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Masterclass: Disrupting Indian Telecom | Vivek Raina (Excitel Broadband)
348 Plays2 years ago
"In India, 35% of all Indian cities are fully planned, but 75% is all on its own... that's not where 70% live. 70% of urban is in those areas, which have all on their own lanes and by lanes."
This powerful insight from Vivek Raina highlights the vast, often overlooked market that Excitel Broadband chose to serve. Instead of focusing only on the structured, planned parts of cities, Excitel ventured into the densely populated but underserved areas, bringing high-speed internet to the masses.
Vivek Raina is the Co-founder and CEO of Excitel Broadband. With over 22 years in the telecom industry, he has spearheaded Excitel's growth to over 1 million subscribers by its seventh year of operation. He is driving Excitel's mission to connect more of "BHARAT" by providing affordable, high-speed, and truly unlimited internet.
Key Insights from the Conversation:
- Untapped Potential in Unstructured India: A significant portion of urban India resides in unplanned areas, a market largely unaddressed by major telecom players, which Excitel strategically targeted.
- Broadband as Entertainment, Not Just Utility: Excitel shifted the perception of broadband from a mere productivity tool to a primary source of entertainment by offering high speeds and no data caps, enabling seamless video consumption.
- The "Uberization of Broadband": Excitel's innovative asset-light model involves partnering with thousands of local cable operators for last-mile fiber deployment, enabling rapid scaling and capital efficiency.
- Hyperlocal Focus is Key: Customer acquisition in the broadband business, especially in diverse Indian markets, relies heavily on hyperlocal strategies, including feet-on-street sales and targeted local marketing, rather than mass media campaigns.
Chapters:
- 00:00 Video Introduction and Initial Context
- 01:26 Viv's Background in Broadband Technology
- 01:50 The Evolution of Broadband Technology
- 03:47 Introduction of Fiber to Home in India
- 06:41 The Origin Story of Excitel
- 11:52 Excitel's Unique Approach to the Market
- 15:58 Excitel's Funding and Early Growth Phases
- 18:58 Internet Supply Chain and Cost Structure Insights
- 25:17 Excitel's Expansion and Market Positioning
- 30:15 Competition and Future Plans for Excitel
Hashtags:
#Excitel #VivekRaina #FounderThesis #IndianStartups #Broadband #InternetRevolution #DigitalIndia #Entrepreneurship #StartupIndia #TechInnovation #FiberInternet #Telecom #MakeInIndia #BusinessStrategy #Leadership #DisruptiveTech #FTTH #InternetForEveryone
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Transcript
Introduction and Competition
00:00:00
Speaker
Hi, guys. My name is Vivek Rana. I am CEO and co-founder of Excitable Broadband. Happy to be with you here.
00:00:19
Speaker
Any sufficiently advanced technology is indistinguishable from magic. You may have heard this famous phrase that was first written by the great sci-fi author Arthur C. Clarke. Imagine someone from the 1970s who time travels to today.
00:00:34
Speaker
The fact that we have internet everywhere will seem like magic to him. In this episode of the Founder Thesis Podcast, we peek behind the curtains of this magic as your host Akshay Dutt interviews Vivek Rena, the founder of Excital. Excital is the David-facing Goliaths like Reliance, Gio and Airtel in the battle for getting internet to our homes. And despite such large competition, Excital has continued to scale up rapidly. In this conversation, Vivek talks about the nuts and bolts of getting the internet to our homes
Career and Technology Evolution
00:01:27
Speaker
My first job was in a broadband company, a wireline broadband company. I'm talking about 2001. And ever since that day till now, I've been just doing one thing selling broadband in various companies at various levels. Now I've performed in this company, but that's been my job from last 22 years, 21 years now, selling wireline broadband in the country.
00:01:28
Speaker
and how he found a niche in a competitive market and managed to thrive in an extremely capital-efficient manner.
00:01:49
Speaker
you must have seen the technology change like 2001 you started your first job I think at that time it must have been copper wires right through which it was coaxial wires the wires are similar to TV wires the technology is called DOCSIS data or system interface specification which means use
00:02:08
Speaker
testing cable TV buyers to deliver broadband. So yeah, at the speech we were delivering, 128 kbps, 256 kbps, best package in our bouquet of packages was 512 kbps. Gold Premier, we used to call it. And now we'll start from 200 MBS. The basic package here, it used to be 100 MBS. So obviously technology has changed a lot. From DOCSIS that would DSL, then to LAN, and now what is DSL? There's still subscriber lines.
00:02:37
Speaker
See, what happened was that these technologies were developing in the US and Europe. So they wanted existing wires going to houses to be used for delivering internet. And it's not very easy to re-do the wiring in the streets, in the homes.
