Broader policy, please

While a CII position paper on the impact of broadband penetration in the country estimates that it can yield an additional benefit of $100 billion over a decade through improvements in productivity and use in areas like e-governance and tele-medicine, the total number of broadband connections in the country was a mere 6 lakh last month.

To put this number in perspective, China is targeting 70 million such connections by the end of 2007. A substantial gap with China is expected, since that country is far ahead of India in terms of telephone and internet connections.

However, some part of the blame has also to be laid at the door of the government-owned Bharat Sanchar Nigam Ltd (or BSNL), which has not only failed to meet its own target quite miserably (0.17 million connections by September, compared to a target of 1 million connections by December), but has also prevailed upon the government to not force it to allow other telecom firms to use its network to provide such net access.

The world over, incumbent monopolists such as BSNL have copper cable going into consumers’ homes. Once this is unbundled, other suppliers lease it to provide services such as broadband and television to customers.

Indeed, the telecom regulator, Trai, had recommended as long ago as April last year that this unbundling be done as far as broadband facilities are concerned, but the government did not accept this recommendation since it felt that it would hurt BSNL’s long-term business plans.

This is being short-sighted in the extreme. Once other technologies develop (such as wi-max, which is being tested right now, and aerial cables, which are being used in some parts of the country), companies will be able to access the customer without BSNL/MTNL’s copper lines—in which case, both PSUs will have lost an opportunity to make money.

More important, from the point of view of the country, increased broadband access has to be more important than the profits of an incumbent monopolist.

In any case, there is enough evidence to show that unbundling of the last mile does not adversely affect the incumbent if it responds fast enough—British Telecom still has the biggest share in the broadband market in the UK despite unbundling, and PCCW in Hong Kong is today a large IP television provider after it felt its business model had been hit by unbundling.

It’s not just in the case of broadband that the government’s policy is short-sighted. For instance, it has not yet moved on Trai’s recommendations on the unified licence, which would allow even cable TV providers to provide telephony and phone operators to provide television signals.

Since this would allow 60 million cable TV homes to get access to broadband internet in a jiffy, the entire debate about using BSNL’s last-mile copper cable would become redundant.

The government is equally protective when it comes to the use of satellites other than the Insat ones, and so users face restrictions in terms of booking space on other global satellites for transmission on the Ku band—if this were allowed, broadband through Vsat would get a big fillip.

Till recently, there were also restrictions on the speed at which Vsat operators could transmit data! For a country that’s setting so much store by the IT revolution, policy is quite backward-looking.