My Business Standard column:
One of the most important documents for India's digital future has barely been discussed in the media. What happens to the TRAI (Telecom Regulatory Authority of India) recommendations on broadband and internet (available at http://www.trai.gov.in) will have far-reaching implications for each of us in our personal and business lives, and we aren't even engaged in the debate.
First questions. What broadband? Why broadband? How broadband? Broadband connectivity, as defined in the TRAI report, is always-on connectivity of 256 Kbps or higher. While one can argue about the connection speed, that is a big leap from what is advertised today (64-128 Kbps).
Broadband is the endgame for the computer, communications and consumer electronics industries. Besides making Internet access faster, broadband can make possible a wide variety of applications. For example, video-conferencing can connect far-flung offices and also enable distance education, telemedicine can bring medical attention to remote areas, video-on-demand can time-shift entertainment to suit our convenience, voice-over-IP can bring telephony costs down even further, multi-player online gaming can now become a reality, and enterprises can access business applications centrally.
The two most common modes of broadband access are xDSL and cable. DSL works on regular telephone lines, and is the most popular way to deliver broadband. Cable companies can also provide broadband by virtue of the fact that they too have a wired connection coming into homes and enterprises. Other possibilities for providing broadband are via satellite and through wireless technologies.
The problem in India, as we have all experienced, is connectivity. TRAI has estimated that bandwidth in India costs 1,200 times more than South Korea, which is the most wired nation today. The end result is few in India have experienced the world of broadband.
While there is a lot of talk about building out India's infrastructure in terms of its roads, ports and airports, we also need to act rapidly to build out our digital infrastructure. From education to healthcare, and entertainment to ecommerce, the world of broadband can also lay the foundation for booting up the domestic IT industry and help improve productivity across India's industrial sector.
This is the context of the TRAI recommendations. TRAI has sought to address 11 hurdles that hinder broadband growth in India: price, access to the customer (lack of access to the incumbent’s copper for DSL, low quality of cable TV infrastructure and lack of organisation, high costs for DTH and VSAT, policies preventing wireless solutions from spreading, clearances for right of way), costs of backhaul networks (lack of effective competition in the “within city” networks, high costs of international bandwidth, ineffective implementation of National Internet Exchange of India), fiscal policies (high taxes and duties, and lack of incentives for faster growth), and content and applications (lack of locally relevant content and absence of “change agent” to drive growth).
TRAI hopes that the implementation of its recommendations will boost the Internet subscriber from last year's 4 million to 40 million by 2010, along with a hundred-fold increase in the broadband user base to 20 million.
One of the most important recommendations of TRAI is that of local loop unbundling. In simple words, it means that the incumbent telcos (BSNL and MTNL) need to open up access on their last mile to others for an appropriate fee. This way, others do not need to replicate what is an expensive last-mile infrastructure. While the concept is sound, this is a non-trivial decision for the government-owned telcos. The interests of a few are likely to supercede those of many.
What India needs is a complete unshackling of all regulation to ensure that every Indian household and enterprise has access to affordable broadband by 2010. We need to think 5-10x the estimates of TRAI. To make that happen, we need to think disruptively. India needs to become a hotbed for next-generation wireless and other technologies which can deliver broadband to homes and enterprises rapidly. It does not matter if others have done it or not. We need to lead the way. Just like South Korea did a few years ago.
Let us set a goal of providing a “whole solution” of hardware (access device), software, broadband connectivity and tech support for Rs 700 per user per month. Of this, broadband access (512 Kbps or higher) should cost no more than Rs 250 per month. Now, let us work backwards and figure out what we need to make this happen. If we can imagine 100 million users in five years, this is a market of Rs 30,000 crore per annum for broadband service providers to fight over. The world of “commPuting” as a utility would have arrived. For once, let us hope TRAI is wrong with their estimates.
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Hi Rajesh,
This is an interesting observation. I have put together a few of my thoughts on what ails adoption of such services. The way i see TRAI's recommendations are as 'technical policy hurdles'. The bigger hurdles are the social ones. Even your suggestion of Rs 250 a month for BB, seems to miss the point.
1. The usage of IT in India in patchy and typically driven by corporate adoption of IT in various spheres of business activity. At the personal level most computers sold to individuals are significantly underused. I have seen cable operators sell 64K 'broadband' connections to homes and even these are underused. The key to this is that there are no real services offered that are innovative or really irreplacable. One may quote the example of online booking for indian railways (which is a killer app) but the reason for its success is the current centralized booking implementation of IR rather than a real innovation.
2. One of the key drivers is the way business is done in this very competitive country of ours. It is easier for me to call the corner 'kirana' and order what i need than to login to fabmall and do the same.There is very little cost arbitration advantage in buying from an online store here due to the slender margins that the kirana's work with and you have to put up with a delay to boot. So much for e-commerce driving adoption unless it is that of a govt monopoly.
Posted by: Shiv on July 14, 2004 12:47 PMHi Rajesh,
This is an interesting observation. I have put together a few of my thoughts on what ails adoption of such services. The way i see TRAI's recommendations are as 'technical policy hurdles'. The bigger hurdles are the social ones. Even your suggestion of Rs 250 a month for BB, seems to miss the point.