00:02:52
Speaker
In the US, because cable TV was a big thing, and cable companies were also massive, so they developed this technology called Docsis. And in Europe, telephone was big, because every house had a telephone line, so they used telephone wire going to the house. And that technology was called DS, and the one using cable TV, why I suppose it was called Docsis.
00:03:12
Speaker
But ultimately people realized that none of these technologies are going to scale with the scaling bandwidth and scaling technology. The needs of why you access internet changed drastically over a period of time. Initially it was just data and now it's mostly video. Data is now a small part of it and 90% of it is video.
00:03:31
Speaker
and both these values are not meant for such deliveries and one had to rely fully on fiber and now the gold standard is the world fiber to home so yeah that's what we do here that's probably what you are on in Japan and that's what they do in the U.S. and Europe so FTD age. When did fibers get introduced to India? Well for poor people it got to me early.
00:03:53
Speaker
Even in 2003, around that time, the company started using it for core network. But what I'm talking about is fiber to home. That's, I think, three, four years back. Technology also developed. You see, fiber was there. We thought that fiber can carry those amount of data and is not developed by, let's say, the signals or weather conditions, because it's light ultimately going in. Unlike other technology, we see a lot of things and electricity gets hampered by a lot of things.
00:04:21
Speaker
How does light travel through a vial? Is it via reflective? Because if it turns... It's not actually via, it's actually a hollow pipe with glass inside. So there is a phenomena called total internal reflection. Like you have diamond in your hand, light goes in and starts reflecting in the corners and it sparkles. Similar.
00:04:41
Speaker
you have a pipe and in pipe there is glass on all sides and you pump in the laser beam of a specific frequency amplitude rather in this case and it starts at a certain angle and reaches the other side without much loss because it is light and you can put multiple beams in the same pipe because multiple amplitudes can go.
00:05:04
Speaker
yeah okay amplitude like light of like say white light yellow light they will have different amplitudes yeah exactly exactly yeah so simply put yes you can say that so but what it does basically is that it increases tremendously the amount of data you can put in that small pipe 100 times the limitation is only of the electronic equipment that you put in between to amplify or to receiver or broadcast
00:05:28
Speaker
Well, it was a game changer for the world of telecommunication around the world. And here in India, coming back to your question, we started using it to, I think too, when people realized that it's a great thing to do and it started converting copper, existing copper wires into fiber. And yes, but what we're now talking about is fiber to the whole. That was very difficult to do because it's one thing to do to convert the core lines.
00:05:55
Speaker
colored and different to go into the streets, lanes, buy lanes, go to the free household with the fiber wire. So we had to look at technologies which are evolving around the world. And those price points were important. Ultimately, something called technology got pawn, passive technical network technology. There are various versions of it, G pawn, E pawn. They started coming, and the prices started easing out. The extent that we could deploy it. So I think around five, six years back,
00:06:24
Speaker
is when telcos in India took it on them. Around five and a half years back. The technology is mature enough for our mass deployment. But around three and a half years, we started going fully on FTT, H5o2 Home.
Market Analysis and Opportunities
00:06:36
Speaker
Like before we talk about the Exeter journey, I want to understand the origin of
00:06:41
Speaker
the idea of Exitel and what made you want to quit a job. You were at DigiCable when you decided to start Exitel. So what made you want to quit that job and start on your own? And what did you see as a gap in the market? Yes, it's a funny thing that India has been doing very well in mobile broadband and mobile telephony. We have what, 600 million users of mobile broadband, mobile telephony, 600 million. And do you know how many users of wireless broadband are in the country?
00:07:11
Speaker
It's just 20 million. So 2 crores is that 20 million? So somehow the penetration never increased in the country and also nobody was talking about it because mobile was taking all the show, it was talking all the limelight and it was easier to do for telcos because mobile is what? You just erect a tower and the whole locality starts lighting up. In this business, you have to go to each and every household with that wire.
00:07:37
Speaker
How will man is more difficult to do this compared to mobile? The scaling up is harder. So it was low hanging feet. Telcos did it. And also the regulators and the government are also looking at that. So wireless somehow took a backseat. But our penetration after so many years is still, forget lower than the developed countries, forget Japan and forget Korea. We are doing worse than Nepal and Bangladesh. So in terms of penetration of wireless broadband.
00:08:04
Speaker
And there is a clear correlation between the development of a country and the penetration of the wireless broadband. There are World Bank studies which show 10% increase in wireless broadband leads to 1% growth of the country. There is a kind of correlation. So I think somebody needs to kickstart the ecosystem. But you will.
