Home broadband has emerged as a battleground between Reliance Jio and Bharti Airtel, India's top two telcos. Airtel could have had a crucial first-mover advantage had it focused on this segment before Reliance Jio's disruptive entry in 2016.

"We [Bharti Airtel] should have done home broadband some years ago, before 2016. And we knew this was required much before the pandemic. And we are feverishly building now," says Sunil Bharti Mittal, chairman of Bharti Group, in a recent interview with ET Telecom. He is not wrong.

The decision not to focus on fiber deployment and the home broadband segment has now come back to bite Airtel, as Jio has been focusing on fiber since the beginning. The market is all set to explode, and Airtel is left trying to catch up with its arch-rival.

Figure 1: Airtel is regretting its lack of focus on fiber and broadband.
(Source: dpa picture alliance/Alamy Stock Photo)

"The total fixed communication services revenue in India is expected to increase at a Compound Annual Growth Rate (CAGR) of 6.4% from $10.2 billion in 2022 to $13.9 billion in 2027, mainly driven by the strong growth in the fixed broadband segment," according to GlobalData.

"Reliance Jio is set to lead the country's fixed broadband services market in terms of subscription share over the forecast period, supported by its strong position in the growing fiber broadband service segment and efforts to upgrade its FTTH network. The operator's promotional offers on its broadband plans are expected to help the company maintain its leadership in the market over the forecast period," says GlobalData's recent report.

At the end of December 2022, Airtel had 5,642,000 home broadband subscribers with an average revenue per user (ARPU) of 624 Indian rupees (US$7.6). It had just 376,978km of fiber at the end of December 2022 in comparison to Jio's 1,100,000km of fiber as of August 2022.

Missed opportunity

Though Mittal and his team couldn't have known this, a fixed broadband network would have given Airtel a significant advantage during the COVID-19 pandemic as remote working became the norm and home Internet usage shot up across all geographies.

What Airtel definitely was aware of is the high revenue potential of fixed broadband. "Airtel had 3.4 Mn [DSL] customers, as on March 31, 2015. Of them, 1.5 Mn customers were subscribed to its broadband/internet services, representing 44.2%, compared to last year's 43.6% ... The higher number of broadband customers also resulted in a significant increase in ARPU to INR1,026 ($12.5) during the year as compared to INR946 ($11.5) in the previous year," says Airtel's 2014-15 annual report. Just to put this in perspective, mobile ARPU in India in 2015 was just INR123 ($1.5).

Further, massively growing mobile broadband consumption highlighted the latent demand for broadband connectivity in the country, which Airtel chose to ignore. India's mobile data usage grew from 828 million GB in 2014 to 1.38TB in 2015, as per TRAI data. However, this is open to argument as to whether the lack of fixed broadband networks was leading to the growth of mobile data or whether the easy and cheaper availability of mobile broadband was hampering the growth of fixed broadband.

Lack of focus on the home broadband segment is further likely to impact Airtel as Jio is combining fiber and 5G Fixed Wireless Access (FWA) solutions to tap the home broadband market, which can potentially give it a significant lead over its competitors.

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— Gagandeep Kaur, Contributing Editor, special to Light Reading