Analysis of Broadband

Industry:
Airtel Vs Reliance
World

By
Chandramita Sarma
FW 2008-10, HRM
 BROADBAND

Broadband Internet access, often shortened to just

broadband, is high data rate Internet access—typically
contrasted with dial-up access over a 56k modem.

Dial-up modems are limited to a bitrate of less than

56 kbit/s (kilobits per second) and require the full use of a
telephone line—whereas broadband technologies supply
more than double this rate and generally without
disrupting telephone use.

Although various minimum bandwidths have been used in

definitions of broadband, ranging up from 64 kbit/s up to
1.0 Mbit/s, the 2006 OECD report is typical by defining
broadband as having download data transfer rates equal
to or faster than 256 kbit/s, while the United States FCC,
as of 2008, defines broadband as anything above 768
kbit/s. The trend is to raise the threshold of the
broadband definition as the marketplace rolls out faster
services.

Data rates are defined in terms of maximum download

because several common consumer broadband
technologies such as ADSL are "asymmetric"—supporting
much slower maximum upload data rate than download.
"Broadband penetration" is now treated as a key economic
indicator.
The standard broadband technologies in most areas are
DSL and cable modems. Newer technologies in use include
VDSL and pushing optical fiber connections closer to the
subscriber in both telephone and cable plants. Fiber-optic
communication, while only recently being used in fiber to
the premises and fiber to the curb schemes, has played a
crucial role in enabling Broadband Internet access by
making transmission of information over larger distances
much more cost-effective than copper wire technology. In
a few areas not served by cable or ADSL, community
organizations have begun to install Wi-Fi networks, and in
some cities and towns local governments are installing
municipal Wi-Fi networks. As of 2006, broadband mobile
Internet access has become available at the consumer
level in some countries, using the HSDPA and EV-DO
technologies. The newest technology being deployed for
mobile and stationary broadband access is WiMAX.

Indian Market Segments

We consider four main segments in the addressable
market for broadband wireless access in India. Many of
the numbers are derived from our earlier publication,
while some numbers have been updated based on our
current projections, using inputs from service providers.
In each market segment, the number of BWA customers
for each service provider per cell is projected from the
population density represented by the number of
households and SOHO (small/home offices) per sq km. We
thus do not consider multiple customers per household.
We only calculate the capacity requirements and the
population that needs to be served in a cell, we do not
address the coverage issues and techniques needed to
deal with null spaces if any between sectors in the cell.

Dense Urban Scenario:

The Dense Urban market segment comprises of the core
areas of first-tier cities and towns like Mumbai, and where
typically the cell size is less than 1 km in radius. The
population is 16 million, 70% of which lives in an area of
600 sq km. This corresponds to about 3733 households
per sq km, assuming a household size of 5 persons. Since
alternative options for broadband access are more readily
available in the dense urban scenario, we assume that
only about 50% of these households would be customers
of broadband wireless access. Assuming an average cell
radius of 0.75 km, this comes to about 3300 potential BWA
customers/cell. This comes to about 660
customers/cell/service provider, assuming 5 competitive
service providers in the area.

Urban Scenario:
The Urban market segment comprises of the core areas of
second-tier cities and towns like Pune, and where typically
the cell size can be about 1 km in radius. For this case, we
project based on the example of Pune. The population is
about 4.2 million, 70% of which lives in an area of 400 sq
km. This corresponds to about 1470 households per sq
km, assuming a household size of 5 persons. Since
alternative options for broadband access are still readily
available for second-tier cities, but perhaps not as readily
as in first-tier cities, we assume that a slightly higher
percentage of about 60% of these households would be
customers of broadband wireless access.

