Broadband in India: Cost Per Line

By Sujai Karampuri, Guest Author

As I discussed in the previous post, the drivers for penetration of broadband in India will be-

* Decreasing cost per line
* Decreasing operating expense
* Decreasing cost of PC (or similar device)
* Social attitudes and habits embracing broadband facilities
* More Indian content

In this post, I will analyze the decreasing cost per line.

The cost per line right now runs between Rs. 7,000 and Rs. 10,000 for DSL services. However, it will be much higher for WiMAX in 2007. During 2007-2008 the major customers for broadband from WiMAX will be enterprises and SOHOs. The residential broadband users will not contribute much to the incomes during this time. However, the revenues from enterprises and SOHOs are substantial and are a market worth pursuing; hence we will see some deployments.

Residential broadband services will start turning out to be lucrative only in mid-2008 when the existing network can easily be used for increasing the capacities to cater to homes. That’s when there will be huge change in the deployment models by the operators who will vie for the residential customers. Each operator announcing a better deal than the other will push down the prices and also increases the subscriber base.

The decrease in cost per line will come from two factors- decrease in the cost of equipment and from the inherent advantage of wireless when adding new lines. The base stations which cost $3000-$5000 now will start costing $400-$800 by end of 2008. The CPE (Customer Premise Equipment) which costs $200-$400 now will start costing $30-$80 by end of 2008.

The cost of a wireless network is high in the first stage of deployment, because of factors like taking up space for tower, erecting the tower, cabling, housing, and connecting the tower to the network, installing base stations, etc. However, once those costs are recovered from enterprise services, adding new subscriber will come at a minimal cost. In comparison to a wireline network where each additional subscriber may cost more or less the same, in wireless networks, each additional subscriber cost will be minimally higher.

This segment is a part in the series : Broadband in India