India's State-Run BSNL Gears Up for RJio Battle

India's BSNL is preparing to take on disruptive new entrant Reliance Jio in the country's fixed-line broadband market.

BSNL, a government-backed telco that operates in all of India's service areas except Delhi and Mumbai, is planning to overhaul its home broadband tariffs to counter RJio's anticipated entry into this segment of the telecom market.

It already offers a fiber-to-the-home service that costs 799 Indian rupees ($12.30) for 10 gigabytes of data at a connection speed of 4 Mbit/s. But media reports say that Reliance Jio now plans to offer 100 gigabytes of data at 100 Mbit/s besides access to its portfolio of applications. Prices could start at just INR500 ($7.75), according to reports, although RJio might offer free access to its services initially, just as it did in the wireless segment.

Led by India's richest man, Mukesh Ambani, RJio caused turmoil in India's mobile market when it began offering free voice and data services to customers on its launch in September last year. This strategy helped the company to garner 100 million subscribers within six months of entering the market. Incumbent operators including Bharti Airtel, Idea Cellular Ltd. and Vodafone India reported a huge fall in their sales and profits in their quarterly results following RJio's launch. (See Can India's RJio Succeed in Broadband?)

RJio is currently testing its broadband offerings in a few cities and is likely to introduce services by October. As a market leader in this segment, Bharat Sanchar Nigam Ltd. (BSNL) stands to lose the most.

According to data from India's telecom regulator, BSNL had about 10 million fiber broadband subscribers at the end of the April 2017, giving it a market share of about 50%. BSNL also operates India's most extensive fiber-based network with around 700,000 kilometers of cable across the country. RJio, meanwhile, has already deployed more than 300,000 kilometers of fiber and is planning to lease dark fiber from the government. (See Why India's RJio Wants to Lease Dark Fiber From Govt.)

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For the time being, BSNL has the capability and the infrastructure to add new customers on its network and to scale up faster. But when it comes to marketing and customer support, it is known to be weak. If it wants to enhance its fixed broadband appeal, it will have to alter this perception fast.

In the mobile segment, it is already putting up a fight. It recently launched two prepaid packages priced at INR786 ($12.10) for a 90-day service and INR599 ($9.20) for one lasting 30 days. RJio, however, is offering a 1Gbit/s data service for as little as INR10 ($0.15) a day.

While BSNL has continued to lose market share to the private-sector players, it may be considering other ways of improving its competitiveness. It was recently in the news following speculation about a proposed merger with Mahanagar Telephone Nigam Limited (MTNL), another state-backed Indian operator. It also has an eye on 5G, having recently signed a deal with Nokia Corp. (NYSE: NOK) regarding development of the next-generation mobile network technology. The hope must be that such efforts help it to withstand the RJio assault.

— Gagandeep Kaur, Contributing Editor, special to Light Reading

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