CABLE – CURRENT STATUS AND WAY FORWARD RajanCABLE Gupta BROADBAND , Managing Director – CURRENT , STATUS Cable and AND WAY DatacomFORWARD Limited Rajan Gupta , Managing Director , Hathway Cable and Datacom Limited

18th Jan 2017 , TRAI's seminar on ‘Brainstorming Broadband: Developing a Roadmap for Cable Broadband- Global Perspective

► Cable broadband across world is a key component of all major cable operators technology strategy aiming to enable every home , business and community to receive high speed broadband while leveraging existing infrastructure.

► Cable broadband subscribers continue to grow across world.

Worldwide CableBroadband Subscribers 200 Nos In Mn

180

160

140

120

100

80

60

40

20

0 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: Ovum: Fixed Broadband Subscription Forecasts 2015-2020 Fixed broadband subscribers by technology

Nos In Mn Nos In North America Western Europe Mn 80 140 70 120 60 100 50 80 40 60 30 20 40 10 20 0 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 2013 2014 2015 2016 2017 2018 2019 2020

Cable DSL FTTH/B Other DSL FTTH/B Other

Nos In Mn Latin America and Caribbean 50 45 40 35 30 25 20 15 10 5 0 2012 2013 2014 2015 2016 2017 2018 2019 2020

Cable Modem DSL FTTH/B Other

Source: Ovum: Fixed Broadband Subscription Forecasts 2015-2020 Advantages of cable broadband

 Opportunity to continue to leverage existing infrastructure to provide faster speeds without the high cost of full FTTH build .

 Faster speed to market.

 Avoid complicated , time consuming and expensive civil works in dense urban environments.

 Cable services currently compare well to other fixed solutions across key performance metrics ; downstream speed , upstream speed , actual perform vs advertised speeds , latency and packet loss. Major cable broadband operators

UNITED STATES • Comcast cable is the largest broadband provider in United States offering cable broadband , video and phone services to 56 million homes . • During 2015 Comcast grew its high speed internet customer base by 6.2% gaining share in a market which grew at 4.8%

UNITED KINGDOM • Virgin Media , covers 13 million homes in UK and 0.9 million homes in Ireland

SWEDEN

• Com hem, Second largest broadband operator with cable broadband coverage of 40% of Sweden homes .

CANADA • Offers Cable and high speed broadband services to 41.5 million homes or 30% of Canadian households. Cable broadband – Indian scenario

► Multi System Operators (MSOs) provide cable TV services, as well as broadband services to customers. In January 2017, there were over 900 provisional and 230 permanent MSOs registered in India, but only a minority provide broadband services1. The MSOs provide these broadband services by obtaining an Internet Service Provider (ISP) license from the government..

1 Ministry of Information & Broadcasting, Jan.2017 Broadband has become a key utility and can help the government achieve its key economic goals and objectives

Broadband Highways

Impact on GDP Per Capita due to a Like other infrastructure networks before it such as roads and railways, 10% Rise in Broadband Penetration broadband can profoundly transform India’s economic landscape: (Low and Middle-Income Countries)1 ► Accelerates the velocity of commerce and boosts employment Broadband 1.4% ► Expands the ability to communicate, share knowledge and innovate Internet 1.1% ► Brings more people into the formal economy via access to e-services Phone: Mobile 0.8% and online payment gateways Phone: Landlines 0.7%

Early Harvest ‘IT for Jobs’ Scheme & e-Governance 2 De-Monetization & Public Internet Programmes2 Skill Development 2 e-Kranti 2 Access Programme2

Formalization of the Short timeline Training for IT sector economy and labor 44 mission mode Creation of delivery projects such as jobs for 10mn. markets via access to projects around end-points for provision of public wi- students across online platforms for digitizing services government/business fi hotspots in 1mn.+ smaller towns and Aadhaar, certificates, relating to land services via common cities and wi-fi access rural areas over 5 degrees, payment records, income tax service centers in in all universities years gateways etc. filing etc. every gram panchayat

1 World Bank: Economic Impacts of Broadband, 2009 2 Digital India Portal But India’s broadband penetration lags behind key peers, and in 2015 it ranked 132nd for fixed and 156th in wireless penetration5

