Special ISP Fees Could Unlock Cable Last Miles For B’Band

The telecom department (DoT) plans to create a new category of internet service provider (ISP) licences to drive broadband penetration by using India's significant cable TV network, reported by Economic Times.

The cable TV network in India is highly fragmented and poorly developed across a majority of the regions. Yet, it has a reach that is easily vast by all measures and is logically well suited to serve as a last-mile broadband infrastructure.

The government further adds that "cable TV connections reach more households than wireline telephone connections, given that total cable TV and DTH subscriber base as on March 2014 stood at 100 million and 56 million respectively". Small wonder, DoT is also likely to unveil new laws to spur direct-tohome (DTH) service providers to step up both "urban and rural broadband coverage".

Moreover, with the initial phase of cable TV digitization over and the next wave of it under progress, the ground is now much better prepared for leveraging it for internet and broadband access. Telcos could potentially engage them as channel partners for the delivery of broadband services in the last mile.

Many of the cable TV operators, however, don’t have the background (socioeconomic as well as technological) to engage with the corporate entities that the telcos are. And if telcos are able to find a way to tackle that, there has also been a financial barrier.

The ISP licenses currently carry one-time entry fees ranging from Rs 2 crore for a category A license; Rs 20 lakh for a category B license and Rs 3 lakh for a category C license. While these may sound trivially small in the context of telecom industry's scales, it would appear as a large sum of money to a cable TV operator that functions in a small town or in a few gram panchayat areas. This has been a key entry barrier, other factors apart, including the annual fees which the ISPs have to pay and which the Telecom Regulatory Authority of India recommended be increased to eight percent of the annual aggregated gross revenues.

As of now, an estimated 100 million households are covered through cable TV networks, which could amount to around 500 million users, based on an assumption of five members per household.

A special ISP fee structure could incentivize smaller cable TV operators to offer broadband services to their existing subscribers, a majority of whom don’t have access to a fixed-line broadband access.

The impact of such a development could be even far-reaching and spawn a new ecosystem around these services, with a focus on the smaller towns and rural areas. The related gears, including the set-top boxes that ideally integrate both cable TV and broadband in a single box, would be a large area of opportunity for equipment makers.

From telcos standpoint, these cable networks could also be seen as a strategic vehicle for offloading as well as backhauling their mobile broadband traffic.

Source : LightReading