(Updated) Broadband in India — lessons from the mobile story

An NDTV report (read here) argues that India “still continues to live in the kbps era and a more proactive approach is needed to make this dream come true”. The report ends up simplifying the issue by assuming that broadband growth = fixed line growth. The media expects and pushes for “more”. While I don’t question the motive behind such articles (after all they do point to infrastructure shortages), it misses the point nevertheless. For example, if the article refers to broadband over cable and telephone lines, yes, one agrees that enough has not been done. Broadband and PC Pricing, availability and quality of physical infrastructure are issues that need to be addressed. But the article’s assumption is that growth will be driven by fixed-line infrastructure.

There are many examples past and current about the sudden explosion of access to communications — for example mobile telephony and satellite TV. What went (and continues to go) in their favour was infrastructure and pricing of both devices as well as services. If you look at the fact that the mobile market grew by 68 per cent last year, the success is not rocket science. Consider the recent moves by Nokia and Reliance to target rural users with phones as less as Rs 777 ($19). Nokia expects half its sales to come from the Asia-Pacific region by 2010 (read it here).

What is holding back broadband growth is the insistence that communications requirements will be driven by the PC. Though in the short and medium term, small and medium businesses will drive broadband and PC growth in India (read here). According to Express Computer, “the scenario with regard to the IT investment at small business houses has changed. These small entrepreneurs like their big counterparts are looking IT as an integral part of their business.” However, the broadband future will belong to wireless. The requirement of roaming communications will drive broadband growth and as datacentres moves to India, free internet access will become a reality. Players such as DoCoMo testify to this huge opportunity (read here).

Media commentators need to shed the tendency to look to west for all comparisons and future projections as the needs of India are unique and will lead to a different growth trajectory.

Update (15 May): Financial Express reports that internet surfing is picking up in the tier-II cities (Net surfing hits small towns big time). According to the report smaller cities and towns have recorded a phenomenal increase of 142% year-on-year growth this year and currently account for a sizeable 25% of the total 40 million Internet users. According to the report:

A Mumbai-based analyst says, “One of the reasons of the increasing Internet awareness would be on the application front. Several one-time applications like examination results and ticketing, which are non-communication oriented, encourage the less affluent to be on the Internet.”

According to industry analysts, “More penetration of Internet connection is seen in small cities because of the increasing awareness on technology and this is a segment which is clearly dominated by the youth.”

Net Worth

• 10 m Users log in from up country
• 142% Growth in smaller cities
• Usage Exam results and ticketing
• Players Bharti TeleVentures, Reliance Telecom, Sify, BSNL and VSNL
The growth in Internet adoption can be attributed to faster and cheaper access options, driven by broadband technology.

Indian households are adopting broadband services, which are cheap and widely available.

Though dial-up connections continue to dominate the market due to sheer historical build-ups in 2008-09 and that by 2009-10, broadband will lead with 75% share of the market, according to the report.

Telecom companies pushing into the smaller towns and cable operators offering last mile solutions have driven this growth for broadband.

Five Indian operators, Bharti TeleVentures, Reliance Telecom, Sify, the state-owned BSNL and Tata Group-owned VSNL have acquired broadband wireless licenses in 3.3 GHz range and are in various stages of trials. The industry also expects global telecom companies to join the fray.

Important stories in the media:

Internet service providers pin hope on DoT (Times of India, May 15, 2007)

Telecom poster boy’s hits & misses (Economic Times, May 15, 2007)

Maran’s sudden, forced exit leaves telecom reforms hanging (Live Mint, May 15, 2007)

Trai norms to make Net surfing dearer (Business Standard, May 11, 2007)

BSNL broadband users in twincities to get IPTV service soon (Deccan Herald, May 12, 2007)

Ready for ‘screen’ shopping? (Financial Express, May 13)

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