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Despite various efforts by the government, broadband penetration (with a download speed of 256 Kbps or more) has not increased much in India. Although the year 2007 was declared as the 'Year of Broadband' by the Ministry of IT and Communications, to improve broadband penetration, the situation has not improved.

According to Trai, the subscriber base reached 3.47 mn by the end of February 2008, as compared to 2.21 mn a year ago, which shows an overall growth of 55%, far short of the targets.

However, despite this promising growth, India has a broadband penetration rate of around 0.3%, which is one of the lowest in Asia. With this rate, there is no possibility of reaching anywhere near the target of 20 mn broadband connection by 2010.

At present, broadband penetration is limited to urban areas and metros; a large population in rural India is still untapped and the government has failed to include this population in the growth story. Considering that over 70% of India still lives in villages, rural areas offer a big market that needs to be tapped to push broadband growth.

Although tariffs have come down substantially, bandwidth prices are still very high compared to neighboring countries like China and South Korea. Poor infrastructure, high prices, ordinary Internet speeds, and licensing regulations are some factors responsible for the slow broadband growth in rural India.

According to EVS Chakravarthy, CEO, YOU Telecom, “The population of over a billion people presents a huge opportunity for broadband in India. However, while connectivity (infrastructure) is a major roadblock, lack of awareness, access, and content are major hurdles in increasing broadband penetration in India.”

It is high time the government, instead of setting over-ambitious targets, expedited the progress to ameliorate the fundamental infrastructure demands, to achieve realistic broadband targets.

Poor Infrastructure
Resolving infrastructure and access issues is crucial. The situation is particularly bad in rural and far-flung areas where there is a clear dearth of the required infrastructure to provide broadband connections. Huge investments are required by the government and service providers to place cables in these areas.

High bandwidth cost is a major factor responsible for low penetration. The soaring license costs are pushing service providers to depend on access to customers through the state owned BSNL network.

The other reason for the slow growth is low PC penetration in India. While it has been increasing in urban India, it is still low in rural India.

As per a recent MAIT study, the total PC sales between October and December 2007, with desktop computer and notebooks taken together, were 1.75 mn units, registering a growth of 26% over the same period last fiscal. The study further reveals that the increased focus on e-governance by the central and state governments also provided traction for desktop consumption. The households market has emerged as one of the key drivers of consumption, thereby enabling the market to rapidly expand into the hinterland.

PC prices have dropped significantly during the last couple of years, and today are available for as low as Rs 10,000. But low computer literacy, ignorance about the benefits of the PC and Internet, and language complexities are issues that need to be taken care.

“Multiple factors such as low PC penetration and high cost of creating network infrastructure are affecting the growth of broadband in the country,” says Srinivas Rao, chief marketing officer, Airtel Telemedia Services.

“For India to experience the true broadband Internet revolution, the complete broadband ecosystem needs to be addressed on an urgent basis and a number of initiatives need to be taken to pace up growth in the broadband industry,” Rao adds.

“Adoption and inclusion of intelligent network infrastructure equipment within the existing network environments can actually help service providers and carriers to increase profitability while drastically reducing their capex and opex. For instance, by simply automating network resource utilization and provisioning as well as managing inventory in real-time, intelligent control planes can reduce provisioning and/or service change intervals from months to minutes, allowing service providers to optimize time-to-revenue,” says Neeraj Gulati, MD, Ciena India.

“We foresee carrier-grade Ethernet as the next agent of change that can help network operators drive down network costs and complexity, boost bandwidth capacity, and enable new services while minimizing the need for significant new infrastructure investment,” he adds.

If we compare things at the global level, nearly all countries that have high broadband incursion succeeded to unbundle the local loop. These countries also have a structured and strong cable infrastructure that looks like a distant dream in the Indian context.

As per Trai, there is a strong need to ensure that the existing local loop must be utilized efficiently and without any further delay. Also, spectrum for wireless broadband technologies is allocated to service providers on a priority basis to fuel broadband growth. Any further delay will not only limit the number of broadband users but will also have an adverse impact on the Indian economy in the coming years.

There should be an exigency to study Indian conditions in an exhaustive manner. It is important that before we design the blueprint for high broadband penetration, we learn from our mistakes and analyze the present deterrents to growth.

