1) The document discusses the economic and social benefits of broadband access, noting that broadband availability at affordable prices contributes to higher GDP growth, a larger qualified workforce, and a more efficient labor pool. 2) It also discusses India's goal of "Broadband for All" and the key challenges in achieving higher broadband adoption rates in India, such as inadequate wireline infrastructure, the need for local loop unbundling to increase competition, and poor quality of service due to high contention ratios. 3) Addressing these challenges will require a coordinated push across technologies, operators, and the broadband value chain, as well as support for efficient broadband infrastructure deployment through streamlined right of way procedures and charges.

1. 25
Broadband for all
Various studies have credited broadband as a catalyst for economic and social
development of a country. Availability of broadband services at affordable price
levels contribute to higher GDP growth rates1, provide for a larger and more
qualified labor force, and make that labor pool more efficient. It has been proven
that the multiplier impact of broadband growth on GDP is significantly higher than
mobile telephony growth.
Growth effects of ICTs: Percentage point increase in GDP
per capita for every ten percentage point increase in ICT
penetration, 1980-2006
1.6
1.38
1.4
1.21
1.2 1.12
1
0.81 0.77
0.8 0.73
0.6
0.6
0.43
0.4
0.2
0
Fixed Mobile Internet Broadband
High-Incom e Econom y Low -Incom e Econom y
Source: Qiang and Rossotto, World Bank, Information and Communication for
Development Report 2009
The successful auction of 3G and BWA spectrum has laid a good foundation for a
push towards achieving pan India broadband infrastructure; which will lead us to
the dream of providing “Broadband for all” This vision demands a synergetic push
.
across technologies (DSL, Fiber, Cable, and wireless), amongst telecom operators
(public and private) and across the broadband value chain (device manufacturers,
service providers, content providers & regulators); so as to provide this “universal
service” to residents living anywhere in the country (urban or rural) and to the
match the customer expectations across all segments (Enterprise, Government and
Retail).
1 Consultation Paper on National Broadband Plan, TRAI, June 10, 2010
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2. Section or Brochure name | 26
24
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3. 27
The key challenges in broadband Quality of Service (QoS)
adoption Broadband growth has been partly constrained owing to
poor QoS in terms of throughput speeds experienced by
The broadband penetration in India has been low despite customers. The contention ratio4 (number of subscribers
the presence of 104 broadband service providers. The accommodated in a given bandwidth) in India is high i.e.
broadband penetration is less than 1 percent2, which is low service providers provision an average 130 subscribers in 52
compared with overall tele-density of 59.63 percent3. Of the Kbps bandwidth, whereas internationally the same ratio is
approximately 17 million (fixed) internet subscribers only not more than 50. Due to this phenomenon, bandwidth per
10.08 million are broadband users3. This implies that India still subscriber reduces dramatically, especially when several
has some way to go in terms of achieving the original target subscribers log in at the same time.
of 20 million broadband subscribers by the end of 2010, as
set by the Broadband Policy 2004. The number of broadband Contention ratio (number of subscribers accommodated
additions is only 0.1 to 0.2 million compared to 16-18 million in given bandwidth)
per month for mobile additions2.
