Sunday, March 15, 2009

Broadband to takeoff, pre-paid models to be evolved

At the current growth rates, number of broadband customers will not cross 10 Million in the next 2 years where as we will cross 400 Million mobile customers by March/April 09. It appears that unless some game changing steps are taken, rural India would be completely disconnect for another 5-10 years. 

Recently BSNL, Tata Indicom, Reliance have started (hi-speed) broadband on move services. Download speeds are typically 500 Kbps  in practical scenarios (theoretically EV-DO, HSPA protocols provide much better speeds like 2 Mbps - 3 Mbps). 

This is really a welcome step considering that India is pathetic on wired infrastructure. To avail the service, users need to purchase a USB device (ZTE or Huawei) and pay monthly charges (ranging from Rs. 300 to Rs. 2000).

If you observe the voice calls business in India, it is above 90% prepaid market. Growth in new post-paid connections is almost stagnant. Today every telco talks only about their pre-paid consumers. However, I am not clear why telcos push post-paid model in the case of  data services?

Let me structure out a prepaid model for the datacards (USB devices):

Service plan: 100 MB - 5000 MB recharge (uniform validity: say, 6 Months)  top-ups should be available. Note that, by default, downlink speed is the maximum available on the network.

Connecting device: Recent eBay census report says that most sold items on its website in India are USB memory sticks. That shows the importance to such memory devices. So the EV-DO USB devices should contain memory in-built and should be sold separately in the market or perhaps rentable. Installation files should be available inside the stick itself and the installation process should be very much simpler. 

Interoperability: Device should be interoperable at least with respect to same technology vendors, such as EV-DO or HSPA. Now the user can purchase any service provider depending on SIM card in it, just like a mobile phone.

An example scenario: a student who don't own a computer but can purchase (or rent) a USB stick (say around 1000/- to 1500/-), service plan of 100 MB and connect to Internet at his college laboratory or at a friend's computer (stores his working files inside the device, just like a storage device)


Another interesting development in the similar space: 3G would perhaps increase the adoption of broadband, because it has all the ingredients to take-off: the pre-paid model (basically, enables the micro-units of consumption), service involving SIM card, built-in memory functionality with every mobile phone.