Indian Broadband Market: A Sluggish Mover
India is the world’s second most populous country with a population of 1.326 billion. More than half of the Indian population are young people under the age of 26. Although India is experiencing robust economic growth, its fixed broadband development is lackluster. At end of 2016, its fixed broadband user base reached 15 million, and its broadband penetration was about 7%, far lower than the world average. Among the reasons for such low broadband penetration are enormous investment in fixed broadband with a long payback period, fierce competition in the wireless sector, and inadequate support from the government. However, India’s multiple system operators (MSOs) who have a different view from traditional telcos find opportunities in the broadband market.
Hathway: An Emerging Broadband Player to Deploy FTTH
MSOs/ISPs are the first in India to pay attention to developing fixed broadband. Unlike other large countries, India’s fixed broadband is developed spontaneously by civil players. The latest market data shows that there are more than 6,000 MSOs in India and 10 of them have over 10 million users each. The 10 MSOs all use GPON and Ethernet to deploy broadband networks. Hathway, in particular, develops at the fastest pace, with the number of FTTH users surging from zero to 100,000 within short 21 months. At this time, the number of FTTH users in the whole country is not more than 500,000. However, it took Bharti, India’s largest operator, five years to grow its FTTH customer base to 100,000.
Hard Choice: New Technology vs. Legacy Technology
In 2015, small and medium-sized operators in India were confronted with an existential threat after the country’s biggest conglomerate, Reliance Jio, announced that it would enter the fixed broadband market in two to three years. Hathway hoped to increase customer stickiness and improve profitability through pipes while deploying IPTV/OTT services in the future to attract high-value users and enhance competitiveness. In the first half of 2015, Hathway started to consider expanding its broadband network and increasing bandwidth rates. Though FTTH was a future trend, it was difficult for Hathway to deploy it. Hathway had been a cable operator without any experience in deploying and operating optical networks. Also, it was hard for Hathway to choose between DOCSIS and GPON technologies. In this context, Hathway and ZTE had technical exchanges and analyzed two technical paths in terms of cost and network evolution. They had a clear idea of what advantages GPON FTTH can offer. ZTE proposed a broadband strategy for Hathway, in which GPON would be deployed only in new areas because it is relatively easy and cheap to install fiber in these areas.
Hathway lacks experience in the construction, operation and maintenance of an optical network, so it is quite important for Hathway to choose a good cooperative partner. According to research firm IHS, ZTE grabbed the world’s No. 1 for 10G PON sales and No. 2 for PON revenue in Q1 2017. The company has built high-quality all-optical networks around the world and gained rich experience in network deployment, operation and maintenance. After three-month network trials and training, Hathway decided to partner with ZTE for its FTTH initiative.
Focusing on Its Own Strengths
Hathway and ZTE worked together to work out a broadband development strategy that focuses on compactness and competitiveness. In September 2017, Hathway decided to deploy FTTH in Chennai, planning to invest $300 million in three years. Hathway rapidly secured the central offices (COs) and increased its new user base to 10,000 every month. Such expansion made Hathway a dominant leader in the Indian fixed broadband arena. Hathway also used a WiFi-capable ONT to replace the original combination of ONT and wireless CPE to reduce capex and maintenance complexity. By offering free ONTs to users, actively promoting 100M broadband and Wi-Fi services, and sweetening its service offerings without extra charge, Hathway quickly attracted more users.
Opening the Road to All-Optical Networks
Currently, the ARPU of CATV users in India is about 164 rupees and declines year by year. However, the ARPU of broadband users is 800 rupees. Hathway sees the potential of broadband business and gradually accepts the FTTH strategy. Through the cooperation with ZTE, Hathway has learned from the experience and achievements other operators have gained in FTTH deployment. By builting up its own capability to operate FTTH services, Hathway has positioned itself accurately in the ever-changing Indian telecom market and developed a growth strategy that determines the first focused sites and then expands to the entire area. As the first MSO in India to resolutely embark on network transformation, Hathway has given a brand-new direction for fixed broadband development in the country. Several other MSOs now follow Hathway’s development path to work with ZTE on their FTTH deployments. Though today the broadband market develops still slowly in India, Hathway stands as a beacon of hope to many MSOs.
Hathway, India, Optical broadband development, FTTH, All-optical, ONT, GPON