The Hindu Business Line : Give push, won't roll

A push could get things moving right away or take some time. The DoT's recommendations to give an impetus to broadband may not make a difference immediately.

INVESTING in broadband, in what can be called high-speed, reliable, on-demand Internet connectivity, has the potential to significantly accelerate India's economic growth. This has been fundamentally established by South Korea, the world leader in broadband penetration. With prudent government support, Korea was able to increase broadband penetration from one Internet user per 100 citizens in 1995 to 25 per 100 in 1999. And see its ongoing results in economic terms.

In 2002, information technology, driven primarily by broadband rollout, accounted for 50 per cent of South Korea's GDP (gross domestic product) growth rate. Sounds astonishing, doesn't it?

Higher broadband penetration in India will not only enable business interaction over long distances, but its manifold spill-over benefits will also have to be recognised as early as possible. Broadband has the ability to reform education, help offer better health services and provide access to superior governance for citizens across the country, some of the priorities of the new Government that has assumed office at the Centre.

An analysis by the National Broadband Economy Committee under the auspices of the Confederation of Indian Industry has projected that the growth from broadband is expected to be $90 billion (in present value terms) in the years 2010-2020 and 11 per cent additional growth in labour productivity.

Broadband is truly an idea whose time has come. And the Department of Telecommunications, part of the Telecom Ministry, has to wake up to this reality. Responding to the Consultation Paper by the Telecom Regulatory Authority of India (TRAI) for `Accelerating Broadband Penetration' issued in mid-April, DoT has suggested that in order to ensure maximum broadband penetration, all possible last-mile networks — including wireline, wireless and fibre, irrespective of age — should be opened up for competition. (Last mile basically means reaching the home or office of the consumer from a distribution point.)

Prima facie, this is a sensible suggestion that TRAI can incorporate in its guidelines. But let us face it... it is not earth-shaking. For two reasons. Except the wireline (or fixed ) infrastructure, all the other infrastructure — whether it be wireless or fibre and latest technologies within them (such as Wi-Fi or WiMax or Fibre-in-the-Local Loop) are still in nascent stages of development. Openness in the last mile can be advocated as a good condition, but it may not make a material difference to broadband penetration for at least three years or more.

Second, the incumbent (in India's case, BSNL and MTNL) controls over 90 per cent of copper-based wireline infrastructure that is suitable for DSL (Digital Subscriber Line) connection through unbundling of the local loop. And DSL is practically the route followed for the highest broadband penetration in developed countries followed by hybrid co-axial cable route (through cable connections which run into homes). It is unlikely that India will be a major exception to this trend.

In European and Asia-Pacific countries, DSL accounts for 75 per cent and 70 per cent, respectively, of all broadband growth on average. In countries like Italy and Germany, it is as high as 100 per cent and 98 per cent, respectively. In India, fixed line (with the copper loop) reaches 42 million subscribers, while cable TV reaches 50 million homes. According to consultations done by TRAI, at least 50 per cent of BSNL/MTNL's copper lines can handle DSL services, though the speed of connectivity may vary, being high in the metros and low in the rural areas.

Going by this trend, it is obvious that DoT's suggestions are intended only to postpone the inevitable. However, in making its recommendation, DoT's suggestion that the last mile be unbundled for all access mediums, irrespective of age, will effectively mean that it is in favour of full unbundling of the last mile access. If this is the purport of DoT's suggestion, then TRAI needs to examine ways and means by which full unbundling is made mandatory, instead of bit stream unbundling and shared unbundling proposed by the regulator.

International experience and studies done by telecom researchers worldwide have clearly established that countries that have advocated full unbundling option like Germany have offered the best broadband services to consumers, whereas in countries such as the UK, British Telecom, acting in its self-interest, ensured that local loop unbundling remained a complicated affair and the prices charged for access were prohibitively high. In this context, the best option is to make full unbundling of voice and data possible by BSNL/MTNL. If that is too onerous, TRAI has to at least ensure that in the first phase, shared unbundling (of only data services) be made mandatory and within a year or two, BSNL/MTNL progress towards full unbundling of both voice and data. As the Korean success story shows, a strong impetus from the regulator has to be complemented by proper direction from the Government, if broadband has to take off in a big way in this country.

Picture: V. Ganesan

maverick@thehindu.co.in

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