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Case Study
Exploit New Opportunities
for Broadband
 Table of Contents
THE BEGINNING OF INTERNET IN INDIA 2

ALPHATEL & ITS BROADBAND SERVICE 3

UNDERSTANDING FTTH NETWORK 5

PROBLEM STATEMENT: ALPHATEL’S FTTH LAUNCH & WAY AHEAD 7

The Beginning of Internet in India

In India, the first publicly owned internet service was launched by Videsh Sanchar Nigam
Limited (VSNL) on 15 August 1995. However, the launch of internet in India dates back to
1986 when it was launched in the form of Educational Research Network (ERNET) meant only
for the use of educational and research communities. In first ever public launch of Internet by
VSNL, it did not estimate the hidden demand coupled with hardware and network issues.
Nonetheless, within just a span of 6 months; VSNL was able to provide Internet to 10,000
users.

Srinivasan Ramani, who played a significant role in creation of ERNET - the precursor to the
Internet in India and an inductee into the Internet Hall of Fame, documents those early days in
a chapter of the book Netch@kra. Here is an excerpt: “What have ERNET team members all
over India achieved? We set out to build India's academic network and succeeded in doing
that. We did that as a nationwide academic coalition of eight institutions of higher learning
and R&D. Working together to win gives you a high, as all sportspersons know. So, how we did
it was as important as what we did. In the process we brought the Internet to India.”

This is a subjective view of a small but important part of the IT Revolution in India - the arrival
of computer networking and the impact it made on many aspects of our lives. It was part of
something bigger - electronic and digital revolution that brought us computers and a plethora
of communication facilities.

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Fast forward from year 1995, with first public launch of internet service, to 2003; a series of
big revolution occurred in the world of Internet. The timeline is below:
1995 - VSNL launched the first public internet service in India
1996 - Major newspapers set their website
- Rediff.com comes to life
- India’s first cyber café is launched in Mumbai
1997 - India’s first profitable dotcoms are launched (e.g. [Link])
- Hotmail sold to Microsoft for $400Mn
1998 - Private ISP set up infrastructure
- Sify becomes the first national ISP license holder
1999 - Indiaworld sold to Sify for $115Mn
- Sify lists on NASDAQ
2000 - Information Technology Act is passed in year 2000
- Yahoo and MSN set up Indian sites
- ITC launched e-choupal initiative
2001 - First cybercrime arrest
- IRCTC sets up its own website – [Link]
- First ever cybercrime police station is set up in Bangalore
2002 - Submarine international Gateways set up
- Wikipedia adds regional languages
2003 - First ever online air ticketing website is launched by Air Deccan
- AlphaTel launches Broadband service in India

Table 1: History of Internet till 2003

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AlphaTel & its Broadband Service

In year 2003, AlphaTel launched its broadband service in India and the cellular service was
launched in India in year 1995 in Delhi. As of 2019, AlphaTel is the third largest mobile
network operator in India and the second largest mobile network operator in the world with
over 293.79 million subscribers with over 114 million subscribers in India. As per Telecom
Regulatory Authority of India (TRAI) report named “The Indian Telecom Services Performance
Indicators – Jan-March, 2019”, there are 563.31 million Broadband subscribers in India with
AlphaTel possessing 114.62 million subscribers. The other major broadband service provid-
ers in India currently are Reliance Jio Infocomm Ltd, Vodafone Idea Limited, and Bharat San-
char Nigam Ltd.

Under the Telemedia segment, AlphaTel provides broadband internet access through several
high transmission technologies such as Digital Subscriber Line (DSL), internet leased lines,
and Multiprotocol Label Switching (MPLS) solutions, as well as IPTV and fixed line telephone
services. In year 2018, AlphaTel announced fiber-to-the-home (FTTH) technology-based
broadband plan.

The following image will provide overview of most commonly used broadband
technologies:

Digital Subscriber Line(DSL)

DSL is a wireline transmission technology that transmits data faster over traditional copper
telephones lines already installed to homes and businesses. DSL- based broadband provides
transmission speeds ranging from several hundred Kbps to millions of bits per second(Mbps).
The availability and speed of your DSL service may depend on the distance from your home
or business to the closet telephone company facility.

Cabel Modem

Cabel modem service enables cable operators to provide broadband using the same coaxial
cables that deliver pictures and sound to your TV set. Most cable modems are external devic-
es that have two connections: one to the cable walll outlet, the other to a computer. They
provide transmission speeds of 1.5 Mbps or more.

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Fiber

Fiber optic technology converts electrical signals carrying data to light and sends the light
through transparent glass fibres about the diameter of a human hair. Fiber transmits data at
speeds far exceeding current DSL or cable modem speeds, typically by tens or even hundred
of Mbps.

Wireless
Wireless broadband connects a home or business to the internet using radio link between the
customer’s location and the service provider’s facility . Wireless
broadband can be mobile fixed. Wireless technologies using longer-range directional equip-
ment provide broadband service in remote or sparsely populated areas where DSL or cable
modem service would be costly to provide. Speeds are generally comparable to DSL and
cable modem. An external antenna is usually required.

