On June 10, we interviewed Vivek Raina, CEO of Excitel Broadband, on the impact of the COVID-19 pandemic on the fixed line broadband business, the ISP market, and Net Neutrality. An edited transcript of that interview follows.
MediaNama: How has the pandemic affected your business and your network? How have new subscribers been coming up?
There were multiple stages and layers to the pandemic. There was one stage when it started to hit us that something was going to happen. The pandemic had not started in the real sense, but we knew that a lockdown or instability was going to come. And people began to realise the enormity of the situation.
Many companies had already told their employees to work from home, mostly tech companies. There was a huge surge in demand at that time, two times the normal demand. We installed twice the number of connections that we normally install.
People have realised that as soon as they have to work from home, mobile broadband is not good enough for data intensive applications to work from home. For example, this conversation that we’re having right now cannot be done with mobile broadband — you need proper wireline broadband. When you stay more at home, you obviously consume more entertainment, and that also cannot be supported on mobile internet. And neither can classes for schools that went online.
The demand of wireline broadband started increasing even before the lockdown was announced.
When the lockdown was announced, we were grappling with lots of issues because even though we come under essential services, it was not clear to anybody how to get movement passes, how to move around, approaching customers, servicing new customers, how network partners service customers…
We approached the Department of Telecommunications and the police, and they eventually issued passes to our people on the ground. We have around a thousand employees in Delhi and it was difficult to get passes for all of them. We gave proper ID cards for some employees. Many employees had to move from one area to another area, and they needed passes. It took us a couple of weeks to do that, and after that we were ready to service existing clients and getting broadband to people who needed it most.
The demand, even today, after three months continues to be higher than pre-Covid times, around 30% more. People have now realised for the first time that mobile internet cannot be compared with real wireline home internet with unlimited data and consistent speeds. This is what is needed for homes in India for entertainment or work-from-home or study-from-home.
MediaNama: Existing customers probably had an exponential surge in data use. Have you been able to deal with the increase in traffic demand?
Excitel was a bit different in the broadband market. When we started in 2015, we were clear that it is videos and entertainment that will drive home broadband services in the country. From the early days, we had very high capacity plans; we never had any download limit. No FUPs and constant speeds.
Therefore we understood that there will [have to] be exponential growth in video usage in the country for wireline broadband to increase and for us to penetrate the market.
Our backend was already designed for high data usage. By the backend I mean the NOC (Network Operations Centre) and the equipment in the NOC, along with the fibre. There was a problem with the [Internet leased line] uplink capacity we had, as demand surged by 60–65%. We had to upgrade our backend capacities, and we were able to do this in a week and a half. For a week, there was this uplink problem, but we were able to resolve it.
But our own backend and fibre was ready because of our focus on high bandwidth usage.
MediaNama: What other help would you like to see from state governments in Delhi and Telangana?
Since we are supposed to be essential services, every organ of the government has to know we are essential. So maybe DoT knows that we are essential, but the policeman on the road may not. I can show my ID card when I’m stopped on the street, but the field sales officer or technical boy may not be so articulate to explain this.
Now that these restrictions have been lifted, we don’t have these problems. We have to understand now that broadband is the only way people exist in the world, and it is important to keep them abreast of the fact that internet has to be up and running. It’s not just about new users, it’s also about existing users. If there was a fibre cut, it was difficult to rectify it.
MediaNama: In the wake of Cyclone Amphan, telecom infrastructure was devastated in West Bengal — trees fell on cables and snapped them, towers were damaged… Last mile cables are usually installed in a very haphazard way above ground and they are vulnerable. How can they be protected from storms and natural disasters like this?
We will indeed see more such incidents. First and foremost, it is important to get rid of legacy infrastructure like copper which uses live electricity on the streets. We need fiber to the home. There are ISPs that still have parts of their network on copper with electricity going through wires.
