`

Feedback

Reader's Poll

Which of the following technologies/concepts are likely to witness significant traction this year?
 
Any data to show

Teledata

Tele Data

Mobile Subscribers Yearwise comparision

Error
  • JUser::_load: Unable to load user with id: 1679

HCIL: Leverages its nationwide VSAT network to increase market reach

November 11, 2014
E-mail Print PDF

Taking advantage of the growing demand for broadband services by small and medium enterprises, financial institutions and defence forces in the underpenetrated areas, Hughes Communications India Limited (HCIL) has expanded its business significantly over the past few years. During 2013, the VSAT service provider registered an impressive growth of 29.5 per cent on the back of multiple contracts awarded by the banking industry. The company’s growth contributed significantly to the 12 per cent growth in the VSAT industry during the year. As of September 2013, HCIL had a total subscriber base of 77,400, making it the market leader in the Indian VSAT industry. The company reportedly had a market share of 40 per cent in 2013, as against 34.6 per cent in 2012. In contrast, all other VSAT service providers witnessed a decline in their market share.

HCIL’s nationwide presence is one of the key attributes of its success in the industry. The company has operationalised 80,000 VSATs across the country which provide an uptime of more than 99.5 per cent even in difficult terrain. In fact, HCIL has played a crucial role in restoring telecom networks and providing emergency communication services in Jammu & Kashmir and Uttarakhand after the terrestrial networks were disrupted due to the flash floods. During a crisis situation, VSAT communication helps to connect and move rescue and first responder resources in the affected areas. Given the rising threat of natural disasters, VSAT services are proving to be an important response solution for government agencies in ensuring telecom connectivity in the affected regions, thereby opening up a new area of opportunity for HCIL.

Growing business opportunities

The banking, financial services and insurance (BFSI) industry is emerging as the biggest customer for HCIL. The company is currently deploying VSAT networks at 27,000 locations under a project awarded by the Ministry of Finance in 2012. As per the contract, HCIL is required to operate and manage VSAT facilities at these locations for eight years. In early 2014, the company installed the VSAT facilities at about 10,000 ATMs. As more banks and financial institutions expand their reach in underbanked areas in order to achieve their financial inclusion targets, the demand for VSAT services is bound to increase.

Another major business driver for the VSAT segment is the educational services industry. Many educational institutes are demanding VSAT services to provide tele-classroom facilities to their students on campus. HCIL already offers these services at 155 locations in 75 cities across the country. In addition, several start-ups have started offering live, interactive on-site learning courses and training programmes not only in urban areas but also in rural areas, which will become one of the key growth drivers for VSAT services.

Further, HCIL is focusing on government projects to grow its business. Various government agencies are offering or planning to offer e-governance services in the fields of health care, finance and education in rural areas, creating significant demand for VSAT services. In this regard, HCIL has partnered with CSC e-Governance Services India Limited, a special purpose vehicle of the Department of Information and Technology, to provide satellite broadband connectivity across 2,500 locations in Uttarakhand, Himachal Pradesh, Jammu & Kashmir, Assam and the Northeast, under the government’s National e-Governance Programme.

Apart from the rise in demand for VSAT services, the fall in VSAT prices by nearly 20 per cent over the past three years has helped the industry grow. Many small enterprises with limited budgets are now considering opting for VSAT services owing to the price reduction. Most of these enterprises are located in areas with poor or limited broadband connectivity. VSAT service providers like HCIL stand to gain, as internet service providers do not find it financially viable to set up terrestrial broadband networks in these areas.

Regulatory and operational challenges remain

HCIL continues to face several operational challenges such as an uncertain regulatory environment. One of the biggest challenges faced by the company is the delay in government approval for its $500 million proposal to set up and operate a satellite in India. The proposal has already been delayed by three years and its non-execution has resulted in capacity constraints for HCIL due to the limited availability of transponder capacity in the country. As per industry estimates, the country needs around 150 transponders in 2014 and 200 in 2015, whereas only 67 transponders were available as of end-2013. HCIL is of the view that the satellite industry should be completely liberalised so that the industry can become competitive. The liberalisation of the VSAT industry is a lengthy process; therefore, the company is taking corrective measures to address the short-term issues. “We are trying to address some of these issues including implementation of the open skies transponder policy and simplification of national long distance satellite backhaul and connectivity services,” says the company’s spokesperson.

In addition, HCIL has been urging the government to accelerate the uptake of the KA band (18 GHz to 20 GHz band) for satellites, as is the case in more mature VSAT markets globally. Further, the company has requested the government to consider bringing in high throughput satellites in the KA band as it will help in reducing satellite broadband connectivity prices in the country. While the government has made the band available, satellites are still not allowed to operate in it. Service providers are of the view that this band could significantly expand the VSAT market in the country.

The company is also concerned about cost management issues and the introduction of innovative products and services to cater to the business needs of enterprises.

Positive future

HCIL is well-positioned to exploit the growing number of opportunities in the VSAT market, given its market leadership and nationwide reach. Going forward, the BFSI, government and defence sectors are likely to dominate the demand for these services. HCIL can strengthen its market position by leveraging its expertise in providing 24x7 broadband connectivity to financial institutions and government agencies. However, the company needs to find alternative long-term solutions to increase the available transponder capacity to meet customers’ growing bandwidth demand. To this end, it is planning to strengthen its uplinking station in Hyderabad and make investments to upgrade its existing infrastructure. In all, it is expected to remain the leader in the VSAT market in the near future. HCIL can now capitalise on its strengths to increase its footprint in non-penetrated areas and bring in new technologies to ensure the provision of low-cost broadband services across the country.

 
 
 Your cart is empty

Monday morning

Monday morning