In India, broadband’s growing

by rohit on September 2, 2009

Broadband is drawing some much-needed attention.

Broadband subscriptions in India now account for 46% of all Internet subscriptions (Qtr ending Mar ’09, TRAI Performance Indicators report), up 3% in a Quarter. It would appear that new growth in Internet subs is coming only from broadband. The number of broadband subscribers (6.8 million at end July ’09) though is short of the government’s 2010 target of 20 million, at current rates at best half that target will be achieved.

New moves are now afoot to grow this infrastructure and deploy broadband applications, as the following recent stories indicate :


Yesterday’s Economic Times carries an interview with Sam Pitroda. Pitroda has of late been consulting for the Government – on new IT / e-governance –  projects. Titbits :

“1. We have 6 million broadband connections, we need 100 million in 3 years ! Will tap into the existing 60,000 km fibre optic network of Railways and the networks of BSNL, Reliance, Bharti, Gas Authority India Ltd., etc. Hopefully, 3 G and WiMax will also help.

2. 21 government verticals have been identified for E-governance, these include passport computerisation & railway reservations (completed earlier), sales tax, new company registration, Income Tax payment, etc.

3. An average citizen has 11 IDs, we need to have just one unique ID.

4. A National Knowledge Hub are planned to connect universities, R & D labs, etc. – to have 5000 nodes.

5. Health and legal information networks are also planned.

6. Challenges : last mile access, local (language) applications and creation of standards e.g. standard birth certificate & standard land records.”

Pitroda’s prior record is mixed and any which ways he is currently in an advisory role, so let’s see if his above assertions come true.


Separately, the government is reportedly considering introduction of broadband in secondary schools (reported in a recent review in The Times Of India on the new Government’s first 100 days).


The Mint of 1st Sep also carries an interesting retrospective on the causes of poor broadband penetration. This one is by David Appasamy of Sify. Sify is one of India’s ISP pioneers and is currently the largest non-telecom i.e. stand-alone ISP.

The ISP sector has not been profitable. There are 167+ ISPs supposedly active. But the top 5 (BSNL, MTNL, Bharti Airtel, Reliance Infocom & Sify) make up 87% of the 13.5 million subscriber base. The top 2 providers, the public sector BSNL & MTNL make up 70% subscribers and only 30% of the base is in the private sector. And only 22 ISPs have more than 10,000 subscribers each.

95 of the 167 registered ISPs offer broadband services. Of these only 15 have more than 10,000 subs each. And these comprise over 98% of total broadband subs.

And there are now new challenges on the horizon which will keep these ISPs struggling to stay relevant.

Here’s the thrust of Appasamy’s piece :

“Highlights from the past:

  • The Internet policy of November 1998 offered an ISP license at a token fee of One Rupee. Five hundred odd companies applied and several hundred started services. However, for reasons given below,a large number have shut down.
  • The Government ISP VSNL had a large installed infrastructure and was thus able to undercut the private ISPs in retail price.
  • High infrastructure charges e.g. port charges were levied on the private ISPs
  • Service-level agreements were not entered into for above infrastructure services given to these new ISPs, thus the support provided turned out to be somewhat unreliable.
  • Despite recommendations made in 2004, the Department of Telecom (DOT) which runs the telcos BSNL & MTNL, has not unbundled i.e. share the BSNL / MTNL’s  ‘last mile’ copper line. ISPs have had to make these huge investments themselves.
  • VOIP trunk dialling calls within India can be a good revenue source for ISPs but has not been permitted.

WiMax technology is on the anvil, this will lead to wireless broadband. However, while WiMax spectrum is currently being auctioned, it is not being offered to ISPs. It is available only clubbed with mobile spectrum and, therefore, available only to mobile operators.

Thus, a worry for the Internet industry is whether any spectrum will be available at all for use for ISP use vis-a-vis mobile use.

In general, DOT sees the private ISPs as competition and has stifled their growth, despite these ISPs receiving the backing of the Ministry of IT and of regulator TRAI. ”

Above has made the ISP business unviable. It is probably no coincidence that stand-alone ISPs (like Sify) have not done well, and the only ones that are large and growing  are those which are into a related business (i.e. telecom) that can cross-subsidise the ISP connection. The top 4 ISPS VIZ. BSNL, MTNL, Airtel & Reliance Infocom are all telcos and together account for 84 % of the ISP subscribers.

Of course, broadband in India is itself defined as a download speed of just 256 kbps or more, lower than the norm in most countries. But then this is another story.

Note : Data from Performance Indicators reports Dec ’08 & Mar ’09 and Summary report for July ’09 by Telecom Regulatory Authority of India

Leave a Comment

Previous post:

Next post: