MTNL to Launch Triple-Play Services in November

Initially, MTNL would be offering 30 free-to-air channels at a monthly charge of 125 rupees (US$2.8), while adding other pay channels as per Telecom Regulatory Authority of India (TRAI) guidelines, said R.S.P. Sinha, Chairman and Managing Director of MTNL. The operator has tied up with Aksh Optifibre Limited and UT Starcom for the delivery of IP TV. Sinha said the service had various features including video-on-demand (VOD), time-shifted TV—a technology that enables customers to watch the last week's television content aired by any available channel at the push of a button—and a video conferencing service. Registration of the services will begin from 25 October, while commercial operations will commence from 1 November. MTNL has 152,000 broadband subscribers in Delhi and 183,000 in Mumbai. The company plans to target these subscribers first and then aim for fixed-line customers in relation to IP TV. On the billing front, from January next year subscribers will get a consolidated bill for all the three services—phone, broadband and IP TV—together.

Outlook and Implications

• Triple-Play Strategy: MTNL is not the only operator in India to have adopted a triple-play strategy. BSNL, the state-owned incumbent operator, last year launched a bundled fixed voice, broadband and mobile subscription package in the metropolitan area of Chennai. The company is offering all three services for a combined US$7 a month. It is also offering bundled fixed and mobile connections for US$6 a month (see India: 7 December 2006: BSNL Launches Bundled Fixed, Mobile, Broadband Offering). Private player Bharti is also offering a similar service to that of MTNL on a pilot basis in some parts of the country. Combining IP TV services with voice telephony and broadband internet access is MTNL's solution to the stagnant growth of its fixed-line revenues. The new IP TV service will create a new revenue source, while the bundling strategy will further drive the uptake of broadband subscription and increase customer loyalty. The operator could also be looking to offer a quadruple-play service in the future, incorporating its fast-growing mobile service.
• India's Broadband Market: There were 1.72 million broadband subscribers in India at the end of August, representing approximately 0.15% of the country's population. The broadband market added a net of 370,000 subscribers in the first five months of the current fiscal year to March 2007, compared to 340,000 in the year-earlier period. The broadband market remains one of the most under-penetrated in the region and has not shown signs of significant improvement. The extremely immature state of the market can be explained by the fact that both incumbent local operators BSNL and MTNL have held back from making major investments in broadband access infrastructure. In November 2005, the government reiterated its reluctance to introduce LLU- and infrastructure-sharing in India's local network. This stance conflicts with that of the TRAI, which sees LLU as essential to stimulating genuine competition in the broadband market. BSNL and MTNL together control over 90% of local exchange lines. Even so, the government continues to dispute the importance of cost-based wholesale DSL products for market growth, describing India's local loop network as “not a bottleneck facility”. The government has argued that the existence of wireless, cable and fibre alternative infrastructures has made DSL market regulation unimportant. Nevertheless, it remains to be seen whether the still-small size of the broadband market leads the government to review this policy.