We want that to be reduced as much as possible and reduce reliance on copper as much as possible. When there is thunder, lightning and rain, traditional infrastructure falls like ninepins straightaway, because copper conducts electricity. You can have hundreds of switches go down in a row. Fiber is not affected by lightning or power fluctuation. The most important thing has to be conversion to FTTH, and that is of paramount infrastructure.
MediaNama: On FTTH, has there been a change in the way RWAs and buildings have reacted to digging and bringing cables in premises? Also, most infrastructure is above ground and not underground. What impact does that have on your ability to deliver connectivity and on your cost of doing so? What would be the average cost of delivering a wireline connection to a home?
It changes considerably as soon as you have FTTH. Vis à vis legacy, it changes considerably. In legacy infrastructure, you don’t have these concepts of OLT and ONU, they would just have to pull the wire and connect them to switches on the roads that had to be powered from the nearest electricity sources.
But now you have one device at home and one device at the local node or partner office, and then there is fibre between the two. We have 50,000 live users on FTTH, and are increasing at 3,000 a week. As soon as you start FTTH, you reduce the infrastructure on the streets and poles. There are no switches, there is no mesh of copper wires on the streets and roads. It’s a finer wire, it’s a plastic wire, it doesn’t conduct electricity. It can be clamped with the poles. Therefore it is much more rugged and it is much less affected by the vagaries of nature.
As for the RWAs, we have to make them understand that we are replacing this mess of cables with this fine wire, without any electricity in it, with no chance of an untoward incident happening in their society.
MediaNama: RWAs used to charge money to get connected. Has there been any change in that mentality?
We don’t do that. You’re right, traditional telcos did pay money to get entry to societies. We don’t do that, it’s not in our business model. Yet, we don’t feel limited by it; we easily cover about 80% of Delhi–NCR.
We feel that when we reach out and tell them what we’re offering and how it’s better than what they have currently, they are receptive.
MediaNama: What has your experience been working with local cable operators? The reality of wireline internet access is that it’s normally controlled by neighbourhood monopolies and there used to be wars and battles between different cable operators cutting each other’s wires, at least five or six years ago. Does that still happen? Do you have costs associated with that? How often do wires get cut in your network?
It’s over, I think. I have been in the industry for twenty years, and this was a part of life, as you said. In the last four-five years, we don’t see such cuttings happening any longer. One, the cable wars are over, as everyone has their territories now. Second is the stakes have lowered down, because of the new tariff order. Therefore this fierce attitude of not letting anybody move around has gone down.
Second, we’re talking about broadband. It’s not cable TV. What happens in cable TV is that if you are in a neighbourhood with a hundred users, you are not going to grow. Cable TV is already at its saturation point. It’ll only go less because people will go to DTH.
Broadband is nowhere near there. We’re just touching the tip of the iceberg. I mean, the whole country has 2 crore connections, come on, it’s a joke. We go to a partner — and we partner with many local cable operators, that’s our model — and we tell them, this is it, you just lay the wire and maintain it as per specifications, and we’ll do collection, sales and manage the customer relationship. And we have 750 such partners in Delhi as of today. It happens time to time, but as a general rule, it is gone. Cable cutting and monopolising areas, that’s gone.
MediaNama: I’ll tell you a story about something that happened around nine years ago. The local cable operator was constantly messing up the connectivity to my home, because he was renegotiating his deal with the primary provider. I’m sure you must have come across many stories like this in your experience. Does that still happen? Also, a large part of your relationship stops at the local cable operator. It’s that operator that deals directly with the customer and has access to the wires, right?
We have a different model, we have tweaked it considerably. Our relationship doesn’t stop at the local cable operator.
Onboarding customers and sales happens through our team, we have 500 of them roaming around Delhi. Then the CX, the call centre, the chat, the welcome call, even the billing, all that is done by Excitel.
More so in case of FTTH, even the design of the network is provided by Excitel, with GIS mapping and all that, and where to route the fibre. The network equipment is also provided by Excitel. We just let the partners do what they’re best at — laying the cable and maintaining it. Everything else is taken care of by Excitel.
