We hear a lot of talk about AI and ML. About Big Data. About Digital is the age we live in. What we don’t hear often now days is, about the entity that brings all this to us! The ISP has been the kind of quiet in the recent times unlike the early days of Hathway and Sify screaming about to get your attention.
So, what’s happened? The ISP industry is facing an identity crisis at the moment. And only now are realizing what happened to the Telecom industry could happen to them. Unless infra providers move up the value chain, they will be forced to become “dumb pipes”. Considering the Telecom companies have stake in most ISPs, this could be a double whammy for them, to lose out on both fronts of mobile and broadband.
So, let’s get to what the future of the ISP looks like.
A for Affordability: This is absolutely key. Price is the one thing that drives adoption in a country like India. Have a great product? Price it high? You’ve lost already in India! We want 150% for every rupee we spend. The ISP market is today mainly surviving on corporate use. The home market has not grown much, since mobile data is extremely affordable today and India is still largely a single device (i.e. mobile) market, so the necessity to have another data provider for the home, doesn’t make sense to most people. With the rumoured talks of how JioFiber is going to be priced, it’s going to create a huge downward pressure on pricing, which will be good for the consumer and the growth of the sector. Hopefully, it will finally weed out the “locally operated gunda operators” as well that DTH helped with.
B for Breadth: There is no truly national broadband provider today. Even today, I can’t get an Airtel connection in my home in Bandra (one of the most populous and might I add, decently affluent areas of Mumbai). This needs to change. Look at the banking industry, the advantage that an ICICI, SBI and HDFC bank have over the other banks. Their truly national footprint has allowed banking to grow in the last two decades profitably. Telecom companies too have tried but have struggled with low ARPU and high infrastructure costs. The trick is to solve this commercial puzzle for the broadband industry.
C for Content: Like I mentioned before, unless, ISPs turn themselves into something more than connectivity end points, they will lose the battle with the consumer. There is a huge opportunity to move up the value chain and become part of the consumer’s life in a deep and intimate way that wasn’t possible ever before. The OTT scene in India is one of the most vibrant in the world. The number of music streaming services is growing as well. So is the library of content. How do ISPs move beyond simply offering “free 6 months of Hotstar” to actually creating a valuable offering? Moreover, the time has finally come for the originally conceptualized but failed “Triple-Play” service. Bundling DTH-like services onto broadband is the best way to get to the Indian Household, since the TV is still the coveted electronic piece of equipment that binds most Indian families together.
D for Data: Last but not least, Data. In today’s day is any industry or company is not data centric, they will be extinct faster than you can count to 3. If you control the pipe, you control the data flow. That is the biggest opportunity for ISPs in my mind. One of the most unique data points that the ISP is placed more than any other industry is household intelligence. Telecom providers, banks, credit card companies only have access to individual data. But if you provide the data pipe for the house, then you have access to the household consumption of content and behavior. That’s very powerful information, especially if you consider, it’s something FMCG companies (by far the largest advertisers) primarily plan their marketing monies on. The trick here would be balance user privacy and not be too invasive yet pick up aggregated signals that are useful for marketers.
While the opportunity is huge, there are few things that we need to watch out for:
- Upholding net neutrality: Up till now India, has done quite well on this. Unlike the US that backtracked, we still uphold the net neutrality principles. However, with a large player like Jio coming in and having huge commercial stake, this might be a space to be wary of. While bundling of services is fine, giving preferential treatment towards these services, such as not counting towards your data count, is where the concern lies.
- Market Dynamics: While I generally believe the lowering of pricing is needed to grow the market, India is an expansive country and connecting its many regions is not cheap, with technology advancing so rapidly, there is lesser time for ISPs and Telecoms to recoup their investments. That along with lower prices, makes it harder to be profitable for many. I think we will see a more consolidation in this space, to keep things competitive.
On the whole though, as a consumer and someone who is professionally in the digital advertising space, I am very excited about the future of ISPs in India! Who doesn’t like the sound of blazing fast broadband that loads up a Netflix special at 4K resolution in under a second?