00:08:20
Speaker
Already in the ecosystem, you were already part of it. Did you see a gap in the market? I was working with various companies. I started with Hathway, then went to Reliance, then went back to Hathway, then to Digicapel. In all these companies, we made grandos plans of rolling out wireline.
00:08:38
Speaker
But somehow, the response never came. Somehow, the plans didn't get fully executed. Somehow, the funding was not there for this. And because the company had other ideas, this could never happen somehow. And then in DGK, well, I happened to have met my co-founders. Now, these co-founders of mine are from Eastern Europe, Bulgaria. Now, Bulgaria is an interesting country. This is a European country, part of the EU. But Eastern part of it, more like Eastern people, rather than Western people.
00:09:07
Speaker
and also they were under the iron curtain till 1998, you know, they were part of the USSR block and everything was dormant and didn't have any private companies. Now in 1998 it got privatized, 1992 it started getting privatized and my co-founders had started one of the first internet companies in Bulgaria, private internet companies in Bulgaria and they became very successful there and ultimately they sold it.
00:09:31
Speaker
They had to dodge telecom and they were looking for opportunities and they came to India and we exchanged notes, tried to understand the markets and what they pointed out was very important. The fact was that one of the issues that you have, why the penetration is not increasing, one of the major issues is that you are still having very slow speeds, which means users cannot watch videos.
00:09:54
Speaker
This cannot be used for videos. It can be used only for surfing the net. Back then, I'm talking about the year 2011 when we met. Right now internet here is a productivity enhancement tool and the mind is not so much concerned about productivity at home, work productivity at home. At home they want leisure, they want entertainment, they want relax, not productivity.
00:10:16
Speaker
oh you are basically that's why one of the major reasons why it's not scaling here you are selling it just to be honest tool if you increase the speed 10 times and users can watch videos and then you have a chance so that was one thing that sort of
00:10:33
Speaker
you know, opened my eyes. The other thing was the nature of Indian cities, the nature of Indian urban conglomerates. What does it mean? See, 35% of all Indian cities are fully planned, but 75% have evolved on this own. For example, take any Indian city, big metro, you have 35% of which are fully planned, properly structured, lanes, by lanes, or multiple stories with shafts, all that.
00:10:59
Speaker
That's not where 70% of urban buildings live. 70% of urban buildings live in those areas which have evolved on their own lanes and by-lanes. The village which got absorbed by the city. Exactly. Serpentine lanes and so on and so forth.
00:11:14
Speaker
Okay, in the past, it was very difficult to go to these areas simply because there was a market there because to use broadband, you needed a laptop or a desktop and this would move to my laptop or a desktop. You had to see the laptop. But all that changed now. You need for a consuming internet, for consuming anything on the internet, all you need is a handheld device, a pump top or a DAB or even a phone.
00:11:39
Speaker
and almost everybody in urban India has a smartphone. That means these areas have opened as potential markets and they're not focusing there. They're still focusing on high margin areas. These two realizations where the genocidal is very entitled enough thought that we need to make a difference. First and foremost, bringing the speeds, bringing the high speeds to the Indians
00:12:05
Speaker
have data limits because we used to have something called data limits in the country. Fair use policy. It was strangely called fair use policy, which was very unfair. It basically said that we will penalize you for using the net. It didn't make sense at all. We started in 2015. We never had any fair usage policy. Unfair usage policy, I would call them. All our plans were
00:12:28
Speaker
completely unlimited. You can use those files 24 by 7, keep on downloading, keep on working videos, nothing will change. And the other thing that we don't know more importantly was the fact that when the speeds, normal speed in the city of Delhi, for example, one or two videos, we started with 20 videos, so that people can actually use the video, HD video, they can see the difference between the TV and a real HD video.
00:12:51
Speaker
And what was DigiCable doing? They were also like they were doing internet through cable lines or? They were doing through combination of everything basically. Basically cable TV company and they had a reason doing internet. And I was taking the part of that part. Okay. It was a secondary business and also come what way. And it was like that. It was no focus on any specific line. It was less than something.
00:13:14
Speaker
whether you have to sell bulk, whether you have to sell corporate, whether you have to sell retail, do it. Prior to 2-3 years now, standalone internet players still pray. There are 3 players which are only standalone internet players in the country. Standalone wireless content players in the country. One is ACT, the other is us.
00:13:32
Speaker
Third is probably, there's nobody left for me because all of them have been brought by the telcos. So there are only two companies doing, real companies doing the wireline broadband. The other side has multiple business lines. So similarly with these cable TV companies, they were doing cable TV, but they're thinking now that the wire is going, let's use something else also. The real plan or vision was not there.
