Internet access critical to SME infrastructure: N. Jairam

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SME Times News Bureau | 24 Apr, 2013
At a time when technologies are changing at an alarming rate, internet network access has become a critical component of business infrastructure, the same as power and water. Yet, many Small and Medium Enterprises (SMEs) don't have the internal resources to reach a technical conclusion from the wide array of IT and telecommunication solutions that are available, said N. Jairam, Director, Hughes (SME business) in an interview.

In fact, 70-80 percent SMEs make decisions on trust or comfort – especially since the complexity of solutions increases. These factors limit SMEs' ability to make informed and accurate decisions, he added.

Excerpts of the interview...

According to Assocham, SME's are expected to contribute over 22 percent to India's GDP in 2012; up from 17 percent in 2009. Technology up-gradation by SMEs will be key to enabling this growth. How Hughes business strategy is strongly focused on mitigating the key challenges faced by SMEs?
N. Jairam: To focus on the small and medium business segment in India, especially in the terrestrially under-served and un-served areas, ie those locations where terrestrial broadband is not available or if available, not reliable, Hughes India is focusing on strong consumer outreach to educate potential customers of the significance of assured broadband reliability. Hughes understands the limitations that such organizations have in terms of investments in infrastructure and hence has recently announced a significant reduction in the onetime investment that is required to set up a Satellite broadband service. In addition to this initiative Hughes has also come up with innovative service offerings to ensure that maximum value is provided to those users who value reliable business grade broadband as an extremely vital ingredient in achieving competitiveness.

As per an AMI Partners report, IT spending by Indian SMEs was USD 9.9 billion and estimated to grow by 8 percent in 2010. The overall spending on Internet and website-related products and services by India SMEs totaled USD 1.45 billion in 2009. In your views, how important is broadband access to SMEs?
N. Jairam: Network access has become a critical business infrastructure, the same as power and water. When it comes to broadband access, having a reliable service is probably an SME's first concern, followed by access speed and then cost. Yet, many SMEs don't have the internal resources to reach a technical conclusion from the wide array of IT and telecommunication solutions that are available. In fact, 70-80 percent make decisions on trust or comfort – especially since the complexity of solutions increases and technology changes at an alarming rate. These factors limit SMEs' ability to make informed and accurate decisions. Lack of investment capability in high end IT infrastructure is definitely one major challenge while the other is not so reliable broadband connectivity options available for their remote office locations starting from suburbs or outskirts of the major cities. It is in these markets that Satellite Broadband is playing and will continue to play a significant role.

And who's benefiting?
N. Jairam: The main SME verticals who are benefiting from this service are : Construction and Infrastructure; Remote Factories; Cyber Cafes; micro-finance companies; Mining; State Government offices and Armed Force units (especially near the border areas); Colleges and Schools, Hotels & Resorts, Project sites, to name a few. In fact the key differentiator is that Hughes, by virtue of offering satellite based broadband services is able to provide services even to single SME units in far off locations and is not dependent on multiple units or clusters being present to offer services - a limitation faced by other terrestrial broadband service providers (please refer to customer segment chart below for more details).

Geographies showing strong growth in remote part of the country like in J&K and the Northeastern states. What future promise?
N. Jairam: From a situation barely a year ago where it was predominantly users in J&K and the Northeastern states who constituted majority customers, today, it is Southern (SMEs from the outskirts of Bangalore, Chennai and other parts of Karnataka) and Western India (SMEs from the outskirts of Mumbai and Pune) spearheading this growth for VSAT broadband. In addition, SME's from Gujarat are now adopting Hughe's VSAT services.

It is also important to note that 50 percent of SME's are adopting VSAT as their primary broadband service while the other 50 percent are using it to provide as a back-up to terrestrial broadband. A huge segment of SMEs now want VSAT connectivity to offer a reliable 24x7 back-up option as insurance against failure and to cater to that segment, Hughes now offers a pay-per-use service plan in addition to very low one time investment option that allows enterprises to keep their one time and monthly charges of the backup connectivity very low and in their control.

And what is your target for future?
N. Jairam: Hughes expects at least 50 percent of that growth will come from SME's looking at VSAT as back-up connections as insurance against failure.

Satellite Broadband User profiles :

Primary Connectivity Users

· Organizations located in locations where terrestrial broadband is not available AT ALL

· Locations where Satellite / VSAT is the only technology option for broadband connectivity providing anytime / anywhere connectivity is the only available option

· Organizations who need broadband to run their business

· Typically organizations with their offices in very remote areas of the country

Backup / Secondary Users

· Organizations which need / cannot live without 24x7 internet connectivity OR Organizations who are not satisfied with their primary terrestrial broadband and would like to keep an insurance against the failure of the primary connection.

· Organizations located in suburbs of Metro cities and Tier 1 City suburbs form the majority of this user group

· The 'reliability' factor feeds them the motivation to opt for a secondary connection through a different technology Eg : DSL , data card , RF could be the technologies that act as the primary connectivity option

How reliable are Satellite/ VSAT services for SMEs?
N. Jairam: From a Satellite / VSAT market point of view, reliability and high service levels remain the USPs while providing adequate speeds that are required by the customers to run their business applications. In fact, an interesting trend being witnessed ,especially in major city suburbs / outskirts, is that of more and more customers going in for Satellite Broadband as a secondary / back-up connection (diverse media backup) which works as an insurance against any connectivity failure of their primary terrestrial broadband . With an over 99 percent up-time reliability, Satellite broadband connectivity provides strong assurance to SMEs in these markets on broadband connectivity that is unmatched by any other medium.