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Spectranet - Widening its horizons

Company Stories , April 15, 2007



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With the government targeting 9 million broadband subscribers by December 2007, Spectranet is aiming to be an active participant in the upcoming broadband revolution. However, with intense competition from public sector companies such as Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited, it has plenty on its plate.

Background

Spectranet, a division of the $750 million Punj Lloyd Group, is a Category A internet service provider (ISP) and a Level-I infrastructure provider. Its subsidiary SpectraNet Limited is a multi-system operator and a licensed cable service provider.

The company's basket of services ranges from broadband internet access to managed optic fibre build-out, and data centre services and solutions. It also delivers broadband content and value-added services such as news, ringtones and SMS.

In tie-ups with companies such as Secure Synergy, Spectranet offers security solutions to its customers. It also provides digital cable TV and video uplink services for broadcasters.

The company currently focuses on four key market segments: home users, demand bandwidth users, managed bandwidth services, and video and broadcasting. For home users, the company has deployed wireless technologies such as Wi-Fi and WiMax. It is also planning to provide value-added services such as IPTV and video-on-demand.

A significant player in the bandwidth market, the company caters to bandwidth users and offers managed bandwidth services. According to company officials, one of the biggest challenges faced by corporate houses is getting sufficient bandwidth to support their growing data communication needs. For these clients, Spectranet offers customised bandwidth solutions. Customers pay for the bandwidth used while Spectranet manages the bandwidth of the company based on the consumers' consumption.

Ongoing endeavours

In an attempt to spruce up its operations, the company has undertaken several measures. It has applied for an internet telephony service provider licence and is applying for a national long distance (NLD) licence.

These licences will help it broaden its area of operation and offset the high fees imposed by the Department of Telecommunications (DoT) for offering virtual private network (VPN) and internet telephony services. In addition, having faced increasing competition from large integrated players in other internet services such as dial-up access and broadband, the long distance licence will place the company on a level footing.

Spectranet is building up its infrastructure. Since 2000, it has built over 3,000 km of optic fibre cable and duct covering the entire National Capital Region of Delhi, Bangalore, Chandigarh, Mumbai and Pune.

With this network, it offers services to over 1,000 corporate and multinational subscribers, many of whom serve Fortune 500 companies. Some of the company's key clients are Bharti Airtel, Reliance Communications, Tata Teleservices, Gas Authority of India and Power Grid Corporation.

The efforts appear to be paying off.Spectranet recently became the second ISP in India and the fourth in Asia to receive the ISO 9001-2000 and BS77992:2002 certification by DNV.

Some concerns

Despite having a 20,000-strong subscriber base, the company's market share is still negligible. As of September 30, 2006, according to the Telecom Regulatory Authority of India, only eight ISPs accounted for approximately 94 per cent of the total market share. Spectranet does not figure in these eight.

This is due to several obstacles. ISPs such as Spectranet do not generally have last mile access and the cost of laying expansive networks is prohibitive. Also, rapid technological developments have led to the emergence of new value-added services such as internet telephony and IP-VPNs.

However, as per the current internet licence regime, ISPs are required to migrate to separate licences such as NLD licences to provide these value-added services. These concerns only make the fight tougher, yet the company has managed to carve out a niche for itself.

The road ahead

For the future, Spectranet has chalked out an aggressive, multipronged strategy. It will primarily focus on enhancing its corporate ISP business by expanding its data centres and forming strategic alliances to devise new service offerings such as VoIP.

Meanwhile, with TRAI recently recommending an unlimited number of bandwidth resellers in the country, Spectranet's prospects are looking brighter. If DoT decides to implement the move, Spectranet willbe able to buy bandwidth from resellers at much lower costs. This should improve the company's business viability.

 
 

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