Suburban Scenario:
In the suburban regions, we assume that there are about
400 households/SOHO per sq km, of which an even higher
percentage of 70% could comprise the potential market
for broadband wireless access. The cell radius for the
suburban regions could vary from 1 km to 3 km. assuming
a cell radius of 2 km, this comes to about 3516 potential
BWA customers/cell. This comes to about 700
customers/cell/service provider, assuming 5 competitive
service providers in the area. In this calculation, it is
assumed that the same technology/standard has sufficient
coverage (up to 3 km) within regulatory constraints
without capacity loss in the same bandwidth. If not, the
customers/cell numbers will have to be adjusted to reflect
the coverage loss.

Rural Scenario:
There are about 600000 villages in India [3]. Assuming a
cell radius of 15 km (could vary from 10 km – 20 km),
there are about 150 villages/cell. Assuming that each
village has about 5 public access kiosks / schools, and 5
households on the average that can afford and will take
broadband, there are 1500 customers per cell. This
indicates a room for growth in number of service providers
from 1 in the beginning to about 2 or 3. This comes to
about 500-750 customers/service provider/cell. Since the
coverage area is much larger, the capacity may reduce
due to the use of less efficient modulation in order to
maintain the desired link budget. However, this may be
acceptable in the rural context. These numbers may be
expected to be achieved in a time frame of 3 to 4 years
from start of deployment. Beyond that time, there will
likely be further growth in these numbers, also aided by
improvements in the technologies and lowering of costs.
This is the trajectory followed by cellular telephony in
India, wherein the initial projection of 100-150 million
customers has been increased to 400 million.

Industry structure
Total market structure
Globally, broadband use is picking up speed. From just
over 17 million users in 2001, the number of global
broadband users has grown rapidly in recent years and is
now fast approaching the 250 million mark. Broadband is
also gaining in its popularity in view of the fact that
service providers, in some countries, are now offering
bundled offers, such as services of voice, broadband and
television in one combined package. This trend is
expected to boost demand for broadband and contribute
to the current migration from dial-up to high-speed
internet.
Further, with the ease in broadband spectrum regulations,
investments by government and decline in service prices
are also among the major factors driving the sales of
Broadband AccessEquipment.

The report forecasts the market size of Broadband Access

Equipment over the period 2007-2010. Further, the total
market is segmented into various geographic regions and
verticals. The report also presents market size for major
countries in various regions. In addition, the report
identifies key selling drivers for the Broadband Access
Equipment for major verticals.

FUTURE PROSPECTS OF BROADBAND

India has traditionally been known for

its cellular service potential. But the
cellular services will soon have to
share focus with broadband services as
well since the country is all set to
register the highest growth in
broadband subscriber base by 2013.

India is estimated to move from its

current position at number 18 in the
world for broadband market and jump to attain the
number 6 rank. This will be achieved at a mind-boggling
growth rate of 489%. This is the highest growth rate
expected from any market and is almost the double from
the second highest growth market i.e. Vietnam (276%).

Broadband services as a whole will grow by 67 percent

over the next five years to reach landmark 680 million
connections worldwide. This is a significant surge as
compared to yearly growth rate of 28% registered for
broadband services from 2004 to 2008.
The growth of the services is likely to be from the
developing markets including the merging markets like
Russia, India, China, Brazil while countries like South
Korea, Japan and Denmark are close to saturation level.
“With its burgeoning economy and huge population India
will zoom up the rankings of the largest broadband
countries in the world. Currently at number 18 in the
charts it will hit number 6 by the end of 2013,” said Tim
Johnson, Chief Analyst at Point Topic, the firm behind the
research.

“Central and South America will see the most high-growth

countries. Brazil will shortly enter the top 10 broadband
countries in the world, most likely before the end of 2008,
and again with a decent economic base and a large
population hungry for bandwidth it will outperform most
other countries in the next 5 years," he added.

The firm says that even though the subscriber base may
sound lucrative there is still scope for growth after the
five years as only two-third of world’s population will have
access to broadband by 2013.

