Why the mobile revolution succeeded but the broadband revolution failed.
Digging around on the TRAI website, I found a white paper published in collaboration with CII (Confederation of Indian Industry) in 2009 - a roadmap for inclusive Broadband growth. The report projected an ambitious vision of 695 million broadband users or 214 million connections by 2014 (as each connection is accessed by multiple users), with equitable rural and urban access to broadband. In those days, broadband was defined as a non-dial up connection with a speed higher than 256 Kbps.
What has been our progress against this vision? At the time of publishing the report in 2009, India had 6.8 million broadband subscribers, but approximately 50 million internet users (this would include cyber cafe, and dial-up access). Home PC penetration was under 10% and household penetration of broadband was under 3%.
As per Jan 2014 TRAI data, broadband subscribers stand at 57 million. 238 million Indians have access to internet. Home PC penetration is still under 10% and home broadband is still under 3%. Effectively, 7 out of 8 Indians are accessing internet through their mobile phones, and most of them are accessing slow 2G internet.
If we have seen any growth in broadband, it has mostly been a default growth, and all of it has happened as a fallout of mobile operator initiatives. We have failed magnificently against the roadmap we set out with.
What was proposed in the report to trigger broadband growth?
One category of proposed initiatives lay in the realm of government policy. This included a reduction in excise and import duties on devices and accessories like PCs, routers etc. Another and far more critical proposal, was for a comprehensive ICT policy which integrates IT, Telecom and Internet growth - a strategy of convergence.
The second category of initiative lay in the realm of providing service. This included encouragement of vernacular content and thrust on internet enabled services like education, e-governance and iPTV. The report also recommends utilisation of the fixed wireline infrastructure to provide high-speed broadband wherever feasible, especially in urban areas, and promoting wireless broadband in remote or sparsely populated tracts of rural India.
None of these proposals are rocket science. In fact, we have proof that they work, when we look at the spectacular growth of mobile telephony. At the foundation and heart of this growth is the New Telecom Policy (March, 1999). At this time, there was a modest vision to achieve 15% teledensity over the next decade, from the current level of 2%.
But the far-reaching outcome of the NTP was the decontrolling of the mobile sector. DoT (department of telecommunications) held a monopoly in the sector, as a deciding factor in disputes, and as a service provider. The government set up BSNL as a corporate entity (PSU) and a separate independant tribunal to resolve disputes and effectively exited its dominant role in the telecom sector. Competition was allowed in overseas call segment. License fees of telecom operators were lowered. In the 2000 budget, the import duties on mobile handsets was cut to 5% paving the way for the flood of cheap devices that have hit the markets today. In contrast, computing devices including tablets still attract 12% duty. Policy reform stimulated private entrepreneurship and there was no looking back.
According to figures shared by TRAI a couple of days ago, India has a mobile subscriber base of approximately 920 million. Private telcos hold nearly 90% share, while the PSUs (MTNL and BSNL) have just around 10%. With rural subscribers contributing 40%, there is finally a more equitable growth in the sector. It has taken us 14 years since NTP, to reach this point.
In contrast, the wired line (landline) subscription data tells a different story. The wireline base is approximately 28 million (it has gone down by 10 million since 2009) - and here the PSUs hold a 78% market share. Every wireline customer is also a potential broadband customer, so it comes as a surprise to know that only 50% of wireline connections have broadband. The majority use wireless broadband through dongles or 3G connections on their phones. (TRAI defines broadband as any internet connection with a speed higher than 512 Kbps).
And this is the most interesting statistic - BSNL figures among the top 5 providers of both wireless and wired broadband, and has 30% market share. Not bad, in a market with over 144 broadband providers!
Here are some of the top measures that can be taken by the PSUs and private sector to promote broadband penetration in the country:
- Partnership with computing entities like Dell, Microsoft and Ubuntu Linux to bring in low cost laptop access. All the boom around tablets notwithstanding, laptops are of more utility to the entire family as a medium of work, education and entertainment, and as such will appeal to Indians. When we have laptops at parity pricing with tablets and TVs, we will see adoption pick up.
- Tackle the power problem by encouraging indigeneous innovation - solar powered charging for laptop batteries, or low cost inverter devices.
- Bundling schemes with devices that trigger internet adoption. No one will buy a TV and not take a cable connection - the TV becomes a useless plastic box. It's no different for a laptop in the 24X7 connection era. Bundled schemes can include one years internet subscription, more user friendly pre-paid recharge schemes and cheap pay as you go schemes. It has been my observation that private telcos actively discourage pre-paid broadband connections and try to push more expensive post paid plans. If necessary, regulators need to step in to protect the consumer interest.
- Cable operators have last mile fibre connectivity and can play an active role in marketing internet to consumers. Bundling of internet offering with the mandatory Cable TV subscription would help, as it would to use common hardware for set top box and internet connectivity. This would significantly lower the barriers to adoption.
These suggestions are just the tip of the iceberg. What's more important, is that the government needs to take a stance to push broadband adoption, as they did with telephony. It is going to take time, maybe another 10 years. But for a million-year old civilisation, a decade is a very small period. And if we actually reach the place where mobile telephony has reached, and most Indians access broadband internet say in 20 years time - that is huge. It's something to dream about, aim for and look forward to.