(This article, by Pune-based Srinivasa Addepalli is taken from his blog and republished here with permission.)
India has about 7 million broadband subscribers, broadband, which by the way is defined in India at >=256Kbps: just about enough speed to let you experience the new, emerging Internet. The Indian Govt. had declared 2007 as the year of broadband, and a target of 9mn subs was set for the year. Even two years later, we are way behind! Just so you know, China has over 80 million broadband subscribers.
Why is a nation such as ours, IT superpower and aspiring global superpower, so poor when it comes to broadband penetration?
Very Poor Fixed Line Infrastructure
Most countries that have a high broadband penetration have (a) high wireline penetration, and / or (b) robust cable infrastructure. Simply speaking, if you do not have the basic infrastructure, you cannot provide a superior service such as broadband. Unfortunately for us, neither of these two conditions exist in India.
There are about 37 million fixed lines, of which only about 30% – about 10mn – are even capable of providing broadband. In recent years, there has been almost no investment in increasing and/or improving the quality of fixed line infrastructure. The country has added more than 400million wireless connections in the last 8 years, as against none in the fixed line space. While lack of focus on wireleine by the incumbents, BSNL and MTNL is an important factor, the blame must really be borne by the regulatory and policy regime which has not created an environment to encourage competition (and thereby, investment) in fixed line infrastructure / services in the country. The TRAI had recommended unbundling of the local loop as a step towards limited competition, but as has now almost become a norm, the TRAI recommendations were not accepted by the DoT.
Less said the better about cable infrastructure. It is a highly fragile and completely unregulated cobweb of many thousands of independent networks. It will take an investment of at least Rs 200 billion to upgrade the cable last mile to make it 2-way and broadband capable. Nobody, it appears, is willing to take that challenge up.
No Encouragement to Competition
It is well-recognized that the mobile revolution in India has been driven primarily by competition: at least 6-7 operators across the country. Private operators were licensed years before the incumbents were allowed to enter the mobile market; several steps have been taken towards creating a level playing field for all the licensed mobile operators. On the other hand, in broadband, there is absolutely no policy measure to encourage private operators to enter and compete; this in spite of the fact that none of them have any last mile infrastructure to speak of, and therefore, require considerable support in the initial years.
The incumbents that are riding on public-funded fixed line infrastructure have – in almost a predatory manner – dropped tariffs so much that India has, at the same time, the lowest broadband ARPU and the poorest broadband penetration in the world! Wireless broadband (read 3G & WiMax) is generally expected to become the competitive alternative – but there has simply been no urgency in creating the policy environment to encourage wireless. Spectrum â the essential ingredient to rolling out wireless networks â has not been made available for Broadband; the proposed spectrum auctions have been postponed several times in the last 2 years.
Can something be done to salvage the situation?
Unfortunately, in the short term, I see no option for the customers and private operators. During 2010, the incumbents will strengthen their dominance in the broadband market (for whatever it is worth); private operators will half-heartedly roll out parallel copper / cable networks and will be plagued with quality issues. If spectrum auctions happen in Jan-Feb 2010 as currently envisaged, 3G and WiMax services should become available in most metros towards the second half of the year.
The Broadband market will have to wait till 2011 for true competition, high quality and innovative services – available in all major towns and cities. But the rest of the world will not stay still. Singapore is experimenting with getting 100Mbps to every home by 2012; we hope to get to about 1Mbps in the top 100 towns by then.
Every year, since 2005, I have been hoping that the next year would be the year that broadband becomes widely available in India. I have been proven wrong before; I pray that things change this time around.
About the Author – Srinivasa Addepalli
Srini Addepalli has been dreaming of a Broadband revolution in India for years, in his professional capacity as the head of strategy at Tata Communications and due to his personal enthusiasm for all things technology. You can find him on Twitter here.
8 thoughts on “Broadband in India – Praying for better times”
We got it all wrong, to begin with. Broadband as defined by the ITU (and, eminently ignored by TRAI) should be, at the minimum, 256 KBps. Maybe, someone used the ‘autocorrect spellings’ feature which got the ‘B’ lowercased, and we are now stuck with 256 Kbps for life!
http://www.itu.int/osg/spu/publications/birthofbroadband/faq.html ( via http://broadbandblog.in/924-trai-appeal-against-information-to-appellate-authority )
We need people with vision, and of action, rather than …
I agree there are some issues with the policy infrastructure. However I do perceive asymmetric investments being made by different players in the fixed line segments (I am not referring to entrenched players). I wonder if some of it is happening “inspite” of the policy infrastructure. It would be interesting to know if there are any published figures in terms of how much each player has invested into the last mile.
