Indian ISP Market – An overview
Arvinder Singh Sahni
Founder / MD · Apr 23, 2024
Introduction:
Internet services were first introduced in India on 15th August, 1995 by Videsh Sanchar Nigam Limited (VSNL). Mr. B.K. Syngal who was the chairman of VSNL is rightly called the ‘father of internet in India’. I remember a friend’s father had taken a dial up connection from VSNL and that was the first time I saw what internet is on his personal computer. The internet connection was established by dialing in to a VSNL telephone number through a dial up modem. The user name and password were entered on the c-prompt of the computer and the modem made an interesting sound while authenticating the credentials. The speed of the internet connection was 32kbps and it might sound humourous today, but in those days 64kbps qualified as a broadband connection as per TRAI guidelines.
Overview::
The ISP industry has come a long way since 1995 and today we have almost 93.62 crore internet connections and a much larger number of people accessing data services on their mobile phones or laptops every day. We have almost 1200 Internet Service Providers (not counting the local cable operators) providing exceptional internet services of speeds from a few Mbps to a few Gbps with almost 99.9% uptime at a cost which is possibly the lowest in the world. These figures are as per data published for the Oct to Dec,23 quarter in the Performance Indicator Report released by TRAI dated 23 April, 2024.
In my humble opinion the Indian Internet providers are providing exceptional services at extremely low prices and the quality to price equation is perhaps the best in the world. They are doing a big service to our nation by providing relatively stable internet connections in almost all corners of India.
Market Players:
India is possibly the world’s largest market for voice and data services in terms of numbers. As of December,23 out of the total of 93.62 crore internet connections almost 98.5% of the connections are provided by Telecom Companies (Telco’s) with Reliance Jio Infocomm Ltd., Bharti Airtel Ltd., Vodafone Idea Ltd. and Bharat Sanchar Nigam Ltd. (BSNL) being the top 4 data and voice service providers.
The Broadband Companies (non-Telco’s) provide almost 1.5% or approximately 1.5 crore internet connections as of period ending December,23. Atria Convergence Technologies Ltd., ONEOTT iNtertainment Ltd., Hathway Cable and Datacom Ltd., , Kerala Vision Broadband Ltd., Excitel Broadband Pvt. Ltd., YOU Broadband India Ltd., GTPL Broadband Pvt. Ltd., Netplus Broadband Services Pvt. Ltd., Railtel Corporation of India Ltd. and Alliance Broadband Services Pvt. Ltd. are the top 10 companies in pure broadband play.
There are a total of 1167 ISP’s as of December,23 not including the LCO’s which could possibly be in excess of 10000 as they operate under the umbrella of larger ISP’s.
Market Outlook:
The Internet Subscriber base in India has been growing at a phenomenal pace since the launch of services in 1995. The following table shows the number of Internet Service Providers and the number of Internet Subscribers over the last 10 years.
ISP Industry / subscriber data over the last 10 Years as per Performance Indicator Reports published by TRAI
| Sr No. | Period Ending | TRAI Report Dated | Number of ISP's | Internet connections | |
|---|---|---|---|---|---|
| 1 | 31-Mar-13 | 01-Aug-13 | 185 | 2,16,06,683 | |
| 2 | 31-Mar-14 | 30-Jul-14 | 128 | 25,15,90,542 | |
| 3 | 31-Mar-15 | 12-Aug-15 | 129 | 30,23,54,883 | |
| 4 | 31-Mar-16 | 05-Aug-16 | 138 | 34,26,54,750 | |
| 5 | 31-Mar-17 | 05-Jul-17 | 154 | 42,21,93,254 | |
| 6 | 31-Mar-18 | 27-Jun-18 | 262 | 49,39,58,617 | |
| 7 | 31-Mar-19 | 10-Jul-19 | 332 | 63,67,29,427 | |
| 8 | 31-Mar-20 | 17-Sep-20 | 360 | 74,31,93,951 | |
| 9 | 31-Mar-21 | 27-Aug-21 | 449 | 82,53,01,383 | |
| 10 | 31-Mar-22 | 26-Jul-22 | 660 | 82,48,88,167 | |
| 11 | 31-Mar-23 | 21-Aug-23 | 1031 | 88,12,54,753 | |
| 12 | 30-Dec-23 | 23-Apr-24 | 1167 | 93,61,60,453 |
Market Challenges:
The prices of Internet Services have been going down on a continuous basis year to year. Average ARPU which used to be almost Rs.1000 about 10 years back is now below Rs.500 for a high speed broadband connection. Keeping in view that the number of subscribers have kept growing and the wholesale bandwidth prices have been somewhat reducing the cost to price equation is still about ok.
This equation has started changing in recent times and ISP’s are getting challenged on multiple fronts. The costs of operations, cost of maintenance of networks, need to upgrade technology, need to provide higher bandwidth at same or lower price and overall inflation in the economy is adding to the total cost of operations of the ISP’s.
The ISP participants need to keep in mind that with the market getting more and more competitive they would need to offer differentiated services, lower downtimes, faster response to complaints and charge the customer a fair price so that they maintain their profitability.
Future Outlook:
In spite of the market challenges, the future outlook of the Internet Industry is promising. The market is growing close to 10% year and year and the Average Revenue Per User (ARPU) looks to be bottoming out and has started increasing to some extent. OTT services are becoming more and more popular and are increasingly being delivered over the internet as compared to digital cable modems thus offering additional revenue streams to the service providers
The future is exciting and I am sure the internet service providers would be feeling proud to be a part of the journey to bring internet to almost the complete population of this vast country.