Take Broadband to the Masses
Naresh Wadhwa, President and Country Manager, Cisco India and SAARC
The Indian economy has been growing steadily over the last few years. To sustain this growth there is a need to ensure a more well-rounded development that includes remote rural pockets. Financial inclusion of the poor and vulnerable groups and provision of better access to healthcare and education is critical to achieve equitable development. The role of technology in furthering these ambitions is pivotal.
Building an extensive broad-band network across the country and enabling universally accessible, inexpensive broadband can en-sure efficient delivery of technology-enabled healthcare, remote education, and improve access to government services in a growing economy like ours, which has a large population. Increased broadband penetration will also help increase GDP because, historically, nations that consistently rank in the top tier of broadband penetration are the ones that post twice the rate of GDP growth compared with countries in the bottom tier.
Broadband penetration in India is extremely row. Factors that have prevented widespread adoption are failure to make the medium sufficiently attractive and a lack of availability. A third element, affordability was a significant barrier in the past, but new technology developments have driven down the costs of PCs and Internet subscriptions making pricing less of a hurdle today. Most broadband customers in India today are primarily concentrated in urban areas; semi-urban and rural areas are virtually excluded.
To date, market forces have not been sufficient to spread the technology beyond urban areas due to cost constraints, lack of compelling local content, limited availability, and a fragmented group of industry operators. Absence of a comprehensive wired infrastructure in India has made wired broadband expensive in semi-urban and rural areas. Setting up a wired communication network is expensive and demands considerable amount of time. A TRAI estimate indicates that a rural fiber infrastructure to connect 3,75,552 villages, for example, requires an investment of roughly INR 32,295 crore. Therefore operators are hesitant to invest in villages and re-mote areas.
For broadband to have a reach across the country, service providers have to consider technologies such as wireless. Wi-Fi and WiMAX, for example, can help take care of last mile connectivity issues and help bring down costs. The other challenge for broad-band penetration is that nearly 70 per cent of the market in India is controlled by state-owned BSNL and MTNL, so private players have found it tough to penetrate the market. However, auction of 3G and WI-MAX spectrum, coupled with the new draft telecom policy, has now set the scene for a competitive wireless broadband market.
India still lacks a critical mass of high-demand applications that can generate new users in areas of entertainment, education, and e-governance. Although some content has started migrating online, content that is locally relevant and available is still in short-fall. One ray of hope exists in the entertainment space, where Internet access is being spurred by video and peer-to-peer applications, rep-resenting a powerful force that can increase demand for high band-width.
Additionally, the Government's investment in the National e-Governance Plan (NeGP) to cover projects including automation of land records, tax, driving licences, pass-ports and common service centres; the Unique Identification (UID) project and other c-governance projects such as e-Passport, National Rural Employment Guarantee Scheme (NREGA) and treasury management initiatives will help drive demand for broadband and promote inclusive growth in rural and semi-urban India.
Another barrier to widespread penetration of broadband in India is availability. Unlike other countries, India has not experienced a smooth progression of technologies that lead the way towards an obvious evolution to broadband. DSL, for example, is the most common evolution path in other countries, but India does not have a large enough base of wired house-holds ready to upgrade. While cable broadband has a large base of subscribers in urban India, the subscriptions are con-trolled by Multi System Operators (MSOs - companies that own a large number of cable systems), who are many in number, small and largely unorganized.
MSOs lack the scale and means to upgrade, expand, and digitize their networks to offer broadband to the masses. They also lack control of the actual cable lines that reach the households, because MSOs secure last-mile access through franchise deals with local cable operators who like to keep their largely un-regulated networks analog, further inhibiting growth. However, the cable digitization Bill is expected to change the cable landscape. Digitization will provide the cable sector with industry status to attract institutional financing and become organized.
Mobile broadband has started gaining traction in India. The introduction of 3G and reduced calling costs are expected to drive mobile broadband in the country and increase the demand for broadband availability. Advanced technologies such as 4G are expected to enhance subscriber interaction with the network because people can access Internet services, such as online television, blogging, social networking, and interactive gaming, easily, on-the-go. This is expected to further drive demand for mobile broadband ser-vices.
However, industry and government need to address underlying issues of concern that prevent the rollout of a fixed-line network. From a pricing perspective, broadband users have to pay for access platforms (e.g., PCs/laptops and mobile devices) and a monthly Internet subscription. Although subscription charges in India are among the lowest globally, they are the outcome of price competition in a currently irrational market (where competition forces operators to sell broadband access at or below actual cost).
This poses a significant hindrance to future market growth be-cause sustainable growth requires bringing prices to a more sustain-able level while simultaneously reducing operating costs. Operators (telecom and cable) must work to ensure ubiquitous supply by understanding the strengths and competitive positions of various broadband technologies and their applicability across different segments.
The government needs to pro-vide more civic services online, establish a policy at the national/local levels to streamline access and advance the rollout of the fixed network infrastructure besides encouraging digitization of the cable industry. As a first step to push for in-creased broadband penetration, the Indian Government hopes to provide all 2,50,000 village panchayats with broadband by 2012 through the 'Bharat Nirman' programme. As of January 2011, 97,548 village panchayats have been covered.
According to the draft of the National Telecom Policy, the Government will provide 'broadband on demand' by 2015 and achieves tar-get of 175 million broadband users by 2017 and 600 million by 2020. The draft policy proposes to revise the existing broadband down-load speed of 256 kbps 10 512 kbps and subsequently to 2 Mbps by 2015 with higher speeds of at least 100 Mbps thereafter. Part of the policy is also to increase rural teledensity from 35 per cent 10 60 per cent by 2017 and to 100 per cent by 2020.
The Government spending on e-governance projects and SWAN initiatives is likely to drive the growth of the networking market further. Going forward, advanced wireless technologies like WiMax, 3G and 4G are expected to pace up the broadband growth in India. Wireless for last-mile connectivity in rural India and growth in broadband penetration will drive market growth and eventually help India transition to a fully networked economy.