00:13:54
Speaker
So we did two things, Akshay, first of all, was the speed, play with speeds that we did. Then secondly, we understood that this 30% of market, everybody will go there and let them play there. But we have to go to the 70% of the market, so-called Aurantra, then India, people who have been denied world-class broadband services by telcos. So we have, we need to go there. But to go there, we do obviously be very cognizant of the fact that the ARB use would be much lower there.
00:14:21
Speaker
It doesn't matter, now that we are talking about 70% of the urban users, so you can afford cheaper AR views. So we kept the ARP at 500 rupees always, so that it's tantalizingly close to cable TV, because every hope we would enjoy in urban India has a cable connection. Why can't they migrate to this? And then also we sort of showed them it's a video consumption service rather than a data service alone. So it opens up, certainly.
00:14:50
Speaker
And the third thing that we did and more interestingly because it's very difficult to do wiring in such areas. It's very difficult to lay wire and then maintain that wire in such areas. We tied up with local partners in every such locality and these local partners are local investors. They invested on the fiber and lay the fiber and maintain the fiber.
00:15:08
Speaker
While as everything else we do, we do sales, we bring in all the customers on board, we provide CX, filling and collection is done by us. So photo, I mean, it's supposed to be all right. These guys, they're the fiber and mint in the fiber in the locality, in the specific locality. We bring core fiber up till there.
00:15:24
Speaker
Just to give you an example, in Delhi, we have 700 such partners taking care of localities, 700 localities of Delhi. Now, we have around half a thousand localities of fiber, which we maintain. This fiber, mostly with those partners, a hawfish or a poo or a shack of that partner, it's going there. And from that point onwards to each and every home in the locality, the partner lays the fiber and maintains the fiber. So in the partner, we share our revenue. There's a revenue sharing agreement for that locality, good running on that network.
00:15:53
Speaker
So what is the overallization of broadband? We have done. We did so well while of doing it. But tell me this, you quit your job and you had some savings, but I'm sure they would not have been enough to start a broadband company. I'm assuming there would be a lot of upfront investment in equipment and I don't even know what is the supply chain here. Where does the, from where do you source the supply of broadband that you further distribute? Tell me about that whole journey of starting up. I always wanted to
00:16:21
Speaker
do it myself. But then I found my co-founders in the Bulgarian guys, Victor Fazza and Nikolai Vorsolov. Okay, they also didn't have money to do it. But the idea was there. And once we had the idea,
Business Model and Expansion
00:16:32
Speaker
we started seeking out for investors. And we found one investor in Bulgaria.
00:16:38
Speaker
And it started with basic investment of one and a half million, one and a half million euros, which is peanuts in this business. But we started with that. But since the water was clever, in which this broadband business, 80% of all Capex is last mile. Last mile means the last mile. Now, this 80% also shows to many, many local entrepreneurs. So that's why we have been much, much more, I think at least 30, 40% more capital efficient than any telco. That's how we started.
00:17:04
Speaker
And so we raised this one and a half million and we had promised them 50,000 users in the first year. Rather, it was our internal target. 50,000 users in the first year and 35,000 users is what we had told the investors. Promised them, delivered one lap in the first year itself. And this idea of uberization, the local entrepreneurs for last mile, this was there right from the beginning or you stumbled upon it after starting up like.
00:17:27
Speaker
There were these local entrepreneurs, like cable operators, were being used by many ISPs, internet providers to develop bandwidth. But in a very crude way, they were telling them, okay, this is the wire. I brought the wire up to you. Now do whatever you want to do. You do sales, you do the CX, you do everything. Now these guys have no freaking idea what sale means, what CX means, what proper customer onboarding and handling means. So yeah, we sort of made it much better.
00:17:54
Speaker
And it has been an interesting journey ever since. From those one lakh users, the first one, now we have around 7.5. So in one month, how did you get one lakh users in a month's time? In a year, in a year. Not a month. In a year, sorry. How did you do that? What was the customer acquisition strategy? Noted our sales. We have sales forces who do door knocking, pamplating, intercepting customer on the street and so forth. Very difficult to make them understand that 20 mbps speed is possible.
00:18:24
Speaker
All the wireline providers were giving 1 or 2 MPS, mobile was giving 2, this came with this. Suddenly you're taking them for 500 rupees, you get 20 Kbps slope speed. They don't believe you, they say, oh, you're lying. They have to check, they have to check you're lying, you're a liar. But once people realize that it's really possible and we're giving those speeds and there's no fair usage policy, it's sold like cohort cakes in the first year.
00:18:44
Speaker
The product itself was so much better than the alternative that it sort of failed. The competitors didn't know what to do, what did I hit them? What is it? What are they talking about? How do they make money? How is it possible? But yes, then obviously they started learning second, second, third year onwards. And how do you make money work? Tell me the supply chain for internet. You are receiving that bandwidth or I don't know what, but you're receiving that bandwidth which you're further supplying.