India and South Asia’s operators are very much in the

news this week, with broadband launches announced by
some of the most dynamic players in the region: Indian
operator Bharti Airtel has launched its 16 Mbps broadband
service in India (delivered through a fibre backbone
carrier ethernet network with last mile delivery on copper
using ADSL2+ technology), Indian mobile operator
Reliance Communications has launched its CDMA-based
mobile broadband service in Kolkata, and Pakistani
wireless service provider Wi-Tribe announced a contract
for the deployment of its IP backbone, to fulfill its
objective of launching WiMAX services in Pakistan this
year.
Broadband access is one of the most talked-about topics
in the region, as a great tool to launch new services
(including high-revenue content), and to boost access to
communications in under-served areas. It is therefore
fitting that it will be a major topic of discussion at the
forthcoming India & South Asia Com, just a month away
from now. The congress is the annual meeting place for
the region’s operators (GSM, CDMA, fixed-line, wireless),
regulators, suppliers and all other stakeholders in the
booming telecommunications market.
 BHARTI AIRTEL
Telecom giant Bharti Airtel is the flagship company of
Bharti Enterprises. The Bharti Group, has a diverse
business portfolio and has created global brands in the
telecommunication sector. Bharti has recently forayed into
retail business as Bharti Retail Pvt. Ltd. under a MoU with
Wal-Mart for the cash & carry business. It has successfully
launched an international venture with EL Rothschild
Group to export fresh agri products exclusively to markets
in Europe and USA and has launched Bharti AXA Life
Insurance Company Ltd under a joint venture with AXA,
world leader in financial protection and wealth
management.
Airtel comes to you from Bharti Airtel Limited, India’s
largest integrated and the first private telecom services
provider with a footprint in all the 23 telecom circles.
Bharti Airtel since its inception has been at the forefront
of technology and has steered the course of the telecom
sector in the country with its world class products and
services. The businesses at Bharti Airtel have been
structured into three individual strategic business units
(SBU’s) - Mobile Services, Airtel Telemedia Services &
Enterprise Services. The mobile business provides mobile
& fixed wireless services using GSM technology across 23
telecom circles while the Airtel Telemedia Services
business offers broadband & telephone services in 95
cities and has recently launched India's best Direct-to-
Home (DTH) service, Airtel digital TV. The Enterprise
services provide end-to-end telecom solutions to
corporate customers and national & international long
distance services to carriers. All these services are
provided under the Airtel brand.
 WHY AIRTEL BROADBAND?
 High speed internet access
Surf, play, download, stream & make friends with speeds upto 16 mbps
(subject to technical feasibility). Impatience is the new life lives it with Airtel
Broadband.

 Surf while you talk

No more missed calls or blocked telephone lines while using the internet.
Airtel Broadband connection does not block existing telephone lines and
allows one family member to use the phone while another member surfs the
net.

 Always on
With Airtel Broadband, the internet is always ON, always
available! No more waiting for dial-up to connect. You are
ready to use the internet as soon as you switch on your
computer.
  Exciting Value added services
Whether it’s On Demand Speed, Antivirus software,
Music, Games, opportunities with our value added
services are limitless and excitement is never ending.

 Go wifi
Did you know that wi-fi helps you connect your
computer/laptop to internet without ‘wires’. You do not
have to park a place in your home to connect with the
world. You can take your laptop around to any place in
your home-bedroom, balcony or even kitchen and keep
that music playing or chat going on without getting
disconnected. Enjoy freedom from wires with Airtel
broadband.

 Find your perfect match

Airtel broadband offers various plans to choose from,
which will suite your needs. Pick the right plan and live a
high speed life.
 SWOT ANALYSIS OF BHARTI AIRTEL

Strengths

• Bharti Airtel has more than 65 million customers (July

2008). It is the largest cellular provider in India, and
also supplies broadband and telephone services - as
well as many other telecommunications services to
both domestic and corporate customers.
• Other stakeholders in Bharti Airtel include Sony-
Ericsson, Nokia - and Sing Tel, with whom they hold a
strategic alliance. This means that the business has
access to knowledge and technology from other parts
of the telecommunications world.
• The company has covered the entire Indian nation
with its network. This has underpinned its large and
rising customer base.
Weaknesses

• An often cited original weakness is that when the

business was started by Sunil Bharti Mittal over 15
years ago, the business has little knowledge and
experience of how a cellular telephone system
actually worked. So the start-up business had to
outsource to industry experts in the field.
• Until recently Airtel did not own its own towers, which
was a particular strength of some of its competitors
such as Hutchison Essar. Towers are important if your
company wishes to provide wide coverage nationally.
• The fact that the Airtel has not pulled off a deal with
South Africa's MTN could signal the lack of any real
emerging market investment opportunity for the
business once the Indian market has become mature.

