In broadband, China zooms India stalls

The first quarter of 2007 has been good for DSL, thanks to higher than expected growth in China and other Asian economies, according to Dittberner Associates. China contributed more than a third of the total 12 million new DSL connections in the first quarter, which also helped Chinese equipment makers, Huwaei and ZTE, who took the top spot from Alcatel-Lucent. In Japan, VDSL made a strong come-back, in the quarter.

While China is zooming, the Indian broadband market seems to be stuck in neutral, even though the government had declared 2007 a year of the broadband (or whatever passes for broadband!) Andthat should be a cause of concern for venture capitalists who are placing multi-million dollar bets on consumer Internet start-ups.

There has been a strong demand for broadband, but apparently there is a shortage of modems and other gear, according to Light Reading. The problems are particularly acute at two state owned phone companies, BSNL and MTNL, who control nearly 64% of the total Internet access market. There are about 2.3 million broadband connections in India. There are about 8 million Internet subscribers in India. MTNL had planned to add a million new subscribers this year, while BSNL had a target of 5 million.

The government was hoping to get 20 million broadband subscribers online by 2010. The problems at MTNL and BSNL come at a time, when the local telecom regulator is trying to change its policies that favor the incumbents, who are allegedly using their copper-control to beat out rivals.

This should be a major concern for US based venture capital firms that are investing at a break neck speed in India, especially those who favor consumer Internet start-ups. Lack of broadband is going to become a major roadblock for the growth of their investments.

While broadband is unlikely to bring the social change brought upon by mobile phones, it is nevertheless crucial for India. From an economic growth standpoint, broadband is crucial for India’s future, especially if the country wants to be taken seriously as a technology powerhouse.

On a more mundane level, broadband could, for instance, provide a major lift to one of India’s biggest assets – Bollywood. Broadband deployment, and sending video over those pipes can help formalize an industry that currently exists in shadows. The television content business could get a major boost, leading to more companies like UTV and NDTV.

On a more personal level, availability of broadband – faster speeds at lower prices could help me iChat with mom, which means better cooking lessons, that would lead to a healthier lifestyle. I know, sounds narcissistic, but then you want me around longer for these long rants.

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