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World Phone Enters Cable Broadband Biz; Prepaid; Potential Challenges

World Phone, a Category A ISP which has so far been an Internet Telephony player, has announced its entry into the ISP business in Delhi; they’re highlighting a tariff of Rs. 95 per month for 200MB data at 256 kbps, and targeting 5000 subscribers in three months. World Phone is a part of BCCLs Private Treaties portfolio; they invested Rs. 21.5 crores in the company last August.

World Phone is entering the Cable Broadband business, and has plans to launch broadband in Mumbai, Jaipur, Ahmedabad, Hyderabad and Kolkata. The Cable Broadband business has its own unique challenges, based on what I’ve seen in Delhi:

Cable Operators provide the last mile of connectivity to ISPs like Sify, Hotwire, and World Phone. They have their own neighbourhood monopolies; some offer reliable services, and others milk that monopoly for whatever its worth: getting a ubiquitious quality of service on Cable Broadband is next to impossible, and cable operators can be unscrupulous.

As a result, you come across disgruntled customers (a sample here, several posts and forum messages online) of consumers blaming the ISP. So whether the service costs Rs. 95 or Rs. 1000, if it doesn’t work, the price doesn’t mater. What’s more, World Phone’s broadband is Prepaid, so if the connection isn’t working, they’re not going to collect beyond one installment.

The other issue is that Airtel, Reliance Communications and MTNL are fairly active in Delhi, and their connections are far more reliable, because they’re providing their own connectivity, and not going through the cable operator. Cable operators also face a significant threat from DTH players like Tata Sky, Dish TV and now BIG TV – so that last mile may not last for long. Note that Sify’s broadband subscriber base has been declining.

Perhaps with the DTH players, the leverage that cable operators have has declined, and this might well work in World Phones favour.

Impact Of TRAIs Internet Telephony Recommendations; Sify To Benefit
Sifys Broadband Business In Q1-09

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