140 130
Uptake of broadband has been limited so far on account of
120
multifarious factors:
100
Inadequate wireline infrastructure
80
Inadequate wireline infrastructure has resulted in the “last
60 50 50
mile” challenge in providing access. The absence of local 45 48
loop unbundling (LLU) further restricts competition in this 40
space by not allowing a regulatory framework wherein 20
alternative service providers can use the existing local loop of
licensed service providers to offer broadband services. Both 0
Czech Slovakia UK Ireland India
these factors have predominantly undermined the growth Republic
of fixed broadband services currently being provided using Czech Republic Slovakia UK Ireland India
DSL technology. Global examples suggest that the DSL
penetration has been significantly higher in countries adopting Note: The contention ration specified are for download speed of 512 Kbps except
for Slovakia for which 1.5 Mbps has been considered
LLU:
Source: TRAI, CRISIL Research, May 2010
DSL Coverage2 Broadband
1
GDP per capita
Country Year of LLU penetration
(USD PPP 2008)3
,
percentage Source year (Dec 2009)
France 2001 98.5% End 2008 30.4 43,453
Germany 1996 95.0% End 2008 30.3 43,484
Italy 1998 95.7% End 2008 20.5 37,936
Netherlands 1997 100.0% End 2007 37.1 50,868
UK 2000 100.0% End 2008 29.5 42,275
Australia 1999 91.0% June 2008 23.3 44,223
Canada 2001 89.3% End 2007 29.6 42,945
Japan 2001 98.6% Sept 2008 24.8 39,081
United States 2003 82.0% End 2007 26.4 46,008
Source:1 OECD, Working Party on Telecommunication & Information Services Policies, Developments in Local Loop Unbundling, 2003
2 OECD, Indicators of broadband coverage, 2010
3 OECD, December 2009
2 Consultation Paper on National Broadband Plan, TRAI, 10th June 2010
3 ‘Monthly Telecom Scenario – August 2010’, DoT, October 2010
4 TRAI, CRISIL Research, May 2010
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4. 28
Support for efficient broadband infrastructure
Growth of internet and broadband users (in Millions)
deployment
180 10.5
Right of Way (RoW) procedures and charges are fairly 160 9.47
9.5
140 8.77
complicated and have concerned the service providers to 120 8.5
7.82
venture into creation of new infrastructure (especially optical 100 7.21 7.5
80 6.62 6.62 6.5
fiber cables) for broadband and telephony services. Lack 60 5.52 5.5
of adequate power supply (or alternative energy sources) 40 4.9
4.5
20 4.38
especially in the rural areas has also been one of the key 3.87
0 3.5
factors for the sluggish penetration. Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun-
08 08 08 08 09 09 09 09 10 10
Cost of customer premise equipment (CPE) Fixed Internet Subs Wireless Internet Subs
Fixed Broadband Subs
The relatively higher cost of CPE is another hindrance for
broadband penetration. Also, the PC penetration in the Source: Indian Telecom Services Performance Reports, TRAI, 2008-2010
country, especially in the rural sector, is low. In the wireless
space, while CDMA operators have launched EVDO based
services that provides high speed access, the uptake has
been limited due to expensive end user device. Key drivers of broadband
acceleration
Notebook sales in India (in thousands) It is broadly accepted and proven internationally, that
Broadband growth depends on availability, affordability and
3000
perceived useful applications or usage.
2500
2000 Availability
1410
1500 795
770
1000
318
500 55 1027 1099
22 747
377 532
0 155
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
E st abl i shment Househol ds
Source: IT Industry Performance Annual Review: 2009-10, MAIT-IMRB, 28th July
2010 Applicability Affordability
The falling prices of laptop and greater availability in terms
of features and pricing has led to a 65 percent growth in sale
Availability – broadband services at the right
of notebooks. In 2009-105, the household users accounted
for a modest 56 percent of the sales; while the rest was places
contributed by business users. Also, the consumption in Although 70 percent of Indian population lives in rural areas;
household users has grown by 83 percent. This is expected broadband facility is limited to metros and major cities.
to have a continued positive impact on uptake of broadband Availability of broadband is critical for development of rural
services. areas as much as it is for the urban areas. Out of total 10.08
million broadband subscribers6, mere 5 percent are rural
subscribers. The low broadband penetration in rural areas is
attributed to unavailability of transmission media connectivity
up to village level. Due to high initial investment and expected
low returns, operators are hesitant to invest in small cities/
villages or remote areas. Considering the enormous power of
broadband, it is essential to concentrate on availability of the
broadband to every citizen.
5 ‘IT Industry Performance Annual Review: 2009-10’, MAIT-IMRB, 28th July 2010
6 ‘Monthly Telecom Scenario – August 2010’, DoT, October 2010
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5. 29
Affordability – Broadband tariffs at the right price Internet is largely in English and to an extent in Hindi, and is
not customized as per local needs and diversity. The content
The entry level tariff7 for broadband services has come down in Indian vernacular languages will increase relevance and
drastically from INR 1,500 per month in 2004 to INR 200 consequently interest of the local population in broadband
a month in 2007 which is still higher than most countries.
