A number of key characteristics such as higher reliability, low latency and higher speed have made fixed broadband a suitable solution for accessing a wide range of the applications and services being used today. These services, which include accessing cloud-based enterprise applications, electronic communications, video streaming, online gaming, videoconferencing, online education and tele-health services, have all gained prominence post the Covid-19 pandemic, thereby propelling demand for fixed broadband services. In line with the rising demand, the penetration of fixed broadband has also improved significantly owing to the growing thrust on fibre-based wireline broadband.
Telecom operators and internet service providers have scaled up their fibre-based broadband networks in a major way post the Covid-19 pandemic, thereby increasing India’s fixed broadband penetration. However, despite these efforts, the level of fixed broadband penetration in India remains low in comparison to global markets, indicating a huge untapped potential in this market.
A look at the evolving fixed broadband market in India, its changing competitive landscape and future outlook for the segment…
Current market scenario
While fixed broadband is rapidly gaining traction in India, it still has a minority stake in the overall broadband market. However, it has an immense potential to grow in the future. Prior to the Covid-19 pandemic, between 2014 and 2019, subscriber growth in the fixed broadband space was modest with a compound annual growth rate (CAGR) of just 5 per cent. Post the Covid-19 pandemic, since 2020, the pace has picked up.
In terms of coverage, fixed broadband has been majorly restricted to urban areas in India and has seen limited uptake in rural areas. Owing to this, there has been an increase in the consumption of wireless services in India as they have a far easier and more convenient installation/activation mechanism.
Globally, wired broadband is well established and is significantly utilised for data consumption as it is cheaper than wireless broadband. In contrast, in India, the need for data consumption is fulfilled through wireless broadband as that is cheaper. However, Reliance Jio’s entry in the fixed broadband space in 2019 has proven to be a game changer in this domain, with other players such as Bharti Airtel increasing their focus in this space to gain ground. As a result, competition seems to be heating up now in this domain as well, especially after the onset of the Covid-19 pandemic.
Jio emerges as the market leader
A massive change in the fixed broadband pecking order occurred recently, in November 2021, when Reliance Jio toppled the state-run telco Bharat Sanchar Nigam Limited (BSNL) as the largest fixed broadband provider. While the segment had been dominated by BSNL since its inception about 20 years ago, Jio overtook BSNL within just two years of launching its services commercially in September 2019. According to a report by Nomura, BSNL had a market share of 44 per cent in the fixed broadband segment before the launch of JioFiber in September 2019. Since then, BSNL’s share has come down.
As per the Telecom Regulatory Authority of India’s (TRAI) data, Reliance Jio pulled ahead of Bharti Airtel in terms of fixed broadband subscribers in August 2021 and kept consolidating its lead in subsequent months. However, it was trailing behind BSNL till October 2021. After that time period, things changed in Jio’s favour after BSNL lost a whopping 0.5 million fixed broadband customers in November 2021. This loss was driven by BSNL’s inability to withstand fierce competition from both Jio and Airtel in the fixed broadband space, especially after the demand for these services witnessed an exponential increase post the pandemic. Further, BSNL’s lack of investments in the fixed broadband space is another reason that took a toll on its position in the fixed broadband space.
As far as Jio’s initiatives to strengthen its position are concerned, it has adopted aggressive strategies such as waiving entry fees and installation charges for new customers opting for post-paid JioFiber connections. The company also introduced monthly plans for Jio Fiber post-paid customers and gave an option to subscribers of low-value plans of Rs 100 of availing access to six entertainment apps. Further, both Jio and Airtel have been speeding up their pace of laying optical fibre cable to capture a larger share of the market.
Owing to these efforts, Reliance Jio’s market share in the fixed broadband space stood at 17.8 per cent as of November 2021, which was higher than BSNL’s (17.2 per cent) and Airtel’s (16.7 per cent). Since then, Jio has maintained a lead in the fixed broadband space. Further, Airtel too has toppled BSNL in terms of fixed broadband subscribers. According to the latest telecom subscription data released by TRAI, Reliance Jio continued to lead the fixed broadband market in March 2022 and had 5.28 million subscribers, followed by Bharti Airtel, which had 4.53 million subscribers and BSNL, which had 3.85 million subscribers.
Another key feature of the Indian fixed broadband market is evolving broadband speed. As per Ookla’sSpeedtest Intelligence data report, more and more Indian homes now have better fixed broadband speeds, with over 36 per cent of connections being in the range of 50-300 Mbps. However, a significant majority are still in the range of 50 Mbps or below, which is the basic category, according to the report based on analysis data as of the quarter ended September 2021.
The report also reveals that about 97.4 per cent fixed broadband connections in India meet TRAI’s minimum speed threshold of 2 Mbps. However, over 2.5 per cent of current Indian fixed broadband connections failed to meet the revised 2 Mbps broadband grade that was set by TRAI in 2021.
Further, TRAI has categorised fixed broadband as slow, basic, fast and superfast based on download speeds. In this regard, around 36.7 per cent users are reportedly in the fast category with 50-300 Mbps speed and 0.7 per cent have superfast speeds of over 300 Mbps.
In terms of regions, Delhi, Rajasthan, Tamil Nadu, Chandigarh and Karnataka fall under the fast category of states/union territories. Over 70 per cent of the broadband connections in Gujarat and Maharashtra are in the basic speed category, while 0.5 per cent superfast broadband connections are in Delhi.
Moreover, data shows that the gap between urban and rural areas is not very wide. Over 58.7 per cent connections in urban areas and 61.7 per cent in rural areas fall under the basic speed category.
In a recent report, Ookla has also stated that India has jumped two ranks above and is now at 70th position, offering 48.14 Mbps median internet speed in the fixed broadband space. While this might be some progress, India is still behind a lot of countries and so has a huge scope for improvement.
Net, net, the Covid-19 pandemic, coupled with the disruptive entry of JioFiber services, has provided a much-needed fillip to fixed broadband services in India. As per TRAI data, the number of fixed broadband subscribers has increased at a CAGR of 11 per cent between March 2018 and March 2022. Further, the number of subscribers increased from 17.95 million in March 2018 to 27.75 million in March 2022.
Going forward, the new work-from-home and hybrid working mechanisms are going to lead to a massive increase in the demand for fixed broadband services. However, the government needs to devise a framework that focuses exclusively on enhancing fixed broadband reach in order to scale up adoption at par with global regions.
Kuhu Singh Abbhi