Mumbai: Bombay Gas Co. Ltd was formed in 1862 to provide street lighting and supply gas to households in the island city then known as Bombay.

It laid a 400-km pipeline network and distributed coal gas through it. The company faded into oblivion during the city’s transition from Bombay to Mumbai, after 120 years of active operations.

Now, thanks to the Internet and telecom revolution, Bombay Gas is roaring to back to life, using its pipeline network to lay fibre optic cables that can offer seamless connectivity and broadband coverage to customers of telecom companies. The process started in 2012-13, with India’s third largest telco Idea Cellular Ltd taking on lease fibre capacity in Bombay Gas’s network. And now the company counts the top three telecom firms of India—Bharti Airtel Ltd, Vodafone India Ltd and Idea—among its customers.

“It plans to deploy the most dense fibre network in South Mumbai and leverage that to build India’s first full stack carrier’s carrier," according to the company’s standalone accounts, directors and auditors report of 2014-15 available with the Registrar of Companies (RoC).

The company’s management says it is just the beginning of the resurgence of Bombay Gas and a long road lies ahead.

“What we have firmed up for now is to reach up to 350km of OFC (optical fibre cable) network throughout the island city of Mumbai. Last year, we had reached around 50km and we will be reaching 100km soon. We have contracted to give fibre backhaul and tower connectivity to the largest telcos in the country. Slowly, we will go up the value chain in terms of being a neutral host BTS and backhaul provider," said Kunal Bajaj, chief executive officer of Bombay Gas.

BTS stands for base transreceiver station and consists of antenna and radio equipment necessary to communicate by radio with a mobile station.

What the company is doing is simple: it is laying huge cores of fibre optic cables in its already existing pipelines which can connect the telecom towers and sites to the main network of telecom companies.

This is called backhaul in telecom parlance. This backhaul not only makes for seamless and reliable two-way communication between the telecom towers and the main sites of telecom companies, it also protects the telcos from call and data drops and provides larger data and voice capacities.

“This is a very good business proposition for both the telecom companies and for Bombay Gas. While the companies save the cost of getting right of way to establish fibre optic network, we are getting revenue which can be ploughed back in the business," said Bajaj.

Documents available with the RoC show Bombay Gas posted total standalone revenue of ₹ 8.32 crore and a profit before tax of ₹ 3.46 crore in the year ended 31 March 2015. On a consolidated basis, it earned revenue of ₹ 9.02 crore and made a loss of ₹ 900,000.

Bombay Gas is essentially a holding company and has two main subsidiaries—Bombay Gas Holdings and Investment Pvt. Ltd, which owns the entire 400-km pipeline network, and Excel Telesonic India Pvt. Ltd, which has a licence from the Telecom Regulatory Authority of India (Trai) to lay fibre optic cables.

The holding company is in the process of merging Bombay Gas Holdings with Excel to put a simpler business model in place.

After starting operations in 1862 as a British government-owned company, the ownership changed hands in 1947 when businessman K.D. Jalan, who was a part of Soorajmull Nagarmull Co. that managed businesses including jute, tea and engineering, bought out Bombay Gas and The Calcutta Gas Co.

The Jalan family continued active operations of Bombay Gas till 1981; Calcutta Gas was nationalized by the government.

In 1981, Bombay Gas’s licence was cancelled by the Brihanmumbai Municipal Corporation (BMC) because natural gas was becoming the fuel of choice.

The business was suspended and the company delisted from the Bombay Stock Exchange (BSE).

“After 1981, the company was given allocation of natural gas from ONGC’s (Oil and Natural Gas Corp. Ltd) Bombay High. Unfortunately, the government did not give us a price at which to sell the gas so the allocation expired," said Ashish Jalan, director of Bombay Gas and grandson of K.D. Jalan.

“Later, the gas was re-tendered and the bid was won by GAIL (India) Ltd, which bid at zero rates to supply gas to Mumbai city. What followed next was almost two decades of discussions and negotiations with gas transmission company GAIL and later city gas company Mahanagar Gas Ltd, none of which fructified," said Ashish Jalan.

Bajaj said that proved to be a blessing in disguise for Bombay Gas. “It was because the discussions never fructified that the promoters began exploring more innovative opportunities. This continued till around seven years ago (2009-10), when the entry into telecom was finalized," he added.

Bajaj explained that most of the telecom companies by then had exhausted their fibre capacity, which relied on 24-core or 48-core fibre optic networks and could support 2G (second-generation) networks.

With Bombay Gas, whose pipelines could hold three to five cables of 144-core fibre optic networks, the backhaul capacities could be enhanced significantly, offering “hundreds of terabits of data transfer capacity to telecom companies", said Bajaj.

Bombay Gas’s management, now headed by chairman and managing director Sushil Kumar Jalan, son of K.D. Jalan, is banking on an expected surge in high-speed Internet usage and data consumption that will require huge capacities of fibre optic network.

But is the future of fibre optic cables as promising as the management expects?

Industry experts and consultants say Bombay Gas is on the right track.

“India is in the early stages of an uptake in the levels of activity through the Internet and data services—both through mobiles and fixed-line services that feed into buildings, homes and offices," said Mohammad Chowdhury, technology, media and telecom consulting leader for Australia, South-east Asia and New Zealand at consultancy PricewaterhouseCoopers.

“For all of this, the only backbone you require is optic fibre, especially in busy business districts such as South Mumbai," he said.

India is way behind China in terms of fibre connectivity. The country has well short of 20 million km of fibre while China has 150 million km.

“India’s demand for fibre, especially from commercial areas and due to the push given to smart cities, is expected to increase by almost three to four times by 2020. As we move from 3G to 4G and to 5G by 2020, the fibre capacity that can support these higher speeds for data transfer increases by six times," said Ankit Agarwal, global head (telecom products) at Sterlite Technologies Ltd.

Sterlite Technologies is the biggest supplier of fibre optic cables to Bombay Gas.

Agarwal said the success of the Bombay Gas model can have far reaching implications in India, where there are unused capacities to lay fibres in water pipes, transmission and distribution lines and gas utilities. Citing an example, he said, Italy is already using its sewer lines to lay fibre optic cables.

Chowdhury said Bombay Gas has an interesting model that can be scaled up from providing simple fibre capacity, called dark fibre, to offering value-added services such as data transfer.

“Independent bodies such as banks, universities, hotels, etc., always want dedicated lit-up fibres, which they can use for personal and secure data transfer. That is the way ahead for companies like Bombay Gas," he said.

Bombay Gas has already envisioned this, said Bajaj.

“What we are planning is to diversify into services and offer different ways of delivering capacity. We will light up the fibres, maintain them and offer them as a turnkey service and eventually offer fibre-to-the-home as a final road map in the foreseeable future," he said.

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