1. The usage of IT in India in patchy and typically driven by corporate adoption of IT in various spheres of business activity. At the personal level most computers sold to individuals are significantly underused. I have seen cable operators sell 64K 'broadband' connections to homes and even these are underused. The key to this is that there are no real services offered that are innovative or really irreplacable. One may quote the example of online booking for indian railways (which is a killer app) but the reason for its success is the current centralized booking implementation of IR rather than a real innovation.
2. One of the key drivers is the way business is done in this very competitive country of ours. It is easier for me to call the corner 'kirana' and order what i need than to login to fabmall and do the same.There is very little cost arbitration advantage in buying from an online store here due to the slender margins that the kirana's work with and you have to put up with a delay to boot. So much for e-commerce driving adoption unless it is that of a govt monopoly.
Posted by: Shiv on July 14, 2004 12:47 PM3. There is a huge problem in content delivery over broadband that is indian in nature. Rudimentary services (voice) are viewed as a necessity,whereas services that need true broadband (video and audio streaming etc.) are really entertainment driven services. If you want the indian public to consume broadband entertainment services, i can see huge hurdles is getting people to pay for content. The CAS debacle across the nation and the failure to get even breakeven mass in chennai(the only city where it is mandatory) has clearly shown that paid content is not the way to go in India. At least for the next decade. This being the case what is the driver for broadband consumption ? I don't see any other vehicle for broadband adoption. What am i missing here ? South Korea is a minute country (50 mill pop) and driven by the US economy as a client state for political reasons, it is not the model we can look to for answers.
4. A computer is not viewed as a 'tool' by even the middle classes in India. IT Education is oriented toward tool usage as an end rather than a means. E-mail is probably the only 'real' application that Indian users are comfortable with. In most homes a computer is an 'investment' for the progeny's education. If we are talking 5-10 year time frames for successful adoption and rollout the computer in its current avatar should die. A perfect example is a mobile phone. No one views it as a computer, which is precisely what it is.
5. I don't think that India is going to achieve the required penetration and broadband usage with the general purpose PC model so successful in the west. We have different social drivers and the devices that provide the content delivery services should not be high cost general purpose devices. For instance, a small gizmo that can connected to a tv, provide configuration free e-mail, multilingually,with text to speech (all the technologies here exist) and retails for Rs. 1995 is more likely to drive mail adoption that village kiosks with thin clients. I see the TV as the center of all convergent technologies due to its penetration and mass appeal (again entertainment driven)
6. All the killer apps till date (i don't look at multimedia content delivery over IP networks as a killer app, but i know this will change) are low bandwidth. I think we should look at seamless basic voice and low-bandwidth IP services as the backbone that will drive the indian market rather than rich content services. 'Function before form' is a suitable adage for this situation we are in. If this is not the approach, the policy will remain elitist and never command mass acceptance, which is what creates industries rather than botique service firms.
I agree with the point that there is not enough scope in terms of ecommerce for households currently in India. The killer app in India is going to be education and entertainment. That BB connection is
under utilized is simply because of lack of content and services.
Voice (as Shiv also mentioned) could surely be a killer app. With VoX making good strides in terms of technological advances, once the technology matures for a mass roll-out it can surely be one king of an app. While education and entertainment (or probably in the other order!) also have the potential, its demand may need to be created, whereas with voice, its latent demand that can be immediately tapped.
Posted by: Ashu on July 14, 2004 06:49 PMInteresting thoughts all along. Even many given by Shiv are pretty apt. to the indian scenario. I think the e-commerce view is seen by many as buying things on the net. I think its the services that will constitute more of e-commerce in the near future. VoIP and TIVO type applications can provide just that. Rather than the last mile telephone lines (esp. MTNL), I think its the cable model that is gunna work in india. SIMPLE, most of the expenditure in indian households is for entertainment purposes rather than utility. Which is why we see Shopping malls springing up, Multiplexes doing well, High-Bandwidth cybercafes flooding with teenager playing LAN games rather than people surfing the net. Even mobile phones (other than being a status symbol sometimes) are sold more with features like polyphonic ringtones, FM, Camera than WAP-enabled, GPRS capabilities.
If mass broadband's gunna be a reality on the indian turf, it has to be through entertainment. Bring more things along with the local Cable. Bring in LAN games for teens, Downloadable Movies/Music for the family and perhaps Video-conference for the technologically inclined status group. Bring in entertainment and the price will be paid.
Posted by: Kshitij Chandan on July 14, 2004 08:32 PMGiven a broadband connection for around Rs. 700 per month, what killer apps is an average Indian going to access? I know you will argue that its a chicken and egg problem. If there isnt a viable mass market for the content/services, why would someone develop them in the first place. And without the killer-app content/services why would an average Indian even spend Rs. 700 per month (unless you are also giving away the PC for dirt-cheap/free aka Reliance model)?
What if an average Indian has a broadband (lets just say 256kbps) connection and can just use VOIP to almost place dirt cheap STD calls to relatives/customers/suppliers/anyone in India? Would this qualify as the killer app? Maybe people would even pay around double the the target amount , ie around Rs. 1500, for this.
Posted by: Anand Jain on July 18, 2004 11:02 PM