Get connected

For anyone who has spent hours on a regular dial-up connection, trying to download files from the Internet, a broadband connection with speeds ranging from 256 kbps to 2 Mbps is the equivalent of nirvana.

Indeed, various studies in developed countries suggest that the impact of higher IT spending, including on high-speed connectivity, is a 1 per cent or 1.5 per cent hike in GDP growth.

Efficiency gains come in several ways, including tele-education, tele-medicine, tele-banking, and the like. That explains the rush across the globe to develop broadband capability.

According to research cited in BusinessWeek magazine’s recent cover story on China’s broadband foray, by 2007 there will be 70 million broadband connections in China, compared to 55 million in the US; by the same date the number of Internet subscribers is projected to be 180 million in China, versus 150 million in the US.

By contrast, according to a report just done by IBM Business Consulting for CII, India is projecting a maximum of just 10 million broadband subscribers by 2010.

Even this, the IBM consultants pointed out during their presentation, will happen only if the pricing of broadband services is correct — at a Rs 1,100 monthly rental demand will be for only 4 million connections, while at Rs 300 it will go up to 10 million.

Yet, given that various government taxes add around 66 per cent to broadband prices today, it is clear that prices aren’t going to get much sweeter till the government realises the benefits of broadband and decides to reduce taxes.

Another issue on which a lot needs to be done, is to open up what’s called ‘last mile’ access to customers.

There are around 35 million fixed telephone lines going into customers’ houses — if access to these is opened up to all broadband firms, it should be possible to provide what’s called ‘broadband lite’ (connections on existing copper wire give speeds of around 256 kbps) at significantly lower costs.

If the example of ITC’s e-choupal is anything to go by, there are interesting broadband possibilities in rural India as well — close to two million farmers today have access to global prices on an online basis thanks to ITC, and ITC makes money by being able to buy directly from farmers and by allowing others to sell to farmers on its network.

In fact, according to IBM Business Consulting, their analysis shows it makes good business sense, once taxes are brought to reasonable levels, to wire up villages with a population of over 5,000; even villages with populations no greater than 2,000 can be wired up on a sustainable basis, it seems. For smaller villages, government subsidies would be required.

While subsidies are not recommended, what does make sense is for the government to implement broadband projects in villages and rural areas where private capital will not go on its own.

And given the experience the government has already had with e-governance projects like Bhoomi and Sarita, it is obvious that the costs of service delivery are much lower than the traditional physical model, while the benefits are enormous.

Going broadband is obviously the way forward, it would be a pity if the government fails to cash in on the opportunity.