India made one fundamental mistake when it came to awarding wireless licences a long time ago. It gave them to BSNL and MTNL (the two dominant public sector wireline players) instead of doing what China did. China created two new companies for the mobile business. The result was that during the early days in India, the profits from wireline got diverted to building the infrastructure for the wireless instead of being reinvested to upgrade the wireline infrastructure. Now, of course, no one really cares about the wireline business since all the money and growth is in wireless. This decision, with a conscious government strategy to almost strangulate the private ISPSs, ensured that there would no broadband boom in India.
The past is over and done with. What can be done now? We do have now the private wireless telcos showing an interest in spreading broadband across the country. But that is happening too slowly since the last-mile connectivity into homes is still a challenge. It is in this context that the two things I suggested earlier in the week need to happen – and both unfortunately require government intervention.
Firstly, the last-mile wireline connectivity access (local loop, as it is called) needs to be opened up to all the private telecom players and ISPs. This will reduce costs of delivering broadband to homes that already have last mile access but without relying only on BSNL and MTNL.
Secondly, the 3G and BWA auctions need to happen on time and transparently. This will start the process of using wireless options (3G, WiMax) to provide connectivity into homes. For this, the public good has to be put above government greed – which is easier said than done, given past experience!
What we need in India is 1 Mbps to homes for Rs 250 on wireline and Rs 500 on wireless – with no data transfer limits. That will then drive the growth of Services.