16 Sep 2011India Broadband Overview

The Indian telecommunications sector has been viewed by some as reflecting the success of government initiatives, including the liberalisation of this sector. In less than a decade, the telecoms sector has implemented a state-of-the-art digital communications infrastructure almost exclusively founded on private and foreign direct investment, at no cost to the government. India continues to be one of the fastest growing major telecom markets in the world.

Others take the view that it took too long, because although India began its liberalisation process as early as 1991, it was only in 2001 that the Indian government did away with the duopoly and opened up the whole fixed-line segment to alternative operators. Before 2001, only the private company, VSNL, had been allowed to compete with the two state-run incumbent fixed operators BSNL and MTNL. VSNL, now known as Tata, held a monopoly on international telephony, but lost its exclusive right in April 2002 when the international market was opened up to competition.

Despite the popularity of the Internet in India, due largely to presence of more than 8,000 cybercafés in the country, broadband population penetration stood at only 1 per cent in early 2011. The take-up rate in the corporate sector has been particularly slow. India’s current low broadband penetration has not been helped by the late large-scale roll-out of ADSL services, which took place from end 2004 to early 2005. High speed broadband deployments during 2008 and 2009 have added functