Tatanet wants channel to offer VSAT on rent

Having worked with the telecom channel partners, Tatanet India has decided rely more on the IT channel community to offers its very small aperture terminals (VSAT) solution for SME customers in C and D-class cities. The reason why the company is targeting smaller cities is because broadband and VPN communication networks are well entrenched in metros and A-class cities. However in smaller towns and remote areas, especially those which are surrounded by mountains or are on higher ground, connectivity is still not as easily available, specifically for last mile connections. In such a scenario, VSAT can ensure ready broadband access on a continuous basis and Tatanet officials claim that their product offers an uptime of 99.97 percent.

There is good reason for partners in smaller cities to be excited about this offering from Tatanet. This is because though SME customers might be willing to opt for VSAT connections, they find the procurement cost which can be upwards of Rs 1.5 lakh prohibitive. This is why Tatanet is offering its product on lease to price-conscious customers. Beside the margins on the sales of the terminals there is also a monthly recurring margin of 8 percent to 10 percent as a montly recurring margin, for as long as the customer subscribes to the broadband connection. The deployment charges for the rented equipment is Rs 30,000 and there is a montly rent of Rs 2000 that the customer pays and he can then sign up for the various broadband options.

Said Ravi Kumar A, National Channel Sales Manager, Tatanet, "We are aware that most SME customers in smaller cities hesitate to opt for VSAT because the cost can be a hurdle for them. This is why we want focused channel partners who can offer the equipment on rent. These partners should be open to new business propositions and have an existing clientele in C and D-class cities."
The company had started its IT channel initiative for its VSAT offering, Readynet, since December, 2007 and currently has around 80 partners in its network. "Of these 30 are active which means that they made at least one transaction a month or have 10 prospective leads with them," Kumar added.

Aware that VSAT is perceived as a technical product by the channel, Tatanet offers a one day training program to all partners who sign up for offering their services. "It is a misnomer that VSAT is a very technical product to sell. It is actually very simple," Kumar noted.

Incidentally Tatanet does have a telecom channel which also offers Readynet as a last mile solution along with the other Tatanet products. Currently the telecom channel contributes 20 percent to its channel revenues. Besides this, the company has a direct sales team which works with enterprise customers for VSAT offerings. Aware that this could give rise to confusion about handling of customer accounts, Tatanet furnishes an annual list of customers that it will be tapping directly to its channel partners as well. "Besides this, we also have a customer lockin protocol to ensure there is no infighting for clientele amongst our partners as well," Kumar added.
According to Dataquest magazine the overall size of the VSAT industry was around Rs 600 crore, including the equipment and services segment. It registered a growth of around 36.2% in 2007-08 and the installed base on shared hub operations reached 82,063 VSATs by March 2008, up from 60,210 VSATs as on March 2007. In total, there were 21,873 VSATs installed in the last fiscal.
Tatanet officials noted that 20 percent of the VSAT revenues came from equipment sale, while the rest came from services, which included offering bandwdith. They added that the SME vertical alone contributed 15 percent to the revenue last year and this is expected to go up to 30 percent this year.