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Rediff.com  » Business » Jio GigaFiber, the next disruptor from Mukesh Ambani's stable

Jio GigaFiber, the next disruptor from Mukesh Ambani's stable

July 17, 2018 17:53 IST

While existing players are expected to first drop prices, acquisition of smaller firms by larger ones is likely in future

The announcement of Jio GigaFiber, a fibre broadband network by Reliance Jio, is expected to trigger a wave of activity in the fixed broadband market, dominated by cross-spectrum players.

These include telecom operators (telcos) such as BSNL, MTNL, and Airtel, cable companies such as Hathway and DEN Networks, and pure-play broadband operators such as ACT Fibernet and Spectra.

 

While existing players are expected to first drop prices in response to Jio’s broadband entry, acquisition of smaller companies by larger firms could also happen in the future.

“In the next two to three years, I certainly see fewer players in the (broadband) market,” S N Sharma, chief executive officer, DEN Networks, said.

“In a sense, the broadband market will mirror the trend seen in the telecom market, which Jio entered two years ago, bringing about consolidation. But the good news is that the overall market will expand in terms of number of (broadband) users. That is exciting,” he says.

This point is endorsed by a top executive at Spectra, which runs broadband operations in Delhi-NCR and other metro markets in the country.

“Do not be surprised if the Airtel-Jio war spills over into broadband. Smaller, fibre-optic-ready companies could be potential acquisition targets because it is difficult to carry on in a market that has giants operating with deep pockets,” the executive said.

The buzz is that one more player, likely from the telecom industry, could announce its entry into the fixed broadband market in the coming months, said executives’ privy to developments, as wireless and wireline operations increasingly become an attractive proposition for them.

Airtel has dropped prices by 15-20 per cent for the six-month and one-year broadband plans. MTNL, on the other hand, is offering free 3G connection and data up to 10 gigabyte with its broadband connection.

Other players are expected to follow shortly, sector experts said, ahead of Jio’s broadband registration drive beginning August 15.

Rajan S Mathews, director general, Cellular Operators Association of India, said: “The (Jio) move brings in much-needed integration between fixed and mobile service offerings across the country. It will also encourage other players in the market to roll out their fibre-to-the-home technology faster.”

Experts say the fixed broadband market, which has around 18 million subscribers today, could triple in size to around 50 million in about five to seven years as operators such as Jio look to offer internet and television services at affordable prices.

Beta trials of Jio GigaFiber are on in select cities, experts said, with plans to target the top metros before moving into smaller towns.

While Jio has not revealed its pricing yet, analysts at IDFC Securities say the sweet spot to hit (for Jio) will be Rs 500 per month.

“We expect Jio’s pricing to be extremely competitive and the initial three to six months could be completely ‘free’, just as it was the case during its wireless service launch.

"We believe that an entry price point of Rs 500 (for basic broadband service) could lead to massive penetration and this price could be increased as more value-added services (such as TV, video calling, etc) are provided on top of this,” the IDFC analysts added.

Viveat Pinto, Romita Majumdar & Urvi Malvania in Mumbai
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