Opportunities

• The company possesses a customized version of the

Google search engine which will enhance broadband
services to customers. The tie-up with Google can
only enhance the Airtel brand, and also provides
advertising opportunities in Indian for Google.
• Global telecommunications and new technology
brands see Airtel as a key strategic player in the
Indian market. The new iPhone will be launched in
India via an Airtel distributorship. Another strategic
partnership is held with BlackBerry Wireless
Solutions.
• Despite being forced to outsource much of its
technical operations in the early days, this allowed
Airtel to work from its own blank sheet of paper, and
to question industry approaches and practices - for
 example replacing the Revenue-Per-Customer model
with a Revenue-Per-Minute model which is better
suited to India, as the company moved into small and
remote villages and towns.
• The company is investing in its operation in 120,000
to 160,000 small villages every year. It sees that less
well-off consumers may only be able to afford a few
tens of Rupees per call, and also so that the business
benefits are scalable - using its 'Matchbox' strategy.
• Bharti Airtel is embarking on another joint venture
with Vodafone Essar and Idea Cellular to create a new
independent tower company called Indus Towers. This
new business will control more than 60% of India's
network towers. IPTV is another potential new service
that could underpin the company's long-term
strategy.

Threats

• Airtel and Vodafone seem to be having an on/off

relationship. Vodafone which owned a 5.6% stake in
the Airtel business sold it back to Airtel, and instead
invested in its rival Hutchison Essar. Knowledge and
technology previously available to Airtel now moves
into the hands of one of its competitors.
• The quickly changing pace of the global
telecommunications industry could tempt Airtel to go
along the acquisition trail which may make it
vulnerable if the world goes into recession. Perhaps
this was an impact upon the decision not to proceed
with talks about the potential purchase of South
Africa's MTN in May 2008. This opened the door for
talks between Reliance Communication's Anil Ambani
and MTN, allowing a competing Inidan industrialist to
 invest in the new emerging African
telecommunications market.
• Bharti Airtel could also be the target for the takeover
vision of other global telecommunications players
that wish to move into the Indian market.

PEST Analysis
Political (incl. Legal) Economic Social Technological
Environmental Economic Income Government research
regulations and growth distribution spending
protection
Tax policies Interest rates Demographics, Industry focus on
& monetary Population technological effort
policies growth rates,
Age
distribution
International trade Government Labor / social New inventions and
regulations and spending mobility development
restrictions
Contract enforcement Unemployme Lifestyle Rate of technology
law nt policy changes transfer
Consumer protection
Employment laws Taxation Work/career Life cycle and speed of
and leisure technological
attitudes obsolescence
Entrepreneuria
l spirit
Government Exchange Education Energy use and costs
organization / attitude rates
Competition regulation Inflation rates Fashion, hypes (Changes in) Information
Technology
Political Stability Stage of the Health (Changes in) Internet
business consciousness
cycle & welfare,
feelings on
safety
Safety regulations Consumer Living (Changes in) Mobile
confidence conditions Technology

7 p’s Analysis:

