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When Broadband Truly Arrives

Omkar Goswami

I have rarely met a person with the mind, imagination and the quest for possibilities like Dhirubhai Ambani. The word ‘impossible’ didn’t exist . In his view of the world, everything could be imagined, conceived, designed and executed. Everything was possible. The only constraint was human. Nothing else.

My mind goes back to a day in August 1984. As the rains lashed Bombay, I was listening to Dhirubhai in his office. His eyes were totally focused on me; his face animated. That day, it was about telephony. Here’s what he had to say in an era when there were no mobiles; only copper-wired fixed line phones, with a tele-density of 0.39 per cent, or 0.39 phone lines for every 100 Indians. Dhirubhai was getting animated about the benefits of connecting India. “Imagine”, said he in 1984, “if a phone call was cheaper than a postcard. Can you think of what it can do for the people of this country?”

He was right as usual. Today, mobile telephony is, in most parts of the country, cheaper than a postcard. And it has led to India’s tele-density rising to over 50 per cent, with some 10 million or more subscribers being added each month.

Why am I thinking of Dhirubhai today? Because what he said about telephony is waiting to come true for broadband — something that can, in the course of the next five years, create information super-highways of the kind that is beyond comprehension, and revolutionise India in ways that are the stuff of dreams.

Let me share some facts, based on extensive all-India research carried out by a brilliant colleague of mine called Vishal More. It is useful to start with the residential market potential, using very conservative, lower bound estimates.

Who can afford broadband in India? In the first instance, the market must constitute households with a base level of disposable income. Vishal assumes this to be at least Rs.40,000 per capita, or Rs.2 lakh per household per annum. That translates to 32 million households in urban and 15 million in rural India in 2009-10, or 47 million in all. It rises to 39 million in urban and 20 million in rural, or 59 million in all in 2014-15. And increases further to 48 million in urban and 26 million in rural, or 74 million in all 2019-20.

This, you may argue, is too gross a cut. We need some extra qualifiers as well. True enough. So, Vishal assumes that of those earning at least Rs.2 lakh per year, only households with at least one graduate member or non-graduates with school going kids qualify. The number reduces to 35 million in all in 2009-10; rising to 46 million in 2014-15; and then 60 million in 2019-20.

Now for the cost of broadband. Today, fairly decent services at 256 kbps with generous data download options are available at around Rs.500 per month, or Rs.6,000 per year. For a household with Rs.2 lakh of disposable income, that amounts to 3 per cent of the annual budget. Vishal pegs broadband’s share of wallet at 3 per cent and further analyses the sample to create a finer stratification across income classes. It is as follows:
In 2009-10, if sufficient broadband connectivity were available, 25 million households could afford a connection at a rate up to Rs.500 per month. Another 4 million could pay up to Rs.1,000 per month. And some 6 million more could pay Rs.2,000 per month.

By 2014-15, this market could rise to 29 million for up to Rs.500 per month; another 7 million could pay Rs.1,000 per month; and 9 million pay Rs.2,000 per month.

By 2019-20, the market is estimated at 32 million at Rs.500 per month; plus 13 million at Rs.1,000 per month; and another 15 million at Rs.2,000 per month.

This is only the private, residential market for broadband. I don’t want to bore you with the details of the business demand. Let me just give the numbers: 7 million establishments in 2009-10; rising to 9.6 million in 2014-15; and then to 13.6 million in 2019-20.

Today, there are some 8 million broadband connections. There could have been 42 million (35 million personal and 7 million business). So, we have only tapped 19% of the potential market. That is tragic, because in 2010 Indians deserved better.

Let’s stay with the residential market. Maps A and B give the district-wise ability to pay for broadband in 2009-10 and 2019-20, respectively. The burgeoning ‘green zone’ over the decade shows how large the market can become across many parts of India.

What does this mean for policy? And for the shape of things to come? First the policy. We clearly need a ‘source-neutral’ approach to broadband. The government shouldn’t care if broadband comes from DSL, optical fibre, or newer technologies like satellite, WiMAX or 3G. The policy stance should be, “We couldn’t care less how you provide it, so long as you accept that all markets will be contestable and competitive.” My guess is that DSL will gradually fade away; while the newer technologies like satellite, WiMAX or 3G will dominate in terms of their spread and lower unit cost to the users.

Mobile telephony will have to necessarily push broadband to start recouping the steep 3G licence fees. Therefore, I expect mobile operators to attempt creating some kind of 3G monopoly. It is here that the government must be careful. It is in the consumers’ interest to get broadband at the best possible price — be it through 3G, WiMAX, satellite, or any other source. Therefore, in the interest of spreading broadband as quickly as possible, the government must allow all sources to compete in any geography, and let the best players win.

What will this do for India? Four years ago, at a small tea shop in the middle of nowhere between Udaipur and Banswara, Vishal and I was amazed to see the illiterate tribal wife of the stall-owner breast feeding a child while talking into a mobile. All through the time that we were drinking chai. That’s nothing compared to what broadband can do.

Consider education. Broadband can make distance education a reality. I can see hundreds of thousands of girls and boys taking up various courses to be better equipped for employment. Think of what broadband can do for banking. Think of what it can do for travel — in trains, long distance buses and planes. Think of how it can revolutionise music and entertainment. Think of its role in e-governance. And, most of all, think of it as the greatest tool for fostering people’s voice and democracy. If you don’t believe me, ask Obama; or the tea party groups in the US. In simple words, think of broadband as the great enabler. Something that can dramatically change society for the better.

Broadband is the most fundamental game changer for India. The country deserves it in spades. It is a shame that we have just 8 million poor connections, when we ought to have had 42 million. This country deserves a revolution in broadband — just as it has in television and mobile telephony. Dhirubhai would have cracked the problem in a trice. So, can we get moving? As of yesterday?

Map A: Broadband Potential in 2009-10


Map B: Broadband Potential in 2019-20




Published: Business World, August 2010


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