India's broadband base touches 13 million

India's broadband base touches 13 million

Though India is the preferred global destination for outsourcing of information technology (IT), the country of 120 crore people has only 1.28 crore users of broadband internet connectivity, a penetration ratio of an abysmal 1 per cent.

According to the latest report from Telecom Regulatory Authority of India (TRAI), at the end of September 2011, India had a 20.99 million internet subscribers and, of these, 12.83 million have broadband connection (TRAI defines broadband when the Internet download speed is 256 kbps or more). Though in the September quarter the growth in broadband connection was 24 per cent over the same period last year, it grew only 3.88 per cent over the June 2011 quarter (see table).

Worse, even those who have broadband access, use the facility sparingly. TRAI data showed that the average broadband usage in the quarter ending June 2010 was only 389 minutes or 6.5 hours a month. This implies that India has grossly fallen short of the target of 20 million broadband subscribers by 2010, as was set out by the government’s Broadband Policy. Poor Internet penetration is bad news for a fast developing country like India as it has been seen worldwide that the economic growth and affluence also depends on the spread of internet usage.

Several factors
A KPMG-FICCI report on Indian telecom industry pointed out several reasons why broadband penetration is poor in the country. The most important one is the poor reach of optical fibre cable (OFC), the main carrier of internet connectivity. Laying OFCs under the ground is expensive and the cost can be justified only if the volume of usage is very high.

This is why only BSNL, the oldest telecom company in the country, has the widest OFC network installed over many decades.    

The other reason is that the two government-owned companies spearheading wired internet connections in the country – Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), are unable to push for the spread of Internet as they are under tremendous financial stress.

Wired line or DSL (digital subscriber line), accounting for 85 per cent of country’s broadband access, was the forte of the PSUs which together accounts for 69 per cent of country’s internet subscriber base. However, large losses and government’s bureaucratic bungling is holding back these PSU companies from making capital expenditure in expanding broadband connections. Strangely, though BSNL’s average monthly revenue per broadband subscriber at around Rs 800 is eight times the average revenue from mobile subscribers (Rs 100), the company cannot expand its business due to lack of equipments and cables.

Yet another reason is the high infrastructure cost at the subscribers’ end. One will have to have a personal computer (desktop, laptop or netbook) and also pay for the modem and installation expenses. On top of this, the rates charged by ISPs are considered to be high as the lowest average monthly broadband bill is around Rs 500.

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