First of all, apologies for the slow posting lately. Things have been insanely hectic the last 1-2 weeks thanks to all the traveling. But by this week, things should stabilize a bit and posting will hopefully get to normal.
While still on the road, I had to make time for this post – more so, I felt compelled to write this post.
As part of the latest issue, BusinessWorld has a great cover story on the state of broadband adoption in India. Besides stating the obvious – that broadband penetration in India is miserable – the story also tries to uncover the reasons for the poor adoption. That is one of the things I have always found missing from most of the other broadband related ’studies’.
Here’re some of the interesting pieces from the BW story:
India has 2.52 million high-speed connections, compared to 60 million and 55 million for the US and China, respectively. At least 50 per cent connections in India are with corporates; consumer broadband is barely 1.3 million. But there is a sleight of hand even in these dismal numbers. India follows an archaic definition of broadband, using the term to describe any Internet connection that moves data at more than 256 kbps (kilobits per second). This is not enough to download movies, use Internet telephones, etc. To the rest of the world, a broadband connection must be at least 2 mbps (megabits per second). By that definition, India has only about 400,000 high-speed lines.
Only 400,000 high speed residential connections !!
Amongst other reasons, the story puts the blame on the service providers – BSNL, VSNL, Airtel, Reliance:
Ironically, India’s optic fibre capacity — the pipes that deliver broadband — far exceeds current usage. At least 40 per cent of the 700,000-km optic fibre laid has not been operationalised by telecom companies, according to Trai.
While Reliance has laid the most — 100,000 km — optic fibre, the largest mobile company Bharti Airtel has just 40,000 km. Others have less than 10,000 km each. They continue to drag their feet in reaching the optic fibre to the customer and their offerings remain limited to a handful of geographical pockets in and around the top dozen cities. Instead, their investments and management are largely focused on the highly profitable mobile business.
The reason, as Bharti Airtel’s President Atul Bindal says, is that “broadband equipment costs are much higher than mobile equipmentâ€. Every optic fibre line to the consumer costs telcos at least $750 (Rs 30,000) while mobile phone networks can be set up for as little as $90 (Rs 3,600) a line. “Broadband is a lot more challenging,†says Prakash Bajpai, CEO of broadband business at Reliance Communications. “Here you need to lay fibre, get permissions from municipal authorities, housing societies, etc. In mobile there are no such issues.â€
High cost for broadband is also a deterrent for higher adoption:
What’s more, broadband providers such as Bharat Sanchar Nigam Limited (BSNL) and Reliance charge Rs 3,300 per month for a 2-mbps connection — itself a rare commodity. That is nearly five times what a similar line costs in Japan and South Korea, and more than three times what it costs in the US.Little wonder, then, that in the first six months of this year, India has barely added half a million subscribers (256 kbps). In comparison, China is adding 1.5 million new subscribers, most of them using 1-2 mbps lines, every month.
I really enjoyed reading the story — instead of hyping the numbers like some of the other studies / reports, it paints a more realistic picture. All hope is not lost though – one look at the figure (1) below and you’ll notice that though India has miserable numbers when it comes to broadband penetration, it has the highest rate of growth (93.39% for Q1 2007) for broadband connections in the world. Something to cheer about ?
Give it a read here and let me know what you think.
