5G has limitation, won't replace fixed-line broadband: Excitel CEO Raina

Wireless internet technology doesn't support unlimited data usage, says leader of fixed line broad company

Low prices, unlimited data packages, and reliable service will ensure that fixed-line internet continues to dominate the home usage market despite the introduction of 5G, said Vivek Raina, chief executive officer and co-founder of Excitel. The company provides fixed-line internet service in more than 30 cities. He told Subhayan Chakraborty that Wi-Fi devices are replacing cable TV in households, and bundling content with data is the way forward.

How are fixed-line internet service providers such as Excitel preparing for 5G?

Wireline broadband or fibre to home broadband has nothing to do with the airwaves. It's a completely different technology. It doesn't require any wireless spectrum. So, there's nothing to do with 5G in that sense. Since it will bring in more speeds for customers, we have to prove our use case that fixed line internet is more effective than any wireless technology. But, in terms of home usage, 5G will not replace fixed-line broadband. We have 755,000-plus subscribers across more than 30 cities. We are witnessing a growth rate of 35 percent annually and expect to reach a million subscriber base by 2022.

Given its much faster speed, will 5G pose a threat to the fixed line internet business?

Whether it is 2G, 3G, 4G or 5G, these are all wireless technologies based on spectrum with a particular limitation. It means every user is connected through a nearby tower to a spectrum, through a fixed data pipeline. If there are ten users using the broadband at the same time in the locality, they all share that pipeline. Now, when these ten users become a hundred, the pipeline gets divided by a hundred. So, it reduces the speed and effectiveness, which is inversely proportional to the number of users who are latching on to the spectrum nearby.

Also, with higher frequencies, the ability to penetrate through walls decreases proportionately. 4G faces more issues inside homes than 3G, and the same will be true for 5G. Wireless technologies are very good when you're on the move, but for home usage whether it be OTT [over the top] consumption, or video calling, you need a fixed wire line coming to your household. Excitel has been delivering broadband internet to each and every household through a fibre wire, which gives much higher speeds.

Many people feel Wi-Fi subscriptions can be dropped, for there is phone internet. Your thoughts.

This is a fundamentally erroneous concept simply because all mobile broadband connections will always come with a download limit per day. They have these limits, because of the limited capacity of the tower and ultimately the limited spectrum. As a result, wireless internet technology doesn't support unlimited data usage. When all your neighbors are downloading and watching movies all the time, the whole neighborhood tends to see a drop in speed since they are all connected to the same tower.

Our prices are probably the lowest in the market considering the speed we are offering. Our revenue per user is around Rs. 500 rupees on average, and we deliver a speed of around 200 Mbps at that price. At that price, often four to six people in the household are using that Wi-Fi device. Therefore, the cost per user is less than Rs 100 per person. Now, compare it to the cheapest 4G available in the market. There is no comparison at all. Also, our data packages are based on unlimited devices and unlimited data. We are already on the rock bottom of pricing.

Which business segment is most important for Excitel?

Fixed-line broadband has become a replacement of cable TV rather than a productivity enhancement tool at home. Nobody is interested in doing office work at home and paying for it. But if it is entertainment, then they pay for it. Every household in the country has a cable TV connection. Cable TV as a technology is on its way out because of the way content is being provided by broadcasters based on their timing, and their choice. Those days are over.

Now, people want to see what they want to see when they want to see it, and don't want to share it with anybody else. The days of having a common TV in a drying room with everybody, sitting around it are over, and personalized viewing is in. Therefore, fixed-line broadband is the next cable TV.

Given changing customer preferences, does Excitel plan to start bundling content along with the data it provides?

That is the way forward. We already have some bundling options. We don't market it very prominently for existing customers. For new sales we do. We will keep on doing that as soon as we think it's optimum. I think this is the way for the future; to bundle data with OTT apps, home security, home automation and ultimately become a package for the household.

What are some of the challenges that you're facing at this level of scale?

The challenge is multifold. Mostly due to what's happening outside the country. All our Wi-Fi boxes are imported. Some companies have now started manufacturing in India, but it is still a very small part of what we use. There is also uncertainty in the market since the chips are in short supply. Our Wi-Fi boxes used to cost Rs 1700 earlier, but have now shot up to Rs 2400 as the supply chain was broken completely during the pandemic. We can't put this burden on the customer. The company has to absorb it, and it's very difficult. Also, the price wars are now beginning as airlines and hotels are also waking up to the fixed line internet market.