The Hindu Business Line : On a slow roll...

The Indian Government is doing its bit to push Internet broadband, but the market penetration is way off the intended target. A look at issues affecting broadband rollout.

NANDINI spends five to six hours a day in front of her computer browsing the Net through a high-speed connection. For her, the Internet has become a utility, a pervasive tool that helps her do everything from shopping, listening to music and catching up with friends and relatives in the US and elsewhere across the globe.Welcome to the era of Internet broadband in India. Given the positive effect of broadband in enhancing GDP (gross domestic product), as the South Korean success story has demonstrated, the Indian Government is betting on it in a big way. (Broadband has been defined in the Broadband Policy as an always-on connection with a speed of 256 kbps and above).

The Broadband Policy, 2004, envisages there would be six million Internet subscribers before the end of 2005 and half of them would be broadband subscribers. Similarly, for 2007, Internet subscribers are projected at 18 million, out of which 50 per cent would be broadband subscribers. For 2010, the numbers are set to be even higher at about 40 million, with half of them being connected to broadband.

The targets that have been set in the broadband policy are aggressive and call for an explosive growth in broadband penetration in the country. Even though the broadband subscriber number has more than doubled to 3.96 lakh in June from 1.86 lakh three months ago, it is still a far cry from the three million broadband subscriber target set for end-2005.

According to Deepak Pande, spokesperson for Bharti (Tamil Nadu), the broadband push in India has only just begun with DSL (digital subscriber line) using the copper loop, cable and other wireless options.

In this backdrop, eWorld looks at some of the key issues surrounding broadband penetration.

As the sector begins the long trek to meet projections over the next few years, one section of the industry points out that the growth of broadband will remain slower-than-expected on account of two factors: limited competition among players on the one hand and continued high prices of international bandwidth on the other.

Limited competition

According to Deepak Maheshwari, Secretary, Internet Service Providers of India (ISPAI), the last mile copper loop connectivity being under the control of the incumbent will pose a big challenge to the growth of broadband. Over 90 per cent of the fixed lines using the copper loop is available with the incumbents, Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL). Since these have not been unbundled for use by private operators on a commercial basis, there has been limited competition in the broadband arena so far. "Regulatory intervention is required in sharing infrastructure of this natural and historical monopoly of the copper pair in the last mile," he says.

On the contrary, the incumbents, BSNL and MTNL have consistently held the view that the question of infrastructure sharing (in the form of unbundling of the last mile copper loop) does not arise as these are investments made by them in a private capacity. On top of this, as the Broadband Policy paper itself specifies, out of 40 million copper loops in the country available with BSNL and MTNL, only about 7 million loops can be leveraged for broadband services, taking into account the condition/life of the copper cable and demand potential.

International bandwidth prices

Estimates by the Telecom Regulatory Authority of India (TRAI) have placed the cost of bandwidth at 40-45 per cent of the total monthly cost of broadband access. While acknowledging that cost of bandwidth accounts for half of what you pay for broadband in India, Maheshwari says that lack of effective competition in the market for international bandwidth has resulted in broadband services being costlier than they should be. This is a view that ISPAI has also endorsed in its recommendations to TRAI on its Consultation Paper on Measures to Promote Competition in the International Private Leased Circuits (IPLC) in India. Some industry sources have also indicated that if costs of international bandwidth are reduced on the lines of domestic bandwidth, announced recently by TRAI, there can be as much as a 20 per cent fall in broadband costs.

Another section of the industry begs to differ on this issue. At present, there is a tug of war on the international bandwidth front, between users of bandwidth (such as ISPAI) and Videsh Sanchar Nigam (and some private operators such as Bharti), whose interests are affected by lower bandwidth prices. The latter set of players, led by VSNL, is contesting that this market is already competitive with multiple operators and consistently falling prices. According to the submission made by VSNL on the TRAI Consultation Paper, "... Broadband industry cost structure demonstrate that access cost is 45 per cent of the total cost while IPLC constitutes just 4-5 per cent of total costs." According to them, this shows that international bandwidth costs are not a deterrent to the growth of broadband.

Considering the fairly entrenched views of the contesting parties, this is a debate that will continue for some time to come.

Cost of access devices

Even as this debate rages, the industry will have to work on other fronts to enhance broadband penetration. The high cost of access devices, including the PC, and limited availability of local content has kept broadband from reaching mass-market status. Even as the Government has promoted the idea of a low cost PC (akin to the Mobilis, a Linux-based PC launched recently), in the Rs 10,000-20,000 bracket, it will also have to look at other innovative solutions. Maheshwari says that in Indonesia, the Government canalised procurement of PCs with standard configurations and passed on the benefits of low cost accruing out of bulk deals - to the citizens. In Korea too, there were soft loans available for procuring the PC.

Availability of content in local language has also been a big driver of broadband in Asian countries. For instance, in countries like Korea, China and Japan, more than 70 per cent Internet traffic is in local language and is routed within the country whereas in India, it is the reverse, he adds.

Finally, unless there are tangible benefits — transactional or otherwise — people will be unwilling to move the processes online. The success of railway booking has shown the power of broadband access, with the transaction cost being lower than what the neighbourhood travel agent normally charges. If we can translate this power of broadband to education, healthcare, agriculture and government, it will unleash energies that will help India become an economic powerhouse of the future.

raja@thehindu.co.in

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