June 1, 2017
Reliance Jio Infocomm, India's newest and fastest-growing 4G network, could become the first service provider in the country to lease dark fiber (or unused fiber) from the government’s BharatNet initiative.
Local media reports suggest that Reliance Jio is planning to lease dark fiber in the states of Haryana and Karnataka. It is thought to be conducting a feasibility study into using the fiber to provide connectivity for its mobile towers. Other telcos, including market leader Bharti Airtel Ltd. (Mumbai: BHARTIARTL) and number-two player Vodafone India , are also considering leasing fiber from the government.
RJio launched in September 2016 and, as a new player, wants to build a reputation for the quality of its services. The so-called "fiberization" of its entire network is an important step in this direction.
A key pillar of the government's Digital India initiative, BharatNet is a rural initiative, previously known as the National Optic Fiber Network, that aims to connect all 250,000 of India's Gram Panchayats (which are essentially local authorities). It functions according to a public-private partnership model, but has until now failed to generate much interest in the service provider community.
But that looks set to change with the move by RJio, which seems likely to start bidding aggressively for government connectivity projects in rural areas. RJio also realizes that a next wave of growth will have to come from the rural segment. The urban market on which operators have previously focused is now flooded with phones -- penetration across both fixed and mobile markets stood at 171.8% in urban areas at the end of March, according to regulatory data, but was just 56.91% in rural communities.
RJio is not the only company looking at the rural segment, either. Search engine giant Google (Nasdaq: GOOG) has recently signed a Memorandum of Understanding (MoU) with authorities in the state of Telengana to support digitization efforts. It has also recently launched a program called Internet Saathi to encourage the use of mobile and Internet services by women in rural areas. Meanwhile, Internet rival Facebook is running its own Express WiFi program aimed at bringing connectivity to rural areas.
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Even so, wariness about the rural opportunity is understandable given the risk of generating a very low return on investment. The high cost of devices is still a major impediment to expansion in the country's hinterland. And while fiber networks had been deployed across 65,475 Gram Panchayats by the end of December, only 14,569 of these had been connected.
Telcos, essentially, have shied away from using BharatNet infrastructure because of weak demand in rural communities. Consumption of mobile broadband services is certainly increasing, but not at a rate that has made BharatNet a priority for the biggest operators. RJio's interest could prompt a reappraisal.
— Gagandeep Kaur, Contributing Editor, special to Light Reading
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