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Spectranet: Using strategic alliances to its advantage

March 30, 2012
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Spectra ISP Network Private Limited (Spectranet) is a private sector internet service provider in India. It started operations in 2000 as a pure-play internet connectivity provider but has since evolved into an integrated communication services provider by diversifying into new business verticals. This has been post its acquisition by the Shyam Telecom Group in 2008.

However, the current state of the internet and broadband market in the country offers little growth opportunity for stand-alone players like Spectranet. The Indian internet market has recorded less-than-satisfactory growth over the years. As of September 2011, the country’s total subscriber base stood at 20.99 million, according to a report by the Telecom Regulatory Authority of India. Further, the market is dominated by the public sector companies, Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited, and private players such as Bharti Airtel and Reliance Communications, which account for more than 95 per cent of the total subscriber base. Spectranet’s contribution to the broadband space is  a mere 0.18 per cent with a subscriber base of only 37,153 as of September 2011.

In order to sustain itself in the highly competitive internet space and to increase its customer base, Spectranet entered into several strategic alliances in 2011. The company is optimistic about its growth potential as it expects the government’s proposed policy initiatives to improve broadband penetration in the country and give a major fillip to this market.

Current status

Spectranet currently offers its services in Delhi NCR, Mumbai, Bengaluru, Chennai, Hyderabad and Chandigarh. It provides communications solutions to enterprise and carrier customers as well as high speed broadband services to residential customers. It offers data centre capabilities, cloud solutions, managed optic-fibre build-out and maintenance services, video broadcasting facilities, network security solutions, and conditional access system television services.

Internet and broadband services

Spectranet offers high speed fixed broadband and Wi-Fi hotspot services and sees tremendous growth opportunity in this segment. So far, it has deployed a Wi-Fi network of 1,300 hotspots across seven metros in India. In the next five years, the company plans to cover 40 cities and build India’s largest Wi-Fi network across commercial and residential areas.

In 2011, it partnered with Aircel to offer high speed internet access to the latter’s Wi-Fi customers. This was the first ever deployment of 2G and 3G mobile data offload to Wi-Fi within India. Spectranet’s mobile data offload platform provided by  operations support systems and business support systems vendor Inventum Technologies has enabled seamless traffic handover between GSM and Wi-Fi networks. As a result, Aircel subscribers were provided with fast and uninterrupted internet access across the operator’s network.

As for its wireline broadband services, the company has adopted a cluster-oriented approach towards deploying optic fibre cable (OFC). This strategy envisages Spectranet selecting a cluster in a particular city and offering solutions in a focused and concentrated manner to gain a higher market share in that area. This helps reduce costs and provides better quality of service.

So far, the company has rolled out about 2,000 route km of OFC across Delhi, Bengaluru, Mumbai, Chennai, Hyderabad and Ahmedabad, and plans to expand it to 6,000 km in the coming years.

Service portfolio enhancement

Though broadband remains a key focus area, the company has entered into several strategic partnerships during the past one year to enhance its service portfolio. In September 2011, Spectranet launched its virtual private network (VPN) services by deploying Juniper Networks’ IP/MPLS network core. The network is built around clusters of Juniper’s MX80 3D Universal Edge Routers that are currently deployed in Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and Delhi. These routers are connected with other MPLS service providers’ networks and this  interconnection enabled Spectranet to offer nationwide VPN services. The partnership proved beneficial for the company as it was cost effective to leverage a readily available infrastructure rather than replicate it for providing services to its customers.

In February 2012, Spectranet announced a strategic partnership with Netmagic Solutions, where the former will set up multi-location commercial DiDs (data centre-in-data centre) across the latter’s data centres in Mumbai, Noida, Bengaluru and Chennai. While globally, this business model, where an end-user-focused service provider partners with a pure-play data centre service provider for colocation space and related services, is a common trend, such a deal is the first of its kind in the Indian data centre space. Besides providing cost and operational efficiencies, the deal will help the company to extend its data centre service footprint from the existing Delhi and Bengaluru regions to other important enterprise as well as small and medium business (SMB) markets in India.

Conclusion

Over the years, Spectranet has shifted its focus from meeting the internet needs of enterprises and SMBs to providing services to retail customers. To this end, the company has resorted to the direct selling of its internet usage plans and offering unlimited data download. It expects to reach a subscriber base of over 2 million in the next five years. Going forward, the company plans to invest around Rs 5 billion over the next four to five years to expand its broadband infrastructure and services by creating over 50,000 hotspots across the country. It also plans to expand its optic fibre network to 30,000 km covering Delhi, Bengaluru, Mumbai, Chennai, Hyderabad and Ahmedabad and 94 other cities by 2015-16.

 
 
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