Product:
 Broadband Data card(prepaid & postpaid)
 Broadband Postpaid Connection
 USB card
Price:
 HOME 2222 Plus (Residential)
 Super Value 499
 Super Value 699
 Home 999 (Residential)
 Home 1499 (Residential)
 Combo 555 512 Kbps
 Combo 666 1Mbps
 Combo 777 2 Mbps
 Combo 999 2Mbps
 Combo 1299 2Mbps
 Combo 2222 2Mbps
 Combo 4444 2Mbps
 8 Mbps Combo 1299 ( Applicable in Bangalore only )
 8 Mbps Combo 19999 ( Applicable in Bangalore only
 8 mbps Combo 2222 ( Applicable in Bangalore only )
 8 Mbps Combo 4444 ( Applicable in Bangalore only )
 8 Mbps Combo 9999 ( Applicable in Bangalore only )
Place:
 The connection is provided to resident homes close to
the main road. Airtel does not cover inner roads
which is ridiculous as the interior roads often contain
 homes and the main roads contain commercial
establishments.
 Cover 94 cities in India.

Promotion:
HP,Airtel Promotion offer - HP laptop/PC with Airtel
Broadband

 Banner, pamphlets, hoardings, newspapers,

magazines

People:
 Sales staff, marketing staff, corporates, students etc.

Physical evidence:
  Stores, logos

Process:
 Have own brands, production units for them,
distribution & sell in different stores spread across
India.
 Michael Porter's 5 Forces
SUPPLIER POWER
Supplier concentration
Importance of volume to supplier
Differentiation of inputs
Impact of inputs on cost or differentiation
Switching costs of firms in the industry
Presence of substitute inputs
Threat of forward integration
Cost relative to total purchases in industry
BARRIERS
TO ENTRY
Absolute cost advantages
Proprietary learning curve THREAT OF
Access to inputs SUBSTITUTES
Government policy -Switching costs
Economies of scale -Buyer inclination to
Capital requirements substitute
Brand identity -Price-performance
Switching costs trade-off of substitutes
Access to distribution
Expected retaliation
Proprietary products
BUYER POWER DEGREE OF RIVALRY
Bargaining leverage -Exit barriers
Buyer volume -Industry concentration
Buyer information -Fixed costs/Value added
Brand identity -Industry growth
Price sensitivity -Intermittent overcapacity
Threat of backward integration -Product differences
Product differentiation -Switching costs
Buyer concentration vs. industry -Brand identity
Substitutes available -Diversity of rivals
Buyers' incentives -Corporate stakes

Reliance World
Reliance World (formerly Reliance WebWorld) is a world-
class nationwide chain of retail outlets for products and
services of the Reliance – Anil Dhirubhai Ambani Group. It
is designed to give the customer a delightful experience of
the digital world of information, communication,
entertainment and utility services.

All Reliance World outlets are connected to Reliance’s

countrywide optic fibre network. The Broadband Centre at
Reliance World leverages this broadband network to bring
you innovative digital services.
With 234 Reliance World outlets across 105 cities in the
country, you are sure to find one in your vicinity.

Reliance Broadband Internet Access provides carrier class

Internet bandwidth through a dedicated connection over a
nationwide fiber-optic IP backbone. Its ‘fiber to building’
approach and the huge international bandwidth capacity
operated by its group company, Flag Telecom, delivers
unmatched service quality and high speeds.

The advantages of our Broadnet Internet solution for

SMEs, coupled with bonus bandwidth, help you to deliver
high performance to your Internet applications. It can be a
critical business enabler for the SME customer.

Reliance Advantages:

• The same connection can be used for many PCs.

• The SMTP relay option allows you to continue using

your existing e-mail IDs.

• Bonus bandwidth.

• High speeds up to 4 Mbps.

• The Optic-fiber-Ethernet advantage:

• Optic-fiber to your building cluster.

o Ring-protected optic-fiber ensures
high uptime.

o Ethernet-based connectivity
delivered over CAT 5 cable.

o Scalable to support futuristic

 bandwidth services.
• Round-the-clock helpdesk.

Why Reliance World?

Broadband Surfing

Broadband is a technology that essentially enables high-

speed Internet access. It is a far faster way of connecting
to the Internet than the conventional dial-up method.
However, not all broadband connections are the same.

