How a regulator and a state owned carrier is hampering Broadband growth in India.

More than half a decade ago, India’s state owned carrier BSNL(Bharat Sanchar Nigam Limited) was hailed as pioneer of providing wired broadband internet access in most of rural areas. It was a time when the nation had not experienced 3G, and 512kbps was a norm in broadband internet access.  Anyone using anything above a 1mbps was either too rich or a business owner. A 512k connection on an unlimited download quota would cost approximately INR.999 ($16 today). There was no such thing as a 8 or even a 4-mbps ADSL connection, even in the grand metros.

The state owned entity, BSNL, had the largest optical fibre cable connectivity which could also be termed as the best in terms of best last mile connectivity, covering a vast expanse of rural as well urban areas. This connectivity was available where no private player could reach easily, and still today private players have not ventured outside tier-2 cities for wired broadband. It was not unusual to see ADSL modems in houses in rural areas. At half-a-mb/sec and almost a thousand rupees a month, at least rural India was beginning to get connected.

Fast forward to 2014. Almost 3 years since 3G cellular services have been introduced. 3G was hailed as India’s route to “cheap high-speed broadband access”, due to ease and speed of setup of mobile towers compared to conventional digging & laying of cables. It was supposed to fill in the gap where wired-broadband couldn’t – cheap, fast and reliable access to internet for anyone using a mobile phone – which basically everyone seems to carry these days.

However, contrary to expectations, outside of metros and tier-2 cities, today, almost no 3G networks exists. Private telecom carriers, as in the case of wired broadband, have limited their 3G networks to urban India. As a result, urban India which already had access to wired-broadband is now upwardly mobile with 3G & even 4G-LTE internet speeds. And, as was the case with wired or ADSL broadband, only BSNL covers the rural areas with its 3G networks.

Now it is evident enough that the private sector has almost abandoned rural areas of high speed internet access, BSNL seems to be unable to get its act together when it comes to delivering both wired and wireless internet to rural India. And tragically, it has happened inspite of BSNL possessing the infrastructure to deliver it. The coverage might not be expansive and does not cover every village, but it is still far greater and covers a major portion of India’s population.

Now, that we know that there is no beating BSNL in terms of reach, let us have a look at some other aspects of broadband access in India.

A report by Akamai earlier this year, ranks India having the lowest broadband speeds in Asia-Pacific, with only 3% connections above 4mbps, compared to 93% in South Korea. An obscure country like Curacao has 87% of its internet connections above 4mbps.

This, of course should come as no surprise to anyone even remotely following the Indian telecommunications scene. The government regulator, TRAI, classified 512kbps of minimum download speed as Broadband back in 2013.

How fast is 512kbps? Well, it is fast enough for 2005, not 2014. At this speed it is not possible to stream videos, let alone HD videos, and most multimedia webpages today wouldn’t load fast enough on 512 kbps. By limiting to 512kbps, the regulator is effectively denying India the “Internet economy”. What this means is most Indians cannot go online and watch a latest movie(Netflix anyone?). That also means, any online streaming company would not open shop in India, which is basically lost employment. Not even mentioning the potential of having your own channel on Youtube and earning from it. These are just two examples of many when it comes to economic importance of having high speed internet on your premises. It’s ironic that these are simply not viable in a country which has 20% or more of world’s population.

 

So, there is no binding on even a state owned carrier to provide high speed internet on a basic start-up plan to the consumer. And a look at BSNL’s website reveals that the basic plan offering 512kbps starts at around INR.600/month. We cannot blame the private players here, because airtel seems to offer a 2mbps plan for INR.799/month(and 512kbps limit kicks-in only if you exhaust the download quotas). And herein lies the source of problems concerning growth of internet speeds in India.

Not only are BSNL’s broadband plans are at times 4 times as costly as competition, but ridiculous looking as well. Sometimes you cannot stop laughing at being made a fool of, and wonder whether BSNL is making a fool or you or itself. There are existing plans(yes as of 2014) which offer speeds of upto 4Mbps and monthly download limits of 8GB/month in the same plan. Then there are plans which have 4Mbps speeds and 100GB download limits, but it is has a monthly rent of approximately INR.7000. To give you a perspective, airtel offers 4mbps and 80GB combo at INR.2400/-.  The plans scream of not buying them. It is as if BSNL itself wants the consumers to go away from it.

As a state-owned entity, it seems natural that BSNL would be able to provide a low-cost alternative to private players. Anyone with a hint of common sense would think that government would effectively use BSNL to change the benchmarks in favor of the consumers which private players would follow. By pushing prices down across the board, and by increasing minimum speeds, BSNL could have lead the charge to change the scenery of wired broadband access. Rather, it is the private players who have been able to bring in volumes of customers by reducing prices, which has enabled them to further cheapen the services and as a result, bring in more subscribers.

BSNL like the rest of the state owned corporations, has failed to take advantage of its own strengths. The behemoth has basically just slept on its huge infrastructural advantages, instead of acting as a catalyst and facilitate as well as revolutionise the economic development of the nation.

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