00:19:08
Speaker
Yeah, it's interesting that what you buy basically is just 10 to 15% of what you sell because you buy international minutes, international capacity from a gateway provider because in the country there are just two or three gateway providers, you buy capacity right from them.
00:19:24
Speaker
just 10% of 10% of what users get. But then because you make pairing arrangements with all country providers. So for example, Google would sit in your cache would sit in your data center, they will say that I want to hear to my user. And I don't depend on the international routes, I want to sit inside your room, if you're big enough, and you have enough users, they come and sit in your the pair with you. And similarly,
00:19:48
Speaker
other content providers, whether it is Amazon, whether it is Akamai, whether it's Disney, all of these guys can't be able to test on Netflix, everybody. They want to come near it. So they will place their server in your providers. They will place their server in our providers or in some cases they will bring their own fiber in our providers to say, okay, just for their services.
00:20:10
Speaker
They may be in a city of like Bombay, which has gateway, there'll be a data center and say, okay, print your fiber here and take my services. So something that, so 90% of all traffic that is consumed by the users today is from these contact arrangements.
00:20:25
Speaker
Okay, and one question here on these content arrangements, is there a commercial angle here also like do they pay you rent for location on your premises or do you pay them something? You pay whatever it takes to reach there and they place servers in your data center and obviously they are not paying rent for that. So, nobody pays, no party pays each other anything but logistics you have to take care of. Okay, got it. 10% is what you are paying to the gateway.
00:20:53
Speaker
Percent is to ping to the gateway. That's an interesting traffic which goes through submarine cables. For example, interaction like this cannot be through caching servers. It has to be through an interesting gateway. But all video consumption, all content, ODD is through caching.
00:21:12
Speaker
the whole of it will be cached. Most of it is cached. So that's how it is. And then you have your own logarithms in your data center, which provides some practice, gives proper packet-wise understanding of how you're going to maintain your services to the users. And then you have a separate packages for them, speed-wise. Why do you need these algorithms? What would happen if there were no algorithms? It's more crude. For example, right now we have a video conversation.
00:21:39
Speaker
and somebody is watching the, let's say, YouTube video which is not cached but is coming internationally. So, this cannot have a break. That can have a break. You understand? That video can come slowly because it's getting cached while he's watching. But this is live. So, such prioritization needs to be done properly.
00:21:54
Speaker
or the video can go low resolution when the bandwidth is low but the audio remains clear. Exactly. Many such announcements, those are done and then obviously you distribute it in packets, obviously the billing information has to be kept there and then you take it out from your data center through your rings across, fiber rings across the city, multiple fiber rings which are basically self-filling.
00:22:18
Speaker
MPLS, they call them. What is a fiber ring? What is the word ring here mean? Yeah, all the fiber you lay in a city has to be in a ring architecture. Because if it cuts from one place, there's a fiber gut, it starts working from the other side. You understand? For example, I create a ring, I lay fiber across the city in a ring fashion.
00:22:36
Speaker
and I have my points of presence on that ring everywhere, from which I run the partners. Now, if there's a five-part at one place, it doesn't matter. The ring will automatically go from the other side and, you know, connect to the partner. Got it, got it, got it, okay. All this is automatic and self-healing, so you need to do that. So you do that, you create points of presence. From that point of presence, you connect to the partner and put a device called OLT, Optical Line Transfer, there.
00:23:04
Speaker
What's a point of presence? It's like you're tapping into that ring. That's a point of presence. That's right. That's right. That's right. Obviously there are electronic movements to do that. We do that. Then it goes to the partner's device, where you put OLT, optical line transmitter there, which is a core device for going to homes. And from that, it will various fires go and you can enter the homes then.
00:23:27
Speaker
and while you so it changes that information into something which is which can go through a like a smaller wire okay that's and then once inside homes you put your Wi-Fi routers there and you are on
00:23:42
Speaker
Like from a P&L perspective, what is the P&L like? So you said 10% is what you would pay as gateway charges and the rest would be like cost of laying wire and all of that? Oh, the biggest cost always is the manpower cost because you have huge armies to sell. For example, we have 3,000 people. Right now, the staff strength is 3,200. That's a clean point, people.
00:24:03
Speaker
And there are partner employees also. People aligned with Excitalize around 78,000. But yeah, people cost is the biggest cost that we have. And this people cost is for sales or also for running the network? Sales and CX primarily. These are the two main states. People who onboard customers and people who resolve issues of the customers. CX means call center, chat support, so on and so forth. And also people who go and outsell, that's the biggest cost. And there are hierarchies there as well and so forth.