India’s 2016 Cable and Internet Landscape Fixed Broadband Penetration Per 100 Inhabitants Average Connection Speed: Mbps (2016 data for India, 2015 for other countries) 45 (Q2 2016 for all countries)6 All India1 France 41% South Korea 27.0 -1311mn. Population South Korea 40% Norway 20.1 - 279mn. Households Norway 39% Sweden 18.8 United Kingdom 38% Japan 17.1 Germany 37% United States 15.3 Canada 36% United Kingdom 15.0 Internet Users 2 TV Households3 Sweden 36% Germany 14.1 - 471mn. - 180mn. United States 32% Spain 14.1 Japan 30% Canada 13.7 Portugal 30% Thailand 13.7 Spain 28% Portugal 12.9 Broadband Subscribers4 Paid C&S 3 Australia 28% Russia 12.3 (excluding Narrowband) Households Italy 24% Poland 12.2 - 162mn. - 151mn. Poland 19% France 9.6 Russia 19% Australia 8.5 China 19% Italy 8.2 2014-16 Argentina 16% Mexico 7.4 CAGR% Chile 15% Chile 7.0 Mobile Wireless Turkey 12% Turkey 7.0 Broadband Subscribers4 64%4 Brazil 12% Malaysia 6.8 Mexico - 144.2mn. 12% Indonesia 5.9 Colombia 11% Sri Lanka 5.7 Thailand 9% South Africa 5.6 Fixed Wireless Malaysia 9% China 5.2 Broadband Subscribers4 14%4 South Africa 5% Argentina 5.2 - 0.6mn. Egypt 5% Brazil 4.8 Morocco 3.4% Colombia 4.6 Sri Lanka 3.1% Morocco 4.4 Fixed Broadband Bangladesh 2.4% 4 Egypt 4.0 Subscribers 8%4 India 17.3mn. 1.3% subscribers India 3.6 - 17.3mn Indonesia 1.1% Bangladesh - Pakistan 1.0% Pakistan - 1 United Nations: Urbanization and Development Report 2016, World Bank 2015, EY Analysis 2 As forecasted for June 2016, IAMAI: Mobile Internet in India 3 FICCI M&E Report 2016, EY Analysis 4 TRAI Quarterly Performance Indicators Jun.2014 and Jun.2016 . TRAI’s definition of broadband only includes speeds >512kbps- this definition is used here. 5 United Nations Broadband Commission Report 2016 6 Akamai Technologies: State of Internet Connectivity Q2 2016 Cable broadband is uniquely positioned to bridge this gap and reach millions of untapped users in smaller cities and rural areas

Value of Fixed Broadband

► The BharatNet initiative has resulted in over 150,000km. of fiber cable being laid 1 100mn.(digital cable) across 65,000 gram panchayats as of Dec.2016 homes with same pipe ► While such long distance cable is available (via government and private telecom and a little bit of operators)- local access networks are lacking upgradation can be used Accessibility ► The cable TV industry has a distinct advantage here, having already reached deep in for delivery of robust urban and rural areas, with last-mile access in 150mn.+ homes and 1500+ towns2 broadband connectivity to 500mn. people. 3 ► India’s copper-based fixed phone line cables are often of poor quality and cannot R.S. Sharma, TRAI 2 take high speeds . But MSOs reach over ⅔ of cable homes via fixed line coaxial Chairman connectivity, which can be quickly upgraded to carry high-speed broadband23

► Given that crowded and scarce wireless spectrum may struggle to keep up with the % of Internet Subscribers ongoing data consumption boom in 2-3 years, wired broadband becomes critical4 5 with Broadband 7 ► (ie: Speeds >512kbps) Speed & There is significant scope for synergies across fixed and wireless broadband, especially in terms of data offloading and easing pressure on spectrum- as has been Reliability Fixed noted in studies across both the US5 and EU6 83% ► For reliability, wired broadband is able to enter the home, and thus offers highly Wireless 43% dependable connections that are not impacted by walls and other obstacles2

