The International Telecommunication Union?s (ITU) annual publication on ?Measuring the Information Society? presents 2011 rankings for two important ICT benchmarking tools, the ICT Development Index (IDI) and the ICT Price Basket (IBP). While the IDI captures access, usage, capability (skills to use) and impact, the IBP is a composite basket based on the price of fixed telephony, mobile cellular telephony, and fixed broadband Internet services, computed as a percentage of average income levels.

The lower the IPB, the greater should be the IDI, the inverse relationship suggesting increased access and usage of ICT at lower prices. Since there are profound network effects in ICT, rising access allows operators to lower prices by leveraging scale economies. A comparison of the IPB and IDI results for 2011 confirms that countries with relatively high ICT prices have relatively low levels of ICT access and use. Conversely, more people access and use ICTs in countries where ICT services are relatively affordable, and almost all of the economies listed in the top 25 of the IDI also rank within the top 25 of the IPB.

The IDI is a composite of three sub-indices (access sub-index, use sub-index and skills sub-index) and, as expected, Korea tops the IDI rank, followed by Sweden, Iceland, Denmark and Finland. All these countries are characterised by high Internet and broadband access and use.

All of the economies ranked at the top of the IPB Index also have high per capita incomes, indicating that these countries have achieved relatively low prices making ICT services affordable to their citizens.

India ranks 116th on the IDI and 87th on the IBP from a given set of 165 and 152 countries, respectively, used by the ITU in its study. In its extended neighbourhood, in the Asia Pacific region too, India is 20 of the 27 countries on the IDI. Besides the low ranking, what is equally if not more worrisome is that in the two years between 2008-2010, India crawled up by a single rank, while other countries such as Vietnam, Saudi Arabia and Russia have all shown strong and notable improvement. At first glance, these results may come as a huge surprise to most of us who cite India?s ICT sector performance as astonishing and consider it as an engine of growth today and in the years to come.

A deeper look at the reality, however, does vindicate ITU?s results. Mobile voice telephony, where most of India?s success is resident, accounts for only 8% of the entire IDI. The rest of the index is largely built on broadband and Internet, including mobile broadband, and in the skills available to leverage availability of the network infrastructure. These skills include literacy rates and gross enrolment ratios in primary and secondary education. It is in broadband and the skills required to use it that India fares poorly, reinforcing the view that broadband infrastructure and its functionality needs to be improved on a war footing for India to boost its ranking in the global information society and, more importantly, to realise the potential social and economic impacts inherent in the broadband ecosystem (see figure).

The weights assigned to the components of the IDI underline the shift in focus from voice telephony to broadband and, within broadband, a shift in focus to providing adequate speed. Although many national regulators and international organisations, including ITU and OECD, define broadband as a connection with downstream speeds greater than, or equal to, 256 kbps, there remains much debate as to how fast a connection should be to qualify as broadband, and national definitions vary. The US, for example, just recently redefined broadband as a ?transmission service that actually enables an end user to download content from the Internet at 4 mbps and to upload such content at 1 mbps over the broadband provider?s network?. In India, our threshold is 256 kbps, although Trai has recommended increasing this to 512 kbps.

That Internet and broadband networks can deliver much more impact on GDP than mobile telephony is now well established. At the same time, it is also a lot more challenging to internalise these potentially larger gains. Digital literacy, applications and content, largely irrelevant in the mobile telephony space, are crucial drivers of use and corresponding impact in the broadband ecosystem. Infrastructure development and network rollout is, therefore, best characterised as a crucial necessary condition for Internet and broadband.

India?s fixed broadband by end-2010 was less than 1% and there has not been significant improvement since. In July 2011, broadband connections amounted to 12.5 million. On the other hand, China?s fixed broadband penetration was 9.4% by end-2010 and more than one in three Chinese were online, as against one in ten in India. An interesting fact, however, is that India has the third highest number of Facebook users among 130 countries in the world, next only to the US and Indonesia. However, there is much debate on how Facebook statistics are actually computed and its corresponding impact.

Consider the case of Finland, which continues to be an impressive ICT country. The country has a history of being an early adopter of new technologies and forward-looking IT policies. It was the first country in the world to launch a commercial GSM network, and one of the first countries to trial mobile payments and licence 3G services. In 2009, it became the first country in the world to make high-speed Internet access a legal right. Finnish Communications Regulatory Authority, the country?s regulator, has passed a law assigning 26 operators to provide a broadband connection to customers in their coverage areas, making Finland the first country to take this measure. This is part of Finland?s updated universal service obligation (USO). ISPs are obliged to provide subscribers with at least a 1 Mbps connection as of July 2010.

With regard to the IPB, India?s rank is low not only because incomes are low, but also because the price of Internet and broadband are relatively high. On average, Indians spend over 4% of their monthly income on ICT (over 6% for broadband) while for most developed markets the corresponding magnitudes are less than 1%.

There seems to be no doubt that new users in India will mostly access the Internet and broadband on their mobile phones. With third-generation (3G) services now available, mobile broadband could be India?s saviour and hopefully not at the expense of fixed broadband. But the ITU rankings clearly pronounce that all is not well with India?s telecom sector and that we have a long way to go!

Rajat Kathuria is a professor at the International Management Institute. Mansi Kedia is a research assistant at the Indian Council for Research on International Economic Relations