00:24:33
Speaker
But then there are other obviously heads also, but these things will comprise the maximum manpower. Okay. You, 2015 you started, right? So by 2016 you hit one like users and you had raised that one and a half million. What kind of revenues were you doing that in?
00:24:49
Speaker
Very difficult to judge. I think around 50,500 rupees is an A. So after that, we went for another round, which was 5 million. Which year was that? It was year 17 or 18 when we launched the second round. Series B, we call it. So we took it to 5,000,000 just with that.
00:25:08
Speaker
and then after this, B came to the city, C, which was around 10 minutes, which you have done like months back. Now we closed it and we are now at 7.5 lakh users as of today. So basically, the need for fundraise is to expand geographically. Like every new region you open up needs a certain amount of investment in laying the fiber and building a team and offices and kickstart those operations, you need money.
00:25:34
Speaker
and after a year or so it starts paying back but then for that till that time you need to invest. So yeah, the need of money is to expand. You can do some expansion with your internal accruals from the older cities. Delhi Prey plays a big part in that but only in a small way because if you want to start a big city like Delhi, you cannot be done with the proceed from Delhi.
00:25:55
Speaker
Right now, we are in around 29 cities across the country. Major cities being Delhi, Bombay, Bangalore, and then there are smaller towns around it. For example, in UP we have around 10-12 cities, right? From Orakkur to Meerut, Rondakkal, Kantur, all the whole belt, Kuntur, Vijaywara and the towns in that periphery. Currently we have Bangalore, Bangalore, Bangalore. So, total of around 20-28 towns, 20-29 towns.
00:26:23
Speaker
And what is the, what percentage, let's say, for example, Delhi. So in Delhi, what percentage of the broadband market is with you? Okay. Yantal has been doing viral and business in Delhi from last 20 years. And they have the biggest share, I think around a million, maybe more than a bit more than million users.
00:26:42
Speaker
I think we have around 4 lakh users, 4.2, 4.3 lakh users reaching around half a million users in the last five years of our existence. So probably will be number two in Delhi. So naturally if you discount the telcos here at Lingio, we would order fourth in the broadband companies list.
00:27:01
Speaker
And so essentially like more than 50% of your current user base is from Delhi. Delhi is like your flagship location, so to say. It was the oldest location. It started before anybody everywhere else. And it was slower to get a start in the south because we started in 2017 or 2018. But traction is now coming actually from there because it's not working on the resources there.
00:27:23
Speaker
So yeah, I joke with the people here that we are a Delhi company with offshoots here and there. Now from there, we're a truly national company. Yes, which is much more intense pulling it. What all do you need to do to make a city grow? Is it a lot of like holdings and advertisements and marketing spend, or is it like feet on street? See, because this is a hyper-local business, because each and every household has to be connected to fiber. The marketing is also very hyper-local effort. You can't tell look at these, but not in five in between.
00:27:52
Speaker
So you cannot do ATL, you cannot do mass promotion on a TV or a radio or something like that. What you can do very effectively is hyper-local stuff which is done through Freedom Street. Those can be active deals, those standy activities, local competitions and so on and so forth.
00:28:08
Speaker
maplets, newspaper inserts, because we still have newspaper sales, so newspaper inserts from time to time. So such things work here. But yeah, the entire effort is hyper-local. And now, obviously, thanks to technology, we have targeted Google ads, targeted Facebook ads, because they can do for each page of the lobby. So that's also what we use a lot now.
00:28:26
Speaker
percentage of your marketing spend is online and what percentage is offline? Do you spend more on online ads or more on offline? No, much more on offline, much more on offline. Because you have a huge army of 2,000 people who need to be fed with these pamphlets. Without pamphlets, there's nothing they can do. So each person pertains around 100 pamphlets to talk to people. So it's like 80% is offline and 20% is online.
00:28:52
Speaker
What is the unit economics for a salesman? Like how much do you pay a salesman and how much revenue does he generate for you? Yeah, so a salesman on an average earns plus minus 20,000 rupees and the least you expect from him to survive in the system is one per day, one line per day.
00:29:08
Speaker
So, like he's 26, 27 lines in a month for him to survive in the system. Otherwise, for promising people plans will kick in and so on and so forth and he'll be sort of either he proves performance error or he'll not stay in the system. They need to create one line per day. About 300 new subscriptions annually, roughly speaking. So, what is your flywheel? Is it just that keep hiring more salespeople and each salesperson will get you 300 subscriptions or what is the flywheel for you?
