Fixed broadband finally gets its chance with Work From Home in time of Covid

Since WFH and video conferencing requires good data connectivity, FBB can score as mobile broadband service quality and speeds are not reliable.

The Covid-19 pandemic and the subsequent trend of work from home may see faster growth of fixed broadband in the country, which otherwise today is an under-penetrated market with only around 19 million subscribers. It is largely the wireless or mobile broadband at around 600  million users which has led to the data boom.

For instance, fixed broadband (FBB) subscribers have grown at a CAGR of 4% to 19 million vs mobile broadband subscriber, which grew at 53.9% to 606 million in the past six years. The FBB penetration (% of households) is just 6.1% vs 80-95% for many developed countries. China has a FBB penetration of 86%.

There are several factors for slow growth of FBB in India. A major reason is that mobile data is cheaper than FBB in India, whereas it is just the opposite in other countries. In India, subscribers use mobile data to access all content on internet due to generous allocation of 45GB a month in base packs.

Analysts say in many countries, pay TV is very expensive compared to OTT, while in India pay TV (cable and DTH) is cheaper than OTT. Thus, FBB+OTT viewing is a premium service in India, which costs over `1,400 per month in contrast to around Rs 300 for cable and DTH. However, in the  post-Covid scenario, all this could change and FBB can emerge a winner.

This possibility could emerge with employees preferring less travel and instead opting for video conferencing. Also, corporates may introduce partial work from home (WFH), where employees can choose to come to office twice or thrice a week and WFH other days.

Since WFH and video conferencing requires good data connectivity, FBB can score as mobile broadband service quality and speeds are not reliable. “Employees will not hesitate to buy this premium service as they would save money from less commuting, save commuting time, etc. FBB will turn from being an alternate entertainment medium to a utility. We may also see corporates reimbursing FBB bills, similar to mobile bills currently. This could drive much higher FBB penetration in the near term,” analysts at ICICI Securities have noted.

Further, the digital communications commission (DCC) has recently decided to abolish the 8% licence fee on FBB and instead charge a token Re 1 fee to promote wired broadband in the country. This would incentivise players to deepen their footprint.

Among the players present in FBB, Bharti Airtel has good converged products. The company has 2.4 million FBB subscribers and is expanding its presence in more cities and looking to penetrate deeper through partnership with cable operators for last-mile connectivity. Bharti’s presence has increased to 111 cities currently from 87 in FY17. Its FBB subs base has grown at 7% CAGR over FY17-FY20 to 2.41 million.

Reliance Jio has also entered the FBB market and till date has provided around 1 million connections. State-owned BSNL is the largest fixed-line broadband service provider with a user base of 8.23 million.