When you log in at Reliance World, you are connected to

the Internet through Reliance’s next generation, high-
speed, countrywide fibre optic network. That’s why you
will notice the difference as soon as you log in.

Surf heavy
Surprises may come in small packages but broadband
sites dole out entertainment in large chunks. Experience
these sites at Reliance World, uninterrupted.

Download to your heart’s content

We all know the pleasures of downloading. And we also
know how frustrating it is when the web crawls at a snail’s
pace. Download your favourite stuff at Reliance World
where the web sets a scorching pace.

Trade online
Does the SENSEX give you a high? Do you say your prayers
every time the NIFTY hits the choppy waters? Trade online
from Reliance World. The markets may be hot but our
comfortable environs will help you think with a cool head
and broadband will keep you well-connected!

When you’ve got speed on your side, you will discover

new ways of leveraging the web. The Internet is an
amazing world of information, communication and
entertainment. Enjoy this world in its full glory at Reliance
World.

SWOT analysis
Strengths:
• Technological skills
• Leading brands
• Distribution channels
• Customer loyalty
• Management

Weaknesses:
• Absence of important skills
• Poor access to distribution
• Low customer retention

Opportunities:
• Changing customer tastes
• Technological advances
• Lower personal taxes

Threats:
• Tax increases
• Local brands.

7 p’s analysis
Product:
• Voice Products: E1 DID, Centrex, PBX trunks, One
Office Duo, toll free, Audio conferencing, and fixed
line phones.
• Data products: VPN, leased lines, IPLCs, Ethernet,
video conferencing, Remote Access VPN, internet
data centre (IDC) services (including managed
hosting, applications, storage, and disaster recovery),
and broadband internet.
Price:
Data Transfer - Pay per Mb Plans (Authenticated)

• One connection can be used for multiple PCs

• Pay only for the data transferred (upload + download)

• Data transfer measured in KB

• Enjoy high speeds up to 4 Mbps.

Additional
Download Monthly Bundled
Service Usage /
Speeds * Rental (Rs.) Usage
MB
Plan 900 1 Mbps 900 2 GB Rs. 0.8
Plan 1199 2 Mbps 1199 8 GB Rs. 0.8
Plan 1999 2 Mbps 1999 12 GB Rs. 0.8
Plan 2999 2 Mbps 2999 20 GB Rs. 0.5
Plan 4999 2 Mbps 4999 35 GB Rs. 0.5
Plan 8999 2 Mbps 8999 75 GB Rs. 0.5
Plan 4 Mbps
10000 75 GB Rs. 0.5
10000

Flat Fee Plans (Unauthenticated):

• One connection can be used for multiple PCs

• Unlimited downloads and use at a fixed monthly

charge

• True always-on connectivity. No login or

authentication required for accessing the Internet.
 Monthly
Download Bundled Additional
Service Rental
Speeds * Usage Usage / MB
(Rs.)
Not
Plan 1100 150 Kbps 1100 Unlimited
Applicable
Not
Plan 1500 300 Kbps 1500 Unlimited
Applicable
Not
Plan 2700 600 Kbps 2700 Unlimited
Applicable
Not
Plan 4500 1 Mbps 4500 Unlimited
Applicable
Please note: (applicable for both plans)

• Two Ricmail.com Email IDs with storage space of 50

MB each free with every Broadnet SME connection

• Installation charges of Rs. 500 extra

• Refundable security deposit (Only for pay per MB

plans) - Rs. 1000

• All taxes including Service Tax extra as applicable

 • SMTP relay option available.

Static IP

• Each Static IP is charged @ Rs. 2000 p.a.

• Available in the slabs of 1,5,13 via MACD only for both

Usage based and Flat Fee plans.

• Maximum static IP permissible 13.

Place:
• All over India

Promotion:
• Pamphlets, hoardings.
• Newspapers, magazines

People:
 Sales staff, marketing staff, corporates, students etc.

Physical evidence:
 Stores, logos
Process:
 Have own brands, production units, distribution & sell
across India.

Michael Porter’s 5 Forces Analysis