00:29:35
Speaker
There are two spokes to the wheel, so to say. One is number of partners. We call them ERPs, exactly wheel partners. Partner means the local entrepreneur. And then the sales guy has to be mapped to the partner. And depending on the homes that this partner has covered.
00:29:52
Speaker
you designate sales people. So each sales person for around 3,000 homes, these are for the homes. But depending on homes you have ready for service, you put the sales guys. So there's this map. Homes ready for delivery compared to a number of people. So you need to do both at the same time. You need to increase your distribution through partners, and then you need to increase the sales effort through... Only one lot more. Got it. Okay.
00:30:16
Speaker
You know, you're operating in a market with very well capitalized competitors. What makes you feel that there is a space for you to exist and thrive and grow? Or is the path forward eventually getting acquired by one of these? What do you see? Simply put, as I said that all these well capitalized players, telcos, are primarily operating in this 30-35% of urban India, which is structured.
00:30:42
Speaker
I think Reliance is making that effort with the geophone to tap beyond urban India. As far as wireline goes, it's very difficult for them to envisage under these territories. We have 70% of the urban Indians live, so our game remains there.
00:31:03
Speaker
in the Bharat section of urban India, in the places where there are no proper broadband services have been given. We're providing world-class fiber-to-home services at 500 rupees to these people. So that's the aim and that's the mass we're looking at. Can there be a strategic tie-up with one of these players? Yes, whenever they see value in us, which they have started already seeing, is they are also starting their partner-led divisions now, I think both Airtel and Gio. Okay, so partner-led division is like copying your model, the entrepreneur model. Okay, okay.
00:31:33
Speaker
Exactly. They are starting industries here and there. But again, from their perspective, it's very difficult to do it because they are basically a telecommunication company doing it directly, not trying to match partners. While as in our case, the whole ecosystem has been built to convert these partners into real franchisees. There's a lot of IT, a lot of technology that we put into the whole ecosystem.
00:31:51
Speaker
The fundamental issue is that if you have 500 partners in Delhi, you don't want 500 customer experiences. You want one customer, uniform customer experience. You want one delivery type. You want one resolution off ticket. For that, we have a lot of applications. Not technology, not there because nobody was doing this model before. So it didn't exist. So we had to do our own coding. We had to put our coders and create software for all.
00:32:16
Speaker
Essentially, you have a lot of digital workflows to ensure consistency across partners. Yeah. First and foremost, treating them as real franchisee, that these are the guys that can be your partners. So, gamification of the whole thing, four hour SLAs.
00:32:32
Speaker
If your issue is resolved in four hours, fine. If not, will you one day free to cast a successful level of trust and commitment from the service? It doesn't come easy. It comes with a lot of processes and a lot of legwork and then a lot of modification of those processes. Give me some examples of whatever work you've done here to make this work, to build an organization which
Technology and Customer Experience
00:32:54
Speaker
is... Yeah, let's start with the basic thing. Now we have, for example, in daily 600 FACs, speed on speed.
00:32:59
Speaker
Now, where are they? Where do we find them? Where are they selling? First and foremost, we have tagged them. They have apps and on those apps, they can do sale and they can book a customer. Now these apps will work only on one part of the location for a specific person. When he is tagged, he goes out of that location, the app doesn't work. And you build this app in house. Exactly. Exactly.
00:33:21
Speaker
We can do sales from that app. He can do everything with that app. Similarly, apps for the partner staff because partner itself is not working. He has a few more people. So they are over tagged in the system. They, we understand who's doing what, how much time is he taking to solve the complaint.
00:33:36
Speaker
Partner also comes to know how effectively work is being done by his people on the ground. It's all through apps and portals that we are interacting with each other. There must be some customer app also where customers can raise issues. Actually, customer app also and there's a partner app also, there's an FSC app also. Apps and portals are interacting with each other in our case rather than just patching it up.
00:33:59
Speaker
So the whole resolution could be digital without needing to actually talk to anyone. Like a customer could raise an issue on the app and the partner would get notified through the app that this is a problem. If it's a partner's problem, if it's not partner's problem, he can do a self-check also. There is a system that checks parameters and there is an issue without anybody talking to them. And if it goes to partner, probably there is a fiber cut where physically somebody goes to involve it. If it's not fiber cut, then we can take care of it remotely.
00:34:27
Speaker
OK, they could be some configuration issues and things like that. All that can be done remotely. Now we have even artificial intelligence, which tells us what is happening inside a customer's home in the sense that how many devices are connected to the Wi-Fi, whether it's a Samsung phone, a Sony TV or Apple MacBook.
00:34:45
Speaker
which one is getting how much bandwidth, where is the issue, is the location of the router or the person is not sitting on a proper place to get the devices or signals. Do you think you'll have more success in the tier 2 towns that you have opened up in considering that metro cities are like all the telcos are also going after metro city audience?