, uptake and utilization. Therefore considering specific regional
The ICT Development Index report of the International requirements, content development in vernacular languages
Telecommunications Union (‘ITU’) indicates that the needs to be encouraged. Large numbers of softwares
Broadband rates are higher at 7 percent of GNI as compared
.7 are available to translate the content from one language
to the price basket for mobile telephony which stands at 2.2 to the other. Conversion from speech to text and text to
percent. speech is also available for different languages. Though the
High Cost of PC and other access devices commonly accuracy of such software depends on the product and
known as CPEs is one of the major impediments in spread actual requirement, there is sufficient scope to further work
of broadband. Economical options like use of thin client, on these areas to boost the development of the content
recycling of old PCs / Laptops will make CPEs more affordable in Indian vernacular languages. Given India’s strengths in
for the masses. One of the measures to make CPEs more IT and the recent trend in the traditional entertainment
affordable may be to provide incentives through fiscal policies. industry, infotainment can be a big booster for broadband.
Incentives could be in the form of reduction of taxes and Entertainment content can be targeted to boost broadband
levies on CPEs and financial incentive in terms of rebate in demand. This can be a high growth driver which may require
income tax to encourage affordability of CPEs. The broad some initial nurturing but may enhance broadband demand
objectives of providing fiscal incentives are to make CPEs especially to the non English literate subscribers.
affordable to the consumers and to stimulate investment Accessibility to applications - Increasing the scope of
for the domestic manufacturers for boosting indigenous broadband from just e-mail to more value added applications,
production. effective use of broadband in automation of operations and
functions, innovative use of technology in imparting education
Growth of internet and broadband users (in Millions) and increasing literacy is likely to drive the penetration of
broadband in India. Few of the areas/applications which hold
United States Canada UK Netherlands Japan India France Brazil Russia
significance to the broadband popularity and growth are:
Mobile cost as %age of per capita GNI
8
Overall telephony cost
7
(as a %age of GNI) high in Brazil
6
5 Email Internet Surfing
High
Significant difference in
4
Broadband and Cellular costs broadband cost and
3
Uptake/Popularity
are similar for most of the cellular cost for India
developed markets Voice Clips
2
Moderate Voice Chat
1
Video Video
0 Gaming
Voice & Streaming
0 2 4 6 8 10 12
Video Chat
Broadband cost as %age of per capita GNI Low
Tele-Education HD
Tele-Medicine Video
Source: ‘ICT Development Index Report’, ITU, 2009
0 64 Kpbs 256 Kpbs 512 Kpbs 2 Mbps >4Mbps
Minimum Bandwidth Required
Applicability – broadband services supporting the
right applications
• Education: In education, virtual classrooms (Tele
Localized Content - India poses a unique challenge in terms Education), where students do not have to travel distances
of diversity in spoken languages. Though Hindi and English are to schools and colleges, will be in demand. Online
principal and secondary official language respectively, there courses, tutorials and examinations will be necessary
are 22 official languages recognized by the Constitution, and for empowering universal education where broadband
hundreds of additional languages and dialects spoken across can be used to impart knowledge. Video conferencing is
the county8. To ensure end-to-end local language delivery, a very useful tool, however initial equipment cost is still
applications as well as content need to be provisioned in viewed as prohibitively high. In keeping with the “Right
local languages. The content that is available today on the to Education Act” of the Government of India that came
into force on April 01, 2010, broadband can help in bridging
this scarcity of adequate schools and teachers to provide
effective education at affordable costs
7 Consultation Paper on National Broadband Plan’, TRAI, June 2010
8 ‘Constitution of India’, National Portal of India, http://india.gov.in
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6. 30
• Healthcare: Another sector which can be benefited from Hence, the scope of broadband can be enhanced from
broadband penetration is healthcare. A significant problem just e-mail to more value added applications. Effective use
plaguing the nation’s health care system is the fact that of broadband in automation of operations and functions,
there are significant disparities in availability of reliable innovative use of technology in imparting education and
health care facilities between urban and rural areas. Rural increasing literacy will drive the penetration of broadband in
India, for example, experiences higher mortality rates due India.
to non-availability of expert advice and timely treatment.
A lot of development is taking place within the e-health
field. Many gadgets are now available, which can assist
in remotely capturing vital parameters of the body which
can be utilized by people living in rural areas to provide
information and seek timely expert advice of doctors
available in any corner of the world at a fraction of the costs
• E-Banking & E-Commerce: Broadband is also useful for
various utility services like online banking, bill payment,
rail ticket booking, online application filing and trading. It
allows job seekers to effectively search for employment
opportunities. New content creation and distribution
systems have enabled millions of people to distribute
their contributions online with least expenditure. There
are significant financial as well as social benefits of online
shopping. It helps ensure the cheapest deal and also helps
to save time when using price comparisons on the web.