Price Sensitivity
High prices of services are also affecting the growth of broadband penetration. In India, price plays an important role in the success of any service and/or product. A drastic reduction in prices encouraged the Indian masses to make the mobile revolution a reality.

According to Rajesh Chharia, president, ISPAI, “Pricing is a very crucial factor for a country like India. It is essential on the part of the government to lighten up the license fees and encourage service providers so that broadband services can reach rural areas in a much faster and cost-effective manner.”

Although broadband prices have gone down, from Rs 1,500 per month in 2003-04 to Rs 200 per month in 2008, prices need to fall further. Operators are offering different plans, ranging from Rs 250-1,500, depending on the use and the downloading limit.

According to A Sethuraman, chief marketing officer, Alcatel-Lucent, South Asia, “Market research shows the willingness on the part of the consumer to pay for the services. Regulations, tariffs, and entry-level prices have to be minimized. Single window bill clearance, multiple service offerings, etc are also required to augment the incursion.”

Localized Content
Interestingly, the purpose of broadband has been extended to lot more applications than simple browsing or checking mails. Indian consumers love to spend hours watching their daily dose of TV serials, cricket matches, and news, which essentially reflect the immense opportunity for increasing broadband penetration in an entertainment-hungry country by offering more localized and entertainment content.

“The changing nature of content is putting pressure on the traditional broadcasting model. In today's scenario, consumers are willing to pay, provided the service provider assures him of quality and reliability. Synergizing investment is a big thing for the consumer,” says Girish Trivedi, deputy director, ICT Practice, Frost & Sullivan.

Language, however, is a major barrier in making the Internet a popular medium of communication among rural masses. It is imperative for service and content providers to focus more on the Indian language content and creating services and applications around it.

According to Jai Maroo, director, Shemaroo Entertainment, “More consumers are consuming entertainment on the PC. To increase ARPU, it is important to provide higher value services. Providers will move beyond the basic need of the consumer, ie, connectivity, in order to penetrate deep across all levels.”

“Focusing more on Indian language movie content and creating services and applications around it will also drive the consumer to adopt and consume,” he adds.

Almost all broadband service providers have plans for content delivery, not necessarily content development. Online VAS, as of today, is primarily a means that enhances the user's broadband experience.

“As an ISP, we believe convergence is a reality. We definitely see YOU making significant contribution to the triple play space. It is a matter of time before mobility is also added to voice, video, and data services,” says EVS Chakravarthy, CEO, YOU Telecom.

Commenting on the initiatives in VAS, Srinivas Rao, chief marketing officer, Airtel Telemedia Services, says, “We are taking initiatives to raise the bar and be the first to make a better offering for broadband and voice customers. This initiative has been driven by the customer's need for better services and rich content that enable them to experience the power of the Internet. We were the first ISP to come up with a gaming service.”

Trai has also recommended the need of subsidizing Web hosting services (through BSNL) of regional language websites. The recommendation further says that all the state government websites should be very user-friendly and should always have regional language as an option.

According to Sanjeev Fernandes, head, Business Development, India, NDS, “No doubt, content is going to be the king in the Indian context. Interactive games and channels can improve the appeal of the platform. However, lack of local language content at consumer-friendly price points is itself a challenge.”

Rajesh Chhaira of ISPAI said, “In today's scenario, simple broadband browsing is not the target of consumers. Now, the time has come to put some killer applications. The interesting thing is that the generation of content is not a big problem.”

In an effort to increase subscriber base, MTNL, in collaboration with Aksh Optifibre, has launched videophone calling services, V Spyk, for its Delhi and Mumbai customers. V Spyk is a real-time videophone calling service that enables real-time communication at a more personalized level between two users.

Subscribers who already have the MTNL broadband connection will have to pay only Rs 999 for this facility while new subscribers will have to pay Rs 1,300 for a package that includes both the broadband connection and the videophone calling facility.

“The value added services revolve around the customer's behavior pattern with regard to the Internet-we try to address needs that are work related, learning related, and entertainment related.

The company is also working with multiple agencies to come up with relevant regional and local content, training issues, etc.