So in a way, this model flies because they do what they’re good at, and we do what we’re good at — marketing, CX, sales… So we have tweaked our model such that it is win-win for both sides.
MediaNama: Broadband is getting to be a competitive field. How do you think JioFiber will impact the home broadband market? Are you worried about them coming in because of their massive resources? Are you scared of JioFiber?
To be frank, no. I’ll tell you why. Airtel has been doing wireline broadband in Delhi for 20 years, and they don’t cover more than 25% of Delhi. It’s not without a reason. It’s because they’re in a direct model. They need to dig streets and lay cable all the way to the customer’s home. For that, they need proper structured areas. They need shafts, they need lanes and backlanes where they can lay fibre. This means they can only go in structured areas in Delhi, which are only 20–25% of the city.
That leads to 70–75% of the city being uncovered by direct providers, whether it’s ACT, Airtel or Jio. We’re talking about Shahdara, Uttam Nagar, Usmanpur, where the majority of Delhiites live.
They need broadband today as much as anybody else. It’s not just about productivity anymore, it’s about entertainment and communication. Everybody wants it.
These unorganised, so-called “messy” areas are open for us, who can do it in a proper way, provide world-class services at an affordable price. The whole game is to make your partner successful, instead of competing with them for power. We want each other to be successful, by having a business model that is scalable and meaningful for both sides, where both sides can grow well. We are providing these services in such areas as we speak.
MediaNama: In the early 2000s, when India had just a few gigabits per second of internet capacity, customers were effectively subsidised by networks, because the economics of ISPs was just so outrageous that monthly tariffs were not making any sense. We have come a long way from that; so what do the margins and EBIDTA for an ISP today look like?
It depends on what game you’re in. If you’re in a high ARPU game, it would be different. We’re in the game of scale, where we want to provide affordable best-of-class services. Our basic offering is 100Mbps on FTTH without restrictions. If you buy a one month package, it comes out to Rs 550 a month. This is different from providing 20–30Mbps for a thousand rupees, which many telcos are doing. In our case, it takes a lot of scale and mass to be EBIDTA positive. But it’s doable, we have done it multiple times; we were gross positive in the first year itself, after the first one lakh users.
If you can scale across cities and the country, it makes [business] sense, even at our ARPU levels.
MediaNama: How often do you receive website blocking orders from the DoT or courts?
Very often, very often.
MediaNama: Most of the time we see a site blocked without a message on why it is inaccessible. How difficult is it to publish these orders and be a little more open about why a certain URL is not accessible anymore?
One set of orders comes from the DoT, and in most cases we are told not to say why it’s being blocked. Such orders come once in 15–20 days. And we comply.
Then there are the John Doe orders that are usually for copyright infringement. These are legal court documents that come to us, and it’s difficult to keep doing that all the time, but yeah, we comply.
MediaNama: On John Doe orders, there are a lot of people who argue that the IT Act only gives the DoT authority to block URLs. Have you ever considered mounting a legal challenge against some of the more expansive orders? We even had the Internet Archive get blocked once because of one such order.
We have not, frankly speaking, thought of challenging such orders legally. They usually come when new films come out and studios want these sites that are distributing their films blocked. And we do comply, as we have license obligations, so we need to fulfil them.
MediaNama: Until a few years ago, Excitel was advertising internet plans with separate speeds for YouTube and Hotstar versus other internet content. Do you still do that?
No, we don’t do that. There’s no need to do that now. It was in the beginning that we were doing that because people were accessing YouTube for videos, and videos needed high bandwidth for 4k videos and things like that.
We started with 20Mbps for YouTube and 5Mbps for the rest of the internet. Now it’s 100Mbps for everything. Net Neutrality had some role to play in it, though it doesn’t come in the speed [sic], and we stopped doing it one or two years after we started. So as of now, it’s 100Mbps everywhere.
