cable networks with tariff and interconnect issues not getting resolved very soon.
The real driver for this transformation will be the cost dynamics which have changed in favor of FTTH in the last six months with costs of an FTTH home having fallen to below USD 25. While cable broadband using DOCSIS 2 and DOCSIS 3 was the mainstay of the few operators providing broadband in India these have been beset with various issues including the use of copper cable, noise ingest, and unstable operations apart from high cost of cable modems.
Other countries such as the United States have also seen an emergence of FTTH operators such as Altice FTTH (Optimum and Suddenlink-branded Internet, TV, and phone services) which intend to cover millions of homes within a year. These are in competition with cable broadband operators such as Comcast (Docsis 3.1) with Gigabit speeds being offered and Verizon FiOS, also an FTTX operator with large distribution.
In the Indian fixed broadband space, while the phone-line broadband has already advanced to VDSL on the lines of AT&T U-Verse in the US, the real competition will come from the advancement of FTTH. FTTH is also riding on high-density clustered homes and multistory complexes where the last mile costs are well-contained. Single fiber distribution and aggregation point from multiple service providers is now well-established for MDU installations.
Developments in European FTTH markets also have shown an accelerating trend with 40–60 percent growth being exhibited specifically in new FTTH subscribers.
In a relative context, the projected growth of fixed line broadband is not surprising considering the data-consumption trends. The generation of high-resolution videos by users and sharing using social media sites is by itself leading to an exponential growth in traffic. As per Cisco VNI Index, data consumption which was just under 100 exabytes per month will double to 200 exabytes per month by 2020. Executives across industry seem to agree that exponential rise in data usage is not possible without FTTH being the base for connectivity applications.
The realization of India's fiber connectivity projects and increasing e-services is likely to outpace that of advanced countries. The latent demand of India is now emerging especially as price points dip for fixed broadband and new technological solutions such as FTTH see an exponential drop in prices. A new Internet home is now in the making, and it will ride on FTTH as the prime connector.