Govt-led Projects To Drive India’s Broadband Growth

by CXOtoday News Desk    Jun 20, 2014

broadband1

The fast growing bandwidth demand and the government-driven projects will continue to drive the fixed broadband market growth in Asia Pacific, led by countries like India and China. According to a recent IDC report, the Asia Pacific excluding Japan (APeJ) fixed broadband market reached $20.3 billion in first half of 2013 showing a growth of 5.2%.

IDC expects the APeJ fixed broadband market comprising FTTP, Ethernet Access, xDSL, cable modem, satellite access, WLAN, power broadband and fixed wireless access (FWA), will continue to grow at a CAGR of 12.1% for the next five years.

“In India, the number of fixed broadband subscribers will see a CAGR of 13.9% in the next 5 years, while the CAGR of revenue will be 7.8%,” says Sherrie Huang, Research Manager of IDC’s Asia Pacific Telecommunications Group. “The fast growing bandwidth demand, driven by cloud, video and other bandwidth-hungry applications, have led to bandwidth upgrade taking place across Asia Pacific countries including India.”

With a number of large government broadband projects coming up in the recent years, the research firm sees tremendous growth in this segment. For example, the government has chalked out its plans of creating a “broadband highway” across the country, and recently the inter-ministerial telecom commission approved a revised strategy for kickstarting the ambitious National Optical Fibre Network (NOFN) that plans to provide broadband connectivity to 2.5 lakh gram panchayats through nearly 6 lakh km of optic fibre by March, 2017. There will be many such projects in the coming months.

 India Fixed Broadband Market Total Revenue 2012 Actual and 2017 Forecast

braodband

Source: IDC Asia/Pacific Semiannual Telecom Services Tracker, 1H2013

The difference between broadband subscriber number and revenue growth shows continuous Average Revenue Per User (ARPU) decline in India. One reason is the high price pressure and fierce competition in India telecom market. Also the growth in mobile broadband is starting to slow down the demand for fixed broadband services, especially on the low-bandwidth side. On the other hand, the mobile-only household is on the rise.

While operators are spending more on network upgrades to satisfy market demand, the revenues and ultimately the return on investment are being squeezed by Over the Top Players (OTTPs). OTTPs offer rich-media applications which are bandwidth and latency-sensitive, as well as voice services which are chipping away at the heart of many operators’ revenue streams. Sustaining revenue growth and profitability will be challenging.

“Leading operators have moved out of their comfort zone developing their ICT service capabilities, bundling connectivity with value-added services, and discovering new revenue sources such as media and e-commerce. Some have partnered with OTTPs to enrich the portfolio and to drive innovation. Carriers will continue to change their business model as competition intensifies,” adds Huang.