► To provide last-mile access, MSOs partner with a network of 100,000+ LCOs, Case Study: comprising a workforce of 500,000 ready to serve broadband subscribers2 PMMY (Mudra) Textile Loans ► The government has supported Skilling & MSOs work with LCOs on training and upgrading skills/technical knowledge- 0.5-1% of broadband revenues will be spent on such programs, and government initiatives skill and loom upgradation Training efforts in the textile industry by can help to further support this2 extending loans to 500,000 ► The roll-out of cable broadband will generate further multiplier effects on handloom weavers over 3 years8 employment- estimated at 65 workers per 10,000 new subscribers2

1 BBNL Bharat Net Phase 1 Status Update, Dec.2016 2 Industry discussions, P&Ls of 5 national MSOs 3 Television Post, Dec.16 4 R.S.Sharma, TRAI Chairman in Outlook India, May 2016 5 Wireless Broadband Not a Viable Substitute for Wireline Broadband, Vantage Point, 2015 6 Working Together: Synergies of Fibre and Wireless Networks, FTTH Council EU, 2015 7 TRAI Quarterly Performance Indicators Jun.2016 8 India Today, Jun.2016 National MSOs- and cable broadband in general- will continue leveraging these advantages to grow their share of the market

Cable Broadband Landscape

Indian Fixed Broadband Industry: 1 Subscriber Market Share by Key Players ► The fixed broadband industry today is dominated by 15.0mn. 17.3mn. the state-owned companies BSNL and MTNL, who had 77% of India’s wired broadband subscribers in 20141 6% 11% 6 National MSOs 9% 8% 12% ► 9% Other ISPs But in recent years, BSNL/MTNL have lost market share to competitors- particularly national MSOs

77% Bharti 68% ► 6 national MSOs* added nearly 1mn. subscribers from June 2014 till June 2016, taking their total to more BSNL / MTNL than 1.8mn. cable broadband subscribers1 Jun.2014 Jun.2016

Broadband Subscribers (mn.) 12345

► Given these MSOs’ existing reach across 100mn.+ 27.9 Total Fixed digital cable homes and future plans for heavy capital 11.2 Broadband expenditure- cable broadband is projected to outgrow 17.3 Cable Broadband the market, even in a baseline scenario with no 4.0 reforms

FY16 FY21

1 TRAI Quarterly Performance Indicators Jun.2014 and Jun.2016 2 Industry discussions, P&Ls of 5 national MSOs 3 2018 Forecast for India’s Fixed Broadband Market- IDC 2014 4 2020 Indian Fixed Broadband Market Forecast- Budde Communications 2015 5 APAC Pay-TV and Broadband Markets, Media Partners Asia 2016 *Note: National MSOs considered- Hathway Cable & Datacom, SITI Cable, Den Networks, IndusInd Media & Communications, Fastway Transmissions, ATRIA Convergence Tech. license fee rationalization - lever for accelerating broadband growth

International Levies on Fixed Broadband Operators

Many countries do not subject fixed broadband providers to any major …while the countries that have license fees, license fees, and are often designed to simply recover regulatory costs*… have rates lower than India’s 8%

License Fee as % of Gross 12 Country Country Regulatory/License Fee Structure Revenue12

Exempt (however telecom operators contribute an annual US* regulatory fee to the Universal Service Fund) Pakistan 2% Slab-based annual regulatory fee, basis proportionate UK* share of revenue/subscribers Indonesia 1.25% Annual regulatory fee, basis company’s share of eligible Bhutan 1% Australia* revenue in industry’s total revenue Brazil 1% Annual regulatory fee, basis company’s share of eligible Canada* revenue in industry’s total revenue Singapore Max 1% Norway* Annual variableadministrativeregulation fee Malaysia 0.50% Sweden* Annual variableadministrativeregulation fee South Africa 0.15-0.35% National Universal Service Fund receives voluntary Mexico contributions

1 United Nations ITU 2016 2 TRAI Release: Delivering Broadband Quickly- What do we need to do?, Apr.2015 *Note: Regulatory regimes where the objective is to recover regulatory costs- any license fees collected are therefore nominal THANK YOU