TRAI attempts to kick-start the Indian fixed broadband market

TRAI redefines broadband in India
TRAI, the Telecom Regulatory Authority of India, recently published a raft of recommendations as part of a “RoadMap to Promote Broadband Connectivity and Enhanced Broadband speed.” These are designed to help achieve the goals of the National Digital Communications Policy (NDCP-2018), which targets universal broadband provision of 50 Mbps, as well as breaking into the top-50 of the ITU’s ICT Development Index, by 2022.

The most prominent of these recommendations targets increased fixed broadband network rollout and adoption. According to TRAI, current broadband penetration levels in India are approximately 55%. Mobile accounts for the lion’s share of this, having grown strongly since the launch of 4G, while the Indian fixed broadband market remains underpenetrated, at approximately 9.1% of Indian households at the end 2020.

The details include a wide range of proposals designed to alleviate network deployment challenges, in particular relating to Right of Way (RoW) permissions, as well as encouraging India’s multitude of cable TV providers to offer broadband services. In addition, TRAI proposed a pilot Direct Benefit Transfer scheme, to subsidize broadband service in rural locations. Beyond these proposals, TRAI also recommended:

• A change to India’s definition of broadband (for fixed and mobile), increasing from the current 512 Kbps to 2 Mbps from the point-of-presence (POP) of the service provider, to the subscriber
• New categories of fixed broadband speed beyond this new baseline, including:
  • “Basic” (2-50 Mbps),
  • “Fast” (50-300 Mbps) and
  • “Super-fast” (>300 Mbps)

TRAI’s new speed tiers to drive improved internet performance
New speed tiers align India with ITU’s IDI Index:
For TRAI, the introduction of a new minimum speed alongside speed tiers, helps it bring its definition of broadband into the present, while also allowing it to monitor and report on a key plank of the NDCP-2018 — India’s advancement up the ITU’s ICT Development Index (IDI).

Broadband definitions vary widely around the world in terms of throughput , from the original OECD definition of a minimum of 256 Kbps, which is still used in many markets, to markets such as the U.S., where even the current minimum of 25 Mbps download and 3 Mbps upload is no longer considered sufficient. Part of the rationale for TRAI’s recommended increase to the minimum download speed is that the 512 Kbps threshold introduced in 2013 can no longer handle even basic internet use cases. This has been thrown into sharp relief by the pandemic, which forced an unprecedented number of people to learn and work from home. In effect, traffic inflation has raised the minimum download speed for basic internet services in TRAI’s estimation to 2 Mbps. Furthermore, the introduction of speed tiers will allow Indian broadband performance to be linked to a new indicator the ITU has introduced within its ICT Development Index (IDI), in which the Indian Government is targeting a top-50 place by 2022.

Vast majority of fixed broadband connections already meet the new minimum speed threshold:
Speedtest uses the Speedtest Server Network™, a global network of high-performance servers, ready to test the maximum sustained throughput of the user’s connection (download and upload speeds) and report back on key network health metrics. There are Speedtest servers in virtually every country and major population center worldwide, which means we can accurately reflect the service provided from the operator’s POP to the end-user. Our data shows only 0.5% of Indian fixed subscribers did not have access to broadband speeds under the old definition. The new definition doesn’t shift the needle much, increasing that underserved proportion of subscribers to 2.5% as of Q2 2021.

The natural conclusion from the above chart is that TRAI should consider a higher speed threshold for its definition of broadband. When the United States Federal Communications Commission (F.C.C.) changed their definition of broadband in 2015, the proportion of U.S. households without access to broadband speeds hit 20%. However, with fixed broadband penetration in India below 10% of households, TRAI’s new definition serves as a marker in the sand, designed to track performance as the fixed broadband market begins to unlock.

Much emphasis is placed on the myriad of cable TV providers already present in the market, with TRAI’s recommendation on AGR fees, alongside other remedies, designed to encourage them to branch out and provide broadband to their customer bases. However, as detailed in TRAI’s submission to the DoT, many of these cable companies are sub-scale and rely on out-dated network infrastructure. If and when they start signing up internet customers, we may well see the proportion of users that fall below the broadband definition increase.

Wide variation in performance among Indian states:
Access to India’s new broadband speed categories varies widely from state to state. The new minimum threshold for broadband only renders an additional 2% of households without access to broadband speeds, however this is skewed by India’s more populous states and cities. At a state/union territory level, this value varies from a low of 1.6% in Delhi, to a high of 7.6% in the largely rural State of Sikkim. This split continues when we look at the new broadband speed categories, with over 70% of connections in the States of Gujarat and Maharashtra falling into the “Basic” speed category, while almost half of connections in the States of Delhi, Rajasthan, Tamil Nadu, Chandigarh and Kamataka were at least “Fast” (>50 Mbps). The availability of “Super-fast” broadband in India is very low, ranging from a high of 1.5% of connections in Delhi, to 0% in Sikkim.

Urban-rural performance gap not as wide as expected:
Indian fixed broadband penetration remains low and is heavily skewed towards urban areas. While 65.1% of the Indian populace live in rural areas (based on World Bank estimates for 2020), TRAI data shows that they account for a mere 5.6% of total fixed broadband connections. A comparison of Speedtest Intelligence data against rural and urban locations (based on India’s 2011 census) fails to show a large disparity between the two when looking at TRAI’s new speed categories, with 58.7% of connections in urban areas falling within the “Basic” speed category, compared to 61.7% in rural areas.

A more detailed segmentation of performance between rural and urban areas shows a wider performance gap, with rural locations tending to have a higher proportion of connections supporting speeds of less than 25 Mbps, while urban locations had a much higher share of connections with speeds greater than 100 Mbps. This is understandable given the lack of a modern fixed network infrastructure in many parts of rural India, coupled with challenges that the country’s ambitious BharatNet infrastructure project has encountered

Our data shows that many connections currently sit at the boundary between “Basic” and “Fast” broadband, and this should serve as encouragement to India’s providers to boost fixed network performance and thereby drive mass market adoption of “Fast” broadband.

New speed categories to provide more clarity on network performance to Indian consumers:
In addition to driving faster speeds and improved availability of fixed broadband, these changes will bring more clarity for Indian consumers when selecting a fixed broadband subscription. At Ookla, we’re fully aware that reporting on network speeds helps spur network operator competition and infrastructure investment. Introducing speed categories goes one step further, as operators in countries that have implemented this will naturally begin to include these speed categories in their marketing and products. They will also target network investment at increasing the proportion of their footprint that supports higher-tier broadband speeds

For the Indian government and TRAI, this move will provide much needed visibility into the state of broadband within India, to better track performance and the reach of different access technologies, and to target and tweak remedies and incentives to spur further adoption.
CT Bureau