MediaNama: A lot of streaming services like Netflix, Amazon Prime Video and YouTube have all brought down their bitrates across all ISPs and telcos in India. Do you believe that you can work with higher bitrates that were in effect before March?
That was only for wireless providers.
MediaNama: No, they have said that they applied it across all ISPs.
Most of them are peering with us, whether it is Netflix or Google, they’re directly peered with our servers. We didn’t need to resort to that. We basically still offer 4k content. So that is not affecting us at all.
MediaNama: What do you think of peering and transit relationships in India? Are they welcoming for new and small ISPs? [Question from Gurshabad Grover, Centre for Internet & Society]
It has changed considerably in the last few years. There are many peering services, internet exchanges have started, and that has made life easy for newcomers. Before, it used to be entirely through Internet leased lines from telcos that we resold. You bought transit from a telco and sold it to subscribers. This was ten or fifteen years back. Now peering has taken over, and content providers have come directly to the country. Google, Netflix, Facebook, everyone has peering.
It’s now 80% peering and 20% through ILL. Exchanges have also proliferated, which has helped the ecosystem in a great way.
MediaNama: Are you peered with NIXI, and what do you think of its relevance today?
Yes, we’re peered with NIXI.
Our total capacity that we deliver to customers is around 500 gigs. And NIXI is about 35 gigs from that. So you can understand the relevance.
MediaNama: What kind of traffic management do you adopt? TRAI is holding a consultation and an open house discussion soon on traffic management and Net Neutrality. Do you think Net Neutrality helps in competition with other ISPs or do you think it prevents commercial arrangements that might help you? [Anonymously submitted question]
We don’t believe in throttling or accelerating content. We see our job as people who open high speed broadband pipes to middle class Indians’ homes. What they want to browse is their business, and they should be provided access to what they want. That is our policy. It should be an open pipe where you get access to what you want.
I don’t see what kind of commercial agreements would help at our level. What we want as a basic policy and principle is that there should be unfettered internet access without any preference to certain cites or blocking of certain sites. This platform is what we have, it is still democratic to a certain extent. It shouldn’t be restricted by undue practices.
MediaNama: Do you notice any undue practices from other ISPs? [Anonymously submitted question]
Not anything that bothers us till now.
MediaNama: If there are things that you think need to change from a government policy perspective to the ecosystem, what would help you in delivering broadband more freely to consumers?
First we need to understand where we stand in wireline broadband penetration. We have 2 crore users in a country of 130 crore people. That’s peanuts. It’s nowhere, it’s the tip of the iceberg. We have to question ourselves on why we have remained so backward on mobile broadband. Mobile internet has grown hugely.
Companies and the government need to ask this question. This is imperative. The fact that there has never been a specific policy to encourage wireline broadband, to give some kind of tax discount or tax holiday— we are still grappling with AGR and those issues still haunt the industry.
The fact that we are lagging behind so much has to be a wake up call to everybody, including the regulator and the government.
MediaNama: Have right of way guidelines changing helped in any way?
Not specifically. I’m not fully aware of the changes yet.
It’s more than right of way, though. Why should a household have a broadband connection is the question. In the west, it’s a basic utility. Every developed country would need to think of broadband as a basic utility infrastructure that every household needs to have. We have been focusing as an industry as well as regulatorily on mobile broadband, but no work has been done in terms of wireline broadband.
Everybody has to come together, the regulator, the government and the industry.
MediaNama: Do you see any positive signs to that end?
Ironically speaking, with corona, and people having to stay at home, at least people now understand the difference between mobile and wireline broadband. Trying to explain this difference has been our biggest challenge. And now this has become easier, as people can see for themselves why they need high bandwidth intensive connectivity.
So such education at the ground level was important, and lockdown did help it. But it’s a temporary blip. There has to be effective education for every household on to see why wireline broadband is important.
MediaNama: Just for fun, one last question: When do you think BharatNet will be rolled out?
[laughter] It really is just for fun. I have no idea.