The debate over Broadband Wireless Access (BWA) spectrum auctions and internet telephony comes at a time when international organizations and analysts are painting a starkly contrasting picture of the Indian telecom and IT sectors.
Recent International Telecommunication Union (ITU) data reveals that the success of India's telecom revolution is restricted to mobile voice with very little to showcase in fixed line and internet access, or high-speed broadband. For a country that is the global IT and ITeS capital or the world's back office, its own internet penetration remains one of the lowest in the world. Forecasts are equally uninspiring, projecting high-speed internet access to remain abysmal till 2012.
Internet broadband penetration will limp along to eventually reach a measly 3.9 connections for every 100 citizens by 2012. Even though internet users may be multiple times higher, actual broadband penetration will not exceed 18.1 million at the beginning of the next decade. In contrast, mobile telephony will add as many as 350 million subscribers during this five-year period to end at roughly 615 million by mid 2012.
These forecasts fall short of the government's conservative target of 20 million high-speed internet subscribers by 2010-end. India's broadband penetration is roughly 4.5 million subscribers. Even with a 300% growth rate over the next five years, the sector will fall short of the 50 million mark by 2012.
"The weak numbers can be attributed to a slew of policy failures including inadequacy of fixed line infrastructure, a barely profitable ISP (internet service provider) business, and low domestic PC penetration", says Rajesh Chharia, president, ISP Association of India. It is learnt that ISPs are actively considering a strong representation to the government on these issues.
Weak broadband penetration could severely slow down overall telecom growth, crippling India's ISPs in the process. It will also hurt ambitious government programmes, such as e-governance, e-commerce, telemedicine and e-education all of which are dependent on high-speed broadband internet access.
This gloomy environment has prompted telecom regulator Trai to recommend internet telephony for ISPs as it believes this has the potential of becoming the killer application that will kickstart growth.
However, the uncertainty of DoT accepting Trai's recommendations or succumbing to the interests of existing mobile operators to slap an additional entry fee for ISPs is a shadow over the sector. DoT officials have been confusing, vacillating between welcoming Trai's recommendations and airing level playing field concerns. "A policy overhaul to include concepts like shared PCs, enhanced scope of services and expanding e-governance applications is critical for the growth of the sector," says Naresh Ajwani, president, Sify Ltd.