Column : Broadbanding for growth

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: The decision of the country’s largest telecom operator, Bharti Airtel, to outsource its broadband and fixed-line management to Alcatel Lucent signals the company’s focus on the next high growth area for telecom companies in the country - broadband.

With voice mobile telephony reaching a staturation point in terms contributing to the topline of firms with minutes usage on the decline, broadband could well emerge as the next area, which firms would focus upon to tap growth. Bharti, which pioneered the outsourcing concept with similar deals with Ericsson and Nokia Siemens for mobile networks and IBM for IT infrastructre has therefore extended the practice in the next emerging area and is sure to reap the first mover advantage as it did in mobile telephony with over 90 million subscribers.

The opportunity in broadband is huge. The country has a tiny 1.2% of the world’s total broadband subscriber base but with the mobile segment having reached 80% coverage in urban India, its growth prospects are limited. Though in the rural parts mobile penetration is around 30%, the market wouldn’t yield windfall gains like its urban counterpart because rural market offers much lower revenue per user.

With technologies providing for wireless broadband access like WiMAX, broadband looks like the best bet for achieving growth numbers. Bharti currently has over 10 lakh broadband customers, miles behind its competitor BSNL’s over 36 lakh. However, once wireless broadband comes into play, BSNL might lose the edge to its competitor because of its rural focus. BSNL’s edge over others owing to its ‘last mile coverage’could also be dented as WiMAX provides for backhaul through which private companies like Bharti can achieve last mile linkage, which they are constrained at present.

The move to focus on fixed line and broadband ahead of spectrum auction for WiMAX and 3G services clearly establishes that the company is betting big on both the technologies. By putting in place a structure ahead of auction, the company is best prepared to tap the opportunity once auctions take place.