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Monopolies, Arbitrary Pricing and Non-Existing Service: Who Will Fix India’s Broadband Market?

In India, there are barely a handful of companies that can claim to offer broadband services across the country. In larger cities, you have a few other local players. Some of them, like ACT Fibrenet, have launched gigabit services and are growing rapidly. The company’s broadband services are available in 11 cities, with plans to add two more over the next 18 months.

In practice this means that if you don’t live in one of the major cities – or even if you live in one but in an area that is outside the catchment area of ​​most vendors – you’ll only have one or two options to choose from, at best. Competition is limited, and therefore prices have not really improved over time, unlike mobile connections where it is relatively easier to switch between providers.

Cable companies offer the only real alternative
There are local providers – cable operators that double as internet providers. These connections often have no FUP limits and are reasonably priced, but in our experience downtime is not uncommon and customer complaints usually take a long time to resolve.

We weren’t alone in this experience either – we’ve spoken to a number of customers who have used or are using cable company provided internet connections. The responses we got show how much the experience varies from provider to provider, and even location to location.

For example, Anuj Katyal, a doctor in Mayur Vihar, switched to the local supplier for his apartment complex two years ago and says it was the best decision. “I pay half [Rs. 750 per month] from what my neighbor gives to Airtel, I get 20 Mbps to his 40 Mbps, and zero FUP,” says Katyal. “I watch Netflix in full quality like it’s regular TV and I’ve never had any issues. The office is right downstairs in the building next door, so if something goes wrong, I go down and back up to get my support.”

Several others say, however, that downtime of a day or two at a time is not uncommon, which we can also attest to from our experience. Also, the speed varies a lot with daily usage, which can degrade experiences like video streaming or gaming. And speaking of gaming, ping response (or latency) can also vary a lot.

It is a capital intensive business
Today, the status quo is being challenged by companies like Excitel, Spectranet, and ACT, which offer much better pricing, better download limits (or no download limits), and promising fast service. But they’re limited in terms of the cities they’re available in, and even if they’re in your city, chances are they won’t serve your neighborhood yet.

Monopolies, Arbitrary Pricing and Non-Existing Service: Who Will Fix India’s Broadband Market?

The reason is quite obvious: the wired broadband industry is extremely capital intensive.

ACT earlier told Gadgets 360 that it is considering expansion from neighborhood to neighborhood, not city to city. “To build in any city, you need a capital commitment of at least Rs. 200 crores,” ACT CEO Bala Malladi explained.

Udit Mehrotra, CEO and Managing Director of Spectranet, supported this view and said, “Wireless service providers have to put up a tower and you’re done. In our case, you have to dig up and lay cables everywhere, then install base stations, then route the wire directly into the user’s home.”

“It’s extremely expensive and time-consuming,” he continued. “That’s why few people can enter this space, but there’s a new wave of growth coming because with 4K video and video consumption on the rise, there’s more need for wired connections.”

Reliance Jio could be a game changer
Reliance Jio’s impact on the telecom market was very evident – every service provider had to lower prices, offer more and more data and offer free calls. The company will then launch broadband services and provide 100 GB of data at 100 Mbps for free, as it is still testing the service. Monthly rental is not yet known, but expect it to be very competitive, if Jio 4G rates are any indication.

Monopolies, Arbitrary Pricing and Non-Existing Service: Who Will Fix India’s Broadband Market?

Jio’s preview seems to have had an impact on the market already. We’ve seen broadband providers offer more data for the same price, and prices have already come down across the board. Even so, things are likely to change much faster once Reliance Jio comes out of testing.

This is because Reliance is one of the few companies in India with the financial wherewithal to tackle the problem of rapidly expanding wired broadband. Companies like ACT and Spectranet are slowly expanding one neighborhood at a time due to the costs involved. Reliance would be able to make its presence felt nationally, and that will have a direct impact on competition – in fact, it will create a scenario where there is real competition.

Whether or not you’re a fan of Jio’s customer service – and this is an area where some people have doubts – it has the potential to really disrupt the wired broadband market in India, to the benefit of customers.


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