On a separate note, is spectrum availability going to be adequate for high speed broadband (eg Singapore ?). If not should the last mile continue to be the focus area despite the policy hurdles ?
Finally – everyone refers to the upcoming 3G spectrum. I wonder what’s your take on whether 3G can be useful for a high population density environment like India (where the same spectrum needs to be used by a much larger number of people).
Thanks for the nice post.
I do not doubt for a moment that we will need to invest in last mile fiber, in at least the top 30 cities (now, and perhaps 70-100 over time) if we want to emulate the broadband experience that developed countries like Singapore. I know that a lot of the large (and some new, smaller) operators are building fiber to buildings, however, it is still enterprise/SME focused at this time – retail coverage is usually incidental.
From a wireless Broadband perspective, just 3G will not be enough. The spectrum auctions are for 3G and BWA: 5MHz of 3G (2.1GHz band) and 20MHz of BWA (2.3GHz band). Spectrum will never be enough, but I guess this will be a decent start, if and when it is allocated.
Its simple, broadband markets such as europe and america are saturated with internet penetration, so the only thing the operator can do is offer is newer tech, faster internet whereas in India the operators have more customers than their capacity for internet connection, so they are free to loot the consumer for really bad service.
eg. a broadband service in a tier 3 city had reduced the cost for 256kbps connection in 2008 has increased the rate again in 2010, when asked about the substantial increase in rental, the service men could only say that they cannot accept too many consumers
with the introduction of evdo the wireless internet space is getting competitive, but again its the poor network services that lets down the user experience
I guess there’s an unstated assumption in this article: High broadband penetration means higher economic development, or a happier society.
It would have been nice to know abot any studies which authoritatively link the two, if such a connection exists (e.g. it is well known now that the mobile revolution connected the masses and higher real time communication meant better economic growth. I doubt this will happen on the Internet – where is the motivation to do regional language content and commerce?)
Higher broadband means more e-commerce (e.g US). The companies who will benefit from this are e-commerce dot coms. Why are they not investing in increasing the broadband penetration?
Higher broadband means more consumption of free Internet content like videos. A majority of rich-content firms in the west and places like Singapore have basically grown on the coat-tails of government’s and telco player’s infrastruture in broadband.
Despite this, such rich content plays are yet to figure revenue models that pay their bills, leave alone make moeny for invetsors.
As we know a majority of broadband telcos in US got burned after 2000 bust, because they even made these investments before time.
For a developing country like India, maybe its better to use capital efficiently to raise the standard of living such that a majority (not just SEC A, B) benefit. e.g. Before this country worries about broadband, maybe it should worry about getting it public distribution system right.
Yogesh I would say let an un-distorted free market decide what is the most efficient use of available capital. Maybe this doesn’t apply to India in toto but still useful for what it is a broadband report talking about impact on society and economy. http://www.calink.ca.gov/pdf/CBTF_FINAL_Report.pdf
@Yogesh: I believe there have been quite a few studies that conclusively link telecom & Broadband connectivity with economic development. A CII committee on broadband (of which I was a member) had estimated (in 2004) the economic benefit to India due to improved connectivity. Summary can be found here: http://www.scribd.com/doc/17411575/Indias-Broadband-EconomyVision-2010Vision-Strategies-Recommended-Action2004Executive-Brief
TRAI took account of the CII inputs as well as other studies while formulating its Recommendations: http://www.trai.gov.in/trai/upload/Recommendations/21/Recommendations%20on%20Internet%20and%20Broadband%202004-04-29%20FINAL.pdf
While entertainment/content does play a role, there is a lot more that can be achieved. We cannot underestimate the value of e-governance projects / open public information / tele-medicine etc. in a country so large and complex as ours.
Infrastructure and Services go hand-in-hand, and sometimes it can be a chicken-egg problem; that’s the reason many Governments have played an active role in several countries in creating the infra as well as “sponsoring” the first-wave of services. Private enterprise kicks in soon after with content and application models.
Hi Srini, Thanks – I really like your last point.