Support of industry players and frequent decisions over technology implementation would act as key growth drivers in FY 2009-10. Despite issues like price margins and increased competition, industry is betting big on government driven projects to fuel the overall broadband growth. This optimism is also driven by increase in demand for superior throughput and spectral efficiency, wider coverage, multi-application technology, faster Internet access, interoperability, focus on standardization and cost-effectiveness.

In FY 2008-09, the popularity of ADSL2+ technology modem continued to gain traction in the market. Its popularity has been increasing due to its effectiveness to offer a high-speed broadband connectivity without bothering about phone line unlike in dial-up. Also, ISDN modem market is seeing a colossal demand from SMEs and SOHOs.

Developments
VOICE&DATA 100 analysis reflects that the economic slowdown will further hamper the sales of leased line modems in FY 2009-10. In order to reduce the recurring cost, customers may look for alternate WAN technology. Furthermore, adoption of WiMax technology may affect the sales of ADSL modems. Overall, the industry is heavily depending on the rollout of broadband initiatives in the country.

Bharti Teletech, one of the major players in the segment, announced the appointment of Sunil K Goyal as its chief executive officer. Thus far, the company has manufactured over 40 mn fixed lines phones in India. Beetel also offered a range of modems for broadband, and claimed to be the largest player in 'free to air set-top box' for 'direct-to-home' market.

In another noteworthy development, Gemini Communication (GCL), acquired a majority stake in Chennai based Veeras Infotek. The deal was valued at around Rs 7 crore and was funded through internal accruals of GCL. With this, GCL is eying a major share in the network security space.

For Dax Networks, the major verticals that contributed to its revenue include telecom, SMB and ISPs. The company supplied modems in bulk to PC vendors for various school projects. Its revenue from modems was Rs 50 lakh during last fiscal.

Furthermore, BSNL, the state- run incumbent, is reportedly looking to establish a joint venture for manufacturing modems and other related equipments. During last fiscal, BSNL invited tenders from equipment majors for the said purpose. The company has a large focus on rural broadband and is working aggressively to take broadband to the masses.

Outlook
With less than 7 mn broadband connections, the country offers huge potential in this space. Interestingly, the market for modems has been shrinking since the past few years. The main reason behind this is higher emphasis on the latest MPLS technology, which does not require modems.

Also, the industry is witnessing a sharp trend of bundling of services, which is also causing a setback to the industry. Issues such as after sales support, lack of marketing, increasing presence of local players among others are making things more complicated for the industry.

As the demand for alternate technologies and services like 3G, Wi-Fi and WiMax is gathering an impetus among the consumers, market can mature significantly in the years to come. According to VOICE&DATA estimates, if things are set in place, the industry can achieve a 25% growth in FY 2009-10.

However, to take the growth to the next level, substantial measures would be required from service providers and government.