Bharti Airtel Announced Broadband Services Now Via Local Cable Operators
Bharti Airtel, which announced a program to partner with local cable operators after Reliance Jio acquired Den and Hathway, said it has cracked the best model for the partnership and is planning to rapidly expand the program in the next 6-12 months. Airtel announced its cable operator collaborative program in late 2018, and has been trying out various models in the field for the last one year.
Bharti Airtel will use local cable operators as resellers of its broadband service!
“This is a model we are very excited about,” said Bharti Airtel CEO Gopal Vittal. “We’ve seen surprising off-take in the 12-13 towns we’ve already gone into. We are now accelerating this quite rapidly”. “We believe there’s a massive opportunity in small towns, particularly in home broadband. We are therefore doubling down on our partnerships with local cable operators in such towns.”
Airtel’s program for local cable operators or LCOs is intended to address the rapid changes taking place in the wired broadband market of the country. The first shot was fired by competitor Reliance Jio when it announced in 2018 that it was acquiring two of the largest cable feed providers — Hathway Data-com and Den Networks — for around Rs 5,240 cr. The move was aimed at giving an initial boost to Jio’s fledgling high-speed broadband and IPTV service.
Since the acquisition, Jio has announced its intent to start high-speed broadband services in over a 1,500 cities in India. In comparison, Airtel has its wired network in a little over 100 cities despite being in the business for nearly three decades. Jio’s plan involved upgrading a substantial chunk of the tens of millions of Hathway and Den cable TV subscribers to fiber-to-the-home services.
However, upgrading existing cable users is more easily said than done because of the complicated realities of the cable TV business in India. A large chunk of the customers who get their cable TV feed from an MSO like Hathway and Den are actually the customers of a local cable operator, rather than that of the MSO.
This is because the last mile — cable network that goes into the homes and colonies — is owned and maintained by the local cable operator, and collection of the subscription amount too is is done by the LCO. As such, if these customers’ connections have to be ‘upgraded’ to fiber-based, broadband-enabled IPTV, usually the local cable operator has to play a part. If the MSO tries to bypass the operator are tries to give a fiber connection directly, the cable operator can technically switch over to another MSO.
In comparison, Airtel has, over the past one year, taken a different route — going directly to local cable operators and bypassing the MSO entirely. Since the local network is owned by the cable operator, Airtel partners them directly and uses them as resellers of its broadband services, much like ISPs like Railwire and BSNL.
While the specifics of the Den/Hathway model are unknown, in case of Bharti Airtel, the specifics are straightforward: The local cable operator has to lay his own fiber network and maintain it, and everything else will be provided by Airtel. In return for laying and maintaining the fiber network, the cable operator gets a certain amount per customer per month. What is not clear is whether the amount paid to the local cable operator per customer is fixed or whether it depends on the broadband plan opted by the customer.
Either way, Airtel will handle things like the subscription plans, customer activation and deactivation, changing plans and even the billing and recharging of the broadband service. The LCO’s cable TV service will continue as before. Vittal said his company has been fine-tuning the LCO partnership model over the last one year, and that he believes it has now come up with an optimum model that will benefit both Airtel as well as the local cable operator.
“We believe that we have cracked the model. So it will start expanding over the next 6-12 months,” he said, sounding quite confident.
“There have been several lessons that have been learnt over the last 9-12 months on how to master that blueprint to onboard these partners in a digital way,” he added. “It’s an opportunity for entrepreneurs to continue to earn money with us and for us to go out and serve customers.”
The ‘standard blueprint’, as Vital calls it, is built using a set of digital tools and platform. “This is a model we are very excited about,” he said. “We have built it in an entirely digital way. “We have a standard toolkit where we are able to go out and work with a local cable operator in a particular town and we give them a revenue share for laying the last mile fiber, maintaining it, and everything else that is done on it — whether it is the router, the billing system, the plans, the customer relationship — all of it is managed by Bharti Airtel. The last mile fiber is managed by the local cable operator for which he gets a revenue share.”
Cost Effective Model:
Vittal said the model of partnering with local cable operators makes much more sense than trying to lay fiber across all the streets in India. Cable operators, on the other hand, have nearly three decades of experience in laying and maintaining cables across all nooks and crannies of the country, including even remove villages.
Maintaining such a huge network of fiber using Airtel own employees too would have been a Herculean task, given that last-mile fiber cables are often strung on poles and liable to get cut by falling trees and taller vehicles. This factor, Vital pointed out, is relevant from a cost and speed-to-market perspective.
“We do it at a much lower cost, because the nature of the geographies that we cover outside the top 50 cities is very different. It’s more flatbed and more distributed. For us to do it ourselves would require a lot more investment and it would be a far more challenging business model. “But with this business model, at a much lower investment, we are able to get a very good traction. We’ve seen surprising off-take in the 12-13 towns we’ve already gone into. We are now accelerating this quite rapidly,” he added.
Interestingly, the latest move is also in sync with Bharti Airtel long-time strategy of working with other stakeholders in the market instead of ensuring vertical integration by doing everything in-house.
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