Broadband has emerged as a powerful tool  ( August '8,2005, FE)

The prospect of ‘broadbanding India’, or providing broadband internet connections to 50 million households in the country, might seem a remote possibility in the near term on the face of it, especially with the internet penetration today being less than 2%. One way to realistically assess this goal would be to compare it with similar ambitions in the early 1990s of connecting India with 100 million telephone lines.

In 1994, India had just eight million telephone connections and providing 100 million connections at the time seemed a distant dream. A decade later, telephone connectivity in India has indeed touched the 100 million mark, transforming the lives of people across the country. This phenomenal growth was in part due to policies that have allowed private players to compete and provide high quality telecom services at tariffs lower than anywhere else in the world.

Equally important, however, has been the role of technological innovation. The capital expenses (capex) and operating expenses (opex) involved in installing and operating a telephone line in the early nineties were such that an operator would require an average revenue per user (arpu) of no less than Rs 1,000 per month to break even. Only a very small section of India’s large population used telephones to the extent required to generate this level of arpu. Therefore, providing 100 million telephone connections would have remained a dream had the capex and opex not been significantly reduced through technological innovation.

The reason for the high capex and opex was the cost of the local loop — the copper line between the exchange and the home. Not only was the local loop the biggest contributor to the capex, but its maintenance also inflated the opex, and the cost of copper and the laying of cable only increased every year. By replacing the local loop with wireless, thereby replacing the copper with electronics, the cost implications became vastly different.

In the field of electronics, the cost is governed by Moore’s law, and decreases with every year and with increasing volumes. Therefore, through the introduction of the wireless in local loop (WLL), the capex and opex were reduced and telephone connections were feasible even at an arpu of Rs 300 per month. The cost of mobile handsets also fell in tandem to less than Rs 3,000 and telephony was now well within the reach of several more Indians, with the added benefit of mobility.

While telephony remains critical for empowerment, telecom has further evolved and broadband internet has emerged as a powerful and unprecedented tool that can transform the way we learn, communicate, transact, and are entertained. The task ahead today, therefore, is broadbanding India, and the recent broadband policy of the DoT is an important first step in this regard.

Just as with the growth of mobiles, broadband use explodes only when it becomes affordable to large sections of people. This requires both the connectivity and the internet access devices (such as PCs) to be affordable and the right content to be available. Given the present income levels in the country, providing broadband in 50 million homes would only be possible if the required arpu of broadband fell to between Rs 400 and Rs 500 per month (including the cost of access to content), and the cost of the access devices was between Rs 5,000 to Rs 6,000. Under these cost conditions, broadband use would be widespread, provided the content were sufficiently relevant and interesting.

BSNL has taken a lead in installing digital subscriber loop on their existing copper and have significantly dropped the tariff. However, the competition, which does not have access to the copper, is struggling to find the right technology to scale.

The situation with regard to affordable internet access devices is more complex. Despite falling PC prices, a home PC remains out of the reach of even middle class urban households.

The requisite policies for broadbanding India are largely in place and technological efforts to provide affordable connectivity and access devices are already underway.