Broadband services in rural and remote areas can also be
a very cheap and effective medium for providing banking
services to the “unbanked” population of India and further
the financial inclusion agenda of the Government
• Entertainment: There is dramatic increase in consumer
behavior towards real-time applications i.e. “experience
now” Share of real-time entertainment traffic (video and
.
audio streaming, Flash media, peer casting, place shifting)
is increasing. Thus, entertainment seems to be key driver
for generating huge demand for broadband especially in
rural and computer literate population
• Utility: Remote management of security for homes
and business premises, and an increasing number of
household appliances and machines communicating
over IP networks, is expected to drive the demand for
broadband
• E-governance: For any technology to go main stream
and find maximum applications and utility, one of the
biggest customers is the government. Broadband can
be an important lever in helping government realize its
objectives laid out under “National E-governance Plan” .
With e-governance being the new mantra, it has significant
potential to bring about convenience, transparency and
efficacy in government functions and take these services
to the doorstep of the citizens.
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7. 31
Achieving the vision of The rural push
“Broadband for All” To support the broadband infrastructure roll-out in the rural
areas, the Department of Telecommunications (DoT)11 has
Despite the historical challenges identified so far, the regulator also proposed to offer a slew of freebies at the panchayat
as well as the government has shown willingness to reignite level. This includes giving three broadband connections to
the broadband growth, and provide a platform to support every gram panchayat free of charge for three years along
“Broadband for all”. with free installation of computer and printer; three telephone
connections and one cable TV connection without any charge.
National broadband plan
The incentives will cost about INR 2,000 crore, which will be
TRAI has suggested the roll-out of a national optical fiber cable funded through the Universal Services Obligation Fund.
network which will act as a backbone to broadband services
across the country. The robust national infrastructure would
be scalable to cater to our future requirements not only in
urban areas but also in the villages. For making all villages Conclusion
broadband-enabled, an option is being explored to take optical Broadband is the much needed catalyst to bring about the
fiber cables to 3.74 lakh villages having a population of 500 or socio-economic growth in the country. India, therefore, needs
more (basis Census 2001 data). The regulator has suggested a National Broadband Plan encompassing initiatives across
that funding for such a project could be considered from the various ministries which would provide a platform for provision
Mahatma Gandhi National Rural Employment Guarantee of quality broadband services across the country. It would
Scheme (MGNREGS) for non-skilled work and from the take a holistic view covering various aspects like customer
Universal Services Obligation Fund (USOF) for material and requirements (demand drivers), customer segment (urban
equipment cost9. India is taking a step in the right direction as well as rural), technologies (wireline as well as wireless);
as global references suggest that developed countries like nature and type of CPE; regulatory aspects. The regulators
Japan, Singapore and Australia have taken similar initiatives to as well as the government and the industry players across
proliferate high-speed broadband services to their masses. the value chain need to join hands so as to provide the best
3G/BWA spectrum auction possible support to this national vision of “Broadband for All” .
India is poised to see both 3G and BWA services before
the close of 2010, BWA services like WiMax (or LTE) has an
opportunity of reaching out to the rural masses in a cost-
effective manner. WiMax and 3G will help in delivering the
government’s target of achieving 100 million broadband
subscribers by 2014. Wireless Broadband technologies by
leveraging (or sharing) the existing wireline infrastructure
(available to the public and private operators) can immensely
contribute to the broadband proliferation in the country.
Low cost tablet PC
Indian government (Ministry of HRD) has unveiled a prototype
tablet computer that would sell for an affordable INR 1,500 or
USD 3510. This highly affordable touch-screen device would
in times to come, play a critical role in providing high-quality
consumer broadband experience across the country. The
tablet also comes with a solar-power option that could make
it more feasible for rural areas. The Linux-based Tablet PC
features most of the basic functions one might expect in a
Tablet: Web browser, multimedia player, PDF reader, Wi-Fi,
and video conferencing ability.
9 ‘Consultation Paper on National Broadband Plan’, TRAI, June 2010
10 ‘An IIT, IISc-designed laptop for just INR 1,500’, Times of India, 23rd July 2010
11 ‘Special purpose vehicle planned for broadband push’, Hindu Business Line, 24th July 2010
© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.