00:35:07
Speaker
the fundamental assumption is the same that whether in metro or even small city in the Indian nature of Indian city is the same 30% organized 30% high ARBU and 70% mass and 70% unorganized and you know so metros as well as non-metros have same you know any small city in India you have Nagar Rajiv Nagar Indran Nagar Jawah Nagar and all that and then you have old names which are just like 70 people live there in old names yeah like your Jabruthpur and all these places in
00:35:41
Speaker
But where do you see your growth coming from? Is it your growth will come more from non-metro or more from metro? The initial growth is always from a metro. But once you are strong in a metro, you go to nearby towns. For example, when we were strong in Delhi, and now we have around 10 odd towns in UP. But for that to happen, you need to
00:36:01
Speaker
cover and capture nearby metro first. And that's how people from other smaller towns, they look up to the metro, nearby metro. A lot of people in Delhi, people in West look up to Bombay, people in South look up to Chennai, you know, so on and so forth. So you need to have metro first, and then you need to go to smaller towns. And so you're currently at about seven and a half lakh subscribers. What's your roadmap? Like, do you have the... At the end of the year, we need to, in any case, reach a million. And that's what we have promised investors, and we know that.
00:36:28
Speaker
And by the end of 2023, 24th mid will be 2 million US. So about 10% of the broadband to home, like fixed line to home market will be with you by end of 2023. Yeah, I haven't rolled till that time. So yeah. And so what's your long term vision for this? Do you look at eventually getting acquired or eventually going for an IPO or from that perspective?
00:36:55
Speaker
Both options are open. If some bigger entity wants to keep the model, keep the basic principles and your bigger platform for us to go in 1000 cities tomorrow, why not? And that will be one way of strategic types. And the other is IPO obviously. So these are the two options in front of us.
00:37:12
Speaker
What is the invested interest for this space, broadband to home? Not much, unfortunately, in the sense that it is in this country because the reliance is there. So everybody thinks that they are going to take everything. We have to make them understand that it's viral and it's not mobile and viral is 1000 times more complicated to do, even for airlines. So it's not very hot in that sense.
00:37:35
Speaker
Would 5G be a viable alternative to broadband to home? Would 5G give similar speeds?
5G vs Broadband
00:37:41
Speaker
You see, any 5G, 4G, 3G, energy, for doesn't matter, either mobile technologies. And mobile technologies mean that they're very good when you're on the move, on the go. It works perfectly alright. But as soon as you enter home, it doesn't, it starts having problems. And the problem is that
00:37:58
Speaker
The higher you go on frequency, the more would be the problem. You see, when you use 2G, mobiles used to work very well inside homes also. Then came 3G, started getting worse off. Then 4G is very bad right now in the country. And 5G will be worse. Because it's physics, you increase the frequency, the actual goes down. So the ability to vent it walls goes down. So all these mobile technologies will be very good for on the go. They'll get a lot of speed for sure on the go.
00:38:26
Speaker
What for who? The other thing that is there is the limitation of spectrum. Spectrum is the frequency use to get the data. Now you have one tower in locality and a limited capacity tower and then 100 people latch on to the tower. This capacity is guided by 100 people. So for example, if we are all watching the match at the same time, the tower will go down because it will not work. Whatever G it might be. Yeah.
00:38:50
Speaker
Here we're getting a dedicated wire to your home, meant for you alone and the capacity dedicated to you alone. And it works anywhere in the home because Wi-Fi router is inside the home. You're saying at scale 5G speeds will be like 4G speeds once there is like mass level 5G adoption simply because of the large volume of users. Yeah, 4G is supposed to give around 60, 70, 80 NDPS. But what is that you get? You get 20, 85 right now.
00:39:16
Speaker
So similarly 5G, suppose you 100 something, but the video 10, 15 like that. So broadband to home will always be faster, especially for video and okay. Okay. So is bundling a part of
Future Prospects and OTT Bundling
00:39:28
Speaker
your strategy? Because essentially if you're saying video consumption is the key use case for broadband to home, then it would make sense to sell a complete package with subscriptions included in it.
00:39:39
Speaker
Yeah, we're doing that. We're trying to do that. Though we don't see a great sort of use case there because people are already getting these OTT apps through mobile operators. Everybody who has a mobile connection gets free OTT devices. OTT services. Still we're bundling it because if somebody wants to use it from our customers, yes, they can have it. Got it. Amazing. Okay.
00:40:01
Speaker
And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to this show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in this show? I'd love to get your questions and pass them on to the guests. Write to me at adatthepodium.in. That's adatthepodium.in.