Bharti Airtel, formerly India’s biggest telecom operator, announced plans to take its fiber-based broadband services to nearly every town in India over the next three years, except for the smallest of the small.
The company, which is currently launching its fiber services in more than 1 new town per day, said it plans to take its fiber broadband footprint to 2,000 towns over the next three years.
“I believe Fiber to the Home is a significant opportunity,” said CEO Gopal Vittal. “We will continue to take steps to take our network to over 2,000 towns across India and over 35 million home passes in the next three years.”
However, the company will have to further increase its pace of roll out to meet this target.
Airtel is currently expanding its services at a rate of slightly more than 1 town per day, or about 400 towns per year. If it maintains this pace of expansion, it will launch its fiber broadband services in around 1,200 towns in the next three years. Together with its existing base of around 400 towns, that will take its total to 1,600 in all, which will still fall short of the targeted 2,000 towns.
Still, the current pace of rollout of 400 towns per year is much much faster than what the company has traditionally been used to, before Reliance Jio’s entry.
Before Jio started rolling out its own Fiber broadband services, Bharti Airtel was happy expanding its broadband service at a snail’s pace.
For example, during financial year 2019, the company launched its broadband service in just 4 new cities for the whole of the year. Since then, it has already increased the pace of its rollout by 100 times.
CABLE BOOST
Key to this pick-up in pace has been a change in strategy from seeing cable operators as rivals to partners.
Till about two years ago, the company used to offer its high-speed broadband services exclusively on its own infrastructure.
However, with the entry of Jio, Bharti Airtel realized that it will not be able to keep up with the kind of investment-fueled expansion that the Mukesh Ambani-led company was embarking upon.
The pace of rollout of the Ambani firm was beyond anything that Bharti was used to. For example, during FY19, Bharti had added less than 1 lakh new wired customers for the entire year.
However, within months of launch, Reliance Jio was adding twice that in a SINGLE MONTH.
Realizing that it cannot match the pace of investment and execution, Bharti Airtel decided a year ago to extend a hand of partnership towards local cable operators, and started signing them up as partners.
Under the new model, the company pays a fixed share of the revenue generated by a customer to the cable operator in exchange for the cable operator building and maintaining the last-mile connection.
This model has helped Airtel avoid the massive investment that would have been required to lay fiber cables along millions of small and big roads across the country, as well as hiring thousands of technical staff on its rolls to maintain this infrastructure.
Instead, it now relies upon cable operators to put in the money and the labor required to lay the last mile fiber.
At the same time, Airtel is in charge of key aspects of the customer experience, and decides the pricing, packaging, provisioning, marketing and billing aspects of the service.
Airtel also provides the upstream connectivity to the cable operator and helps in customer complaints redressal as well.
It also owns the brand as the service is still sold as Airtel Broadband, even though it is the local cable operator who gives the connectivity and maintains it.
The LCO model is, however, not unique to Airtel, nor is it something that the company came up by itself.
The model was pioneered by Indian Railways-owned RailTel for its RailWire broadband service, and then copied by state-owned BSNL. Both of these companies have been delivering their broadband services using the LCO model for several years.
Meanwhile, the move has thrown a lifeline to local cable operators who were sinking in the sea of technological change. Millions of customers in India have already shifted their TV consumption from linear technologies like cable and DTH to IP-based platforms such as Amazon Prime and Netflix.
This shift has been leading to several people cutting the cord by disconnecting their cable service.
However, with the popularization of the LCO-based broadband distribution model, millions of people who work in the cable sector in India have again found a sustainable way of earning a livelihood.
DTH SERVICE
Meanwhile, even as the penetration of fiber broadband services increase, Bharti Airtel stands to lose out in another of its business units – Direct to Home or DTH.
The company owns India’s second biggest DTH service, after Tata Sky, called Airtel Digital.
Like Tata Sky, Airtel Digital too has been facing the head of the transition from linear models to non-linear TV.
However, said Vittal, the company intends to overcome this challenge by replacing its linear-TV boxes with IP-enabled, Android-based set-top-boxes that will be able to support IP-based TV services.
He said the company is tying up with vendors of IP-based content services (such as Amazon Prime).
The idea, he said, is that the shift to connected boxes will allow the company “to operate as a platform of choice for driving the penetration of OTT [app-based] services in conjunction with the OTT players.”