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Summary:

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 […]

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.

  1. I called MTNL last week to get a broadband connection and they told me their at capacity at the CO the services me. No ports for another month…WTF. My broadband adventure continues, it’s been 3 weeks and still waiting for the cable guys to install their service.

    pray for me.

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  2. Great reporting. This is the kind of information that really does not run anywhere else.

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  3. Consumer broadband in India is a massive un-solved problem due to
    Failure of the regulatory body to foster free market competition and a retrograde licensing regime( separate voice, VPN and Video licenses for ISPs) trying to protect huge voice telcos at the expense of pure-play ISPs. ISPs failure to cooperate and sensibly price datacenter services. Anti-competitive last mile providers ( cable companies ) demarcating areas of operation by relying on muscle power. Ham-handed government backed efforts to make ISPs peer at a high cost(cost of last mile) NIXI instead of gentle nudges,education and fostering of free market for the ISPs. I tried to list problems faced by IT managers trying to buy corporate Internet bandwidth here along with my utopian ideas on how to fix it. NGO/Government backed efforts at spreading Internet are not about Bollywood, they are about e-learning. The low PC penetration doesn’t help. I do believe that the young in India definitely want to do the same “cool” things the young people in the west/far east. Bollywood and Gaming are definitely the two biggest killer apps for India. There is definitely a huge market for reasonable quality and competitively priced $10-$30 (per month) broadband Internet services in India.

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  4. Om, it comes as no surprise to me that internet in India is not growing. Have analyzed some of those issues here, if interested –

    http://arunuday.com/2007/05/21/internet-in-india-still-nice-to-have

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  5. You are absolutely correct in your observation. The problem is that though the government of India has declared 2007 as the year of broadband I feel they forgot to inform the relevant telecos about their vision. What Indian government run telcos lack is planning in any form or fashion. The sad part is that MTNL in Mumbai is still the best, though that’s not saying much…

    The other issue due to which broadband is not taking off is pricing. Basic plans are expensive and we have something called “download limit” where if you download more that 1 GB a month you pay for every additional MB that you download.

    All I can say is that we have a long way to go…

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  6. In politicians are the corrupt persons with little education. They are planning to increase taxes on hardware and service tax on ISPs. They are regressive people. I hope sanity will prevail over these people.

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  7. Broadband is stillborn in India. There is obvious conflict of interest here; the companies (public sector or private) that provide broadband are the same ones minting money through ISD calls, especially when inland calling rates are amongst the lowest in the world due to competition. The biggest casualty due to broadband in India is the ISD revenue. Not so much of outgoing calls since those are falling rapidly this year. The golden goose for the government is something called ‘Access Deficit Charge’. Indian expats calling home still pay hefty rates (10-20 cents) and contribute to this kitty. Then why would the incumbants push broadband that could potentially kill this revenue? The three major private players would not complain either because the high ISD rates (and less competition) helps them too. That explains why one reform, of allowing carrier access codes (similar to Europe and maybe US?) has been stalled for so long.
    Further, all these broadband/ISD providers also have IPTV/DTH ventures lined up; why would they push unlimited plans that would threaten their TV ventures?

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  8. Govt. backed MTNL/BSNL are the only reliable service provider in India. Right now they are having serious capacity issues. Seems the waiting is spanning months. This shows the disconnect between govt. policies and operators’ capability. However it is very heartening to find that broadband has reached far and wide. Even remote areas are getting broadband. Its just that India is not yet at “on demand” stage.
    Private players are worst. Bharati takes around 2 weeks to install the equipment and another week to activate the service. Their modems do not support plug-n-play wireless router. Their after sales support is as bad.

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  9. The days of License Raj are back in India when it comes to Broadband. You need to know someone in the company where you are applying for broadband conenction. MTNL has a waiting queue of 8,000 in Delhi and 18,000 in Mumbai.

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  10. I had read somewhere that internet might be available free of cost for Indians in a couple of years but with companies like Reliance entering it who are notorious for keeping every government in power in their pocket this may be a distant dream and penetration might never reach the desired level without proper government will

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