With creaky dial-up connections and a substantial state stronghold, India's Internet industry is still a laggard.

But the flood of private investment announced this year could make wobbly connections a thing of the past, analysts say.

Private sector leaders and state-run giants have lined up investments totalling at least $5 billion to build domestic fibre optic pipes that will carry sound, pictures and text.

"If most of the planned projects were implemented, there would be a glut of bandwidth. Anyway, it would take some time for that to happen," Nitin Bhat, telecoms analyst at consultants Frost and Sullivan, told Reuters.

"This is in tune with international trends, where backbone bandwidth is increasingly getting commoditised."

Old economy giants that dominated textiles, petrochemicals and engineering are now jumping on the bandwidth bandwagon.

Petrochemical leader Reliance group is believed to be investing more on "infocom" than it did on its crown-jewel refinery that cost Rs 142.5 billion($3.2 billion).

Reliance recently launched a friendly takeover bid for BSES Ltd, with an eye firmly on the power distributor's plans to build Internet infrastructure over its electricity grid. It plans to wire up 115 Indian cities with a broadband network.

"We will leverage our core competencies of complex project management, technology absorption, financial engineering and building grass-root businesses to become a leading player in the infocom landscape," chairman Dhirubhai Ambani said last month.

The Tata group recently merged its four power utility companies and also announced plans to invest Rs 3.75 billion to build a 400-km (250-mile) fibre optic network in Bombay. Some 1,200 km are planned later.

While such companies focus on infrastructure as a prime offering, entertainment groups like Zee Telefilms are building bandwidth to feed their cable TV customers.

Zee plans to link 26 cities through optical fibre links, involving a total investment of Rs 24 billion.

"Once it becomes interactive, we'll push video-on-demand, pay-per-view and interactive games in addition to Internet and TV," Dev Naganand, Zee's CEO, portal and convergence, told Reuters.

India's software industry is growing at more than 50 per cent per year. Cable TV penetration is expected to grow from the current 25 million to around 80 million by 2008, and Internet subscribers to around 35 million from the current one million.

Besides these, key bandwidth demand is expected from an emerging boom in Application Service Providers (ASP), who manage and rent out software over networks.

India is also going through the paces of a new regime to end a state monopoly on bandwidth-hungry long-distance telephony.

State-run units have jumped to take advantage.

Powergrid Corp is scouting for a global partner to build a telecoms backbone around its 13,800-km electricity network.

Gas Authority of India Ltd is using its natural gas pipelines to build long-distance communication links. The Indian Railways plans an optic fibre network around its sprawling 62,800-km route through a joint venture.

The new projects are in addition to the more than 100,000km of fibre links built by the Department of Telecommunications.

A good portion of the investments are in the southern states of Andhra Pradesh, Tamil Nadu and Karnataka, where software is powering a broad-based urban and industrial growth.

In addition to domestic groups, US-based Enron Corp aims to invest Rs 6.0 billion on fibre optics in Karnataka.

There is also a drive to spread affordable Internet. In Madhya Pradesh, Reliance plans to set up 7,800 cyberkiosks through a joint venture and BSES plans 1,000 in Bombay. Britain-based WorldTel, in partnership with Reliance, will build 1,000 community Internet centres in Tamil Nadu.

-- (Reuters)