Towards a broadband revolution

Written by Atul Bindal | Updated: Jul 31 2007, 04:03am hrs
The sooner the government makes unbundling mandatory for access by telecom operators on non-discriminatory basis, the better it would be for boosting broadband growth in India The stage has been set to usher in the broadband revolution in the country. Three years after the Department of Telecommunication unveiled India's first broadband policy, it has heralded 2007 as the Year of Broadband which would aim at increasing PC penetration in the country, at making broadband more affordable and at making available higher speed broadband-offering the Indian broadband consumer connections beyond 256 kbps-and introducing them to the information super highway.

The opportunities are immense. Globally, broadband use is picking up speed. From just over 17 million users in 2001, the number of global broadband users has grown rapidly in recent years and is now fast approaching the quarter of a billion mark. As of now, the base of Indian broadband users stood at a meager 2.43 million by the end of April 2007, giving immense scope for growth. Digital adoption is evolving rapidly. There is also a need to make it easier for consumers and businesses to adopt broadband solutions.

However, there are two key challenges that broadband growth faces in India, namely, local loop unbundling (LLU) and low PC penetration. While the above represent challenges from the technology angle, overcoming these will be merely necessary, not sufficient. The primary impediment to broadband adoption will remain content that is both compelling and relevant content LLU is one of the main obstacles in the fast roll out of broadband services in India. This is an issue of lack of access to the local access network where the incumbents own close to 90% of the copper cable network, the most common medium for the access to the customers. The sooner the government makes unbundling mandatory for access by telecom operators on non-discriminatory basis, the better it would be for boosting broadband growth in India. Telecom Regulatory Authority of India (TRAI) has also recommended it as a significant step for speedy spread of broadband services.

As regulatory precedents, we can draw lessons not only from US and UK where after going through some of the hiccups, unbundling of local loop is a successful model but also from the electricity sector back home where open access in transmission has been allowed. The transmission segment in power sector can be equated with last mile access in telecom as both have huge sunken costs and hence same economic justification for opening up of existing resources holds valid for both.

There are, of course, two main problems in implementation of the unbundling. The first is to ensure reasonable return to incumbents without making the price prohibitive for private operators and the other to ensure that incumbents provide the access on non-discriminatory basis and do not deliberately hide their unutilized capacities. TRAI in its recommendations has already addressed these issues and come out with practical suggestions. It suggests the regulation of the unbundling with power to TRAI both to fix the price and to determine if excess capacity is available with incumbents.

The desktop/notebook penetration in India is still seen to be low. According to the latest IDC India figures 5.8 million PCs were shipped in CY 2006 in comparison to China's 22 million. Analysts say that India has one of the lowest PC penetration rates in the world at 18 per 1,000. The government and the industry need to think about how to effectively partner to bring down prices of Internet access devices.

Government assisted PC purchase programmes that offer PCs at lower interest rates can offer significant benefits. Industry players can work with governments and industry partners to promote, design and deliver such programs. Leveraging their strong customer base, telecom service providers have been partnering with PC manufacturers to include broadband access as part of the PC package.

The primary driver of broadband adoption will be the availability of compelling content. Global success stories indicate the role played by eGovernance in driving broadband penetration. India also has opportunities here that can be leveraged. The efforts of the NIC in bringing in more services and features under the internet umbrella will go a long way in making our country next generation broadband ready

As the industry and the government responds to these and other challenges, the Indian broadband consumer can soon expect to see broadband connectivity reach a critical mass. He will soon see the sequel to the success story of mobile growth in India-that of Broadband growth in India.

The writer is president, Airtel Broadband & Telephone Services