Satellite

Just as satellites orbiting the earth provide necessary links for telephone and television
service , they can also provide links for broadband. Satellite broadband is another from wire-
less broadband, and is also useful for serving remote or sparsely populated areas.

Broadband over Powerline

BPL is the delivery of broadband over the existing low-and medium-voltage electric power
distribution network. BPL speeds are comparable DSL and cable modem speeds. BPL can be
provided to homes using existing electrical connections and outlets. BPL is an everywhere,
alleviating the need to build new broadband facilities for every customer.
Figure 1: Overview of Different Type of Broadband Technologies

Understanding FTTH Network

But before we get into details, the following image will briefly depict the functionating of FTTH
network currently:

1. [Link]
2. [Link]

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 Figure 2: Basic FTTH Functioning

The following table will explain basic functioning of components involved in FTTH technology:

Optical Line Terminal (OLT An optical line termination (OLT), also called an optical line
terminal, is a device which serves as the service provider
endpoint of a passive optical network. It provides two main
functions:
1. to perform conversion between the electrical signals used by the service provider's
equipment and the fiber optic signals used by the passive optical network.
2. to coordinate the multiplexing between the conversion devices on the other end of that
network (called either optical network terminals or optical network units).

Optical Distribution Network Optical Distribution Network (ODN) is an indispensable

(Primary Fat Box & path for transmitting Passive Optical Network (PON)
Secondary Fat Box) data and directly affects the performance, reliability,
and scalability of a PON system. The ODN, an integral
part of the PON system, resides as the physical path for
optical transmission between the OLT and the ONT. Its
reach is 20 km or farther. Within the ODN, optical fibers,
fiber optic connectors, passive optical splitters, and
auxiliary components collaborate with each other.
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Optical Network Terminal (ONT) ONT converts optical signals transmitted via fibe
to electrical signals. These electrical signals are
then sent to individual subscribers. In general,
there is a distance or other access network
between ONT and end user's premises. Further
more, ONT can send, aggregate and groom diffent
types of data coming from the customer and send
it upstream to the OLT. Grooming is the process
that optimises and reorganises the data stream so
it would be delivered more efficiently.

Table 1: Explanation of components involved FTTH Network

Problem Statement: AlphaTel’s FTTH Launch & Way Ahead

In the current scenario, AlphaTel launches its FTTH service in new locations by itself with
minimal tie-ups with third party partners such as Local Cable Operators (LCO), Multi System
Operators (MSO) etc. As a result, the cost incurred by AlphaTel in launching broadband
service is high and the model, at its current stage, is not readily scalable.

Going forward, AlphaTel plans to make its FTTH launch in new cities cost effective and scal-
able by either using the partnership model, hybrid model or self-launch (as done currently).
The current cost structure is present below.

A snippet of cost involved for one premises is presented below:

• Average Rollout Cost per Home pass is ~Rs 3600.

• Assumed @ 30% utilization, per sub roll out cost is ~Rs 12000. Additionally, cost of
connecting a customer will include ONT + Installation which is (2240 + 1200).
• Hence total cost of connecting a single home pass is ~Rs 15.5K.

Table 2: Cost Structure for FTTH

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 “Subscriber” is a Premises that is connected to a network and uses at least one service on
this connection under a commercial contract.

“Premises” is a home or place of business. In a multi-dwelling unit each apartment is there-

fore counted as one Premises.

“Homes Passed” is the potential number of Premises which a Service Provider has capability
to connect to an FTTH/FTTB network in a service area. Typically new service activation will
require the installation and/or connection of a drop cable from the homes passed point (e.g.
fiber-pedestal, manhole, chamber, and utility-pole) to the Premises, and the installation of
subscriber Premises equipment at the Premises. This definition excludes Premises that
cannot be connected without further installation of substantial fibre plant such as feeder and
distribution cables (fiber) to reach the area in which a potential new subscriber is located.

Despite having the advantage of strong infrastructural capabilities and high valued brand
image, AlphaTel currently has a lower market penetration and wants to gain more market
share for its broadband service. By following the current strategy of self-launch, AlphaTel is
gaining market share at a slow pace and incurring high capex.

Given the context above, AlphaTel would like you to come up with following:

1. Identify the best sustainable and scalable model for Bharti AlphaTel’s broadband
service launch for the next 10 years. (Take into consideration all the possible external
factors such as growing use of technology, shifts in economy, inflation, competition
etc.)

Also, justify the model that you have chosen. The model can be – partnership-based
model (LCO Partnership), hybrid model or current model with new strategy for launch.
Include the new cost snippet as per your recommendation.

2. What is the overall opportunity around Broadband service in India for the next 5 years?
Please quantify the opportunity.

3. Identify the best cities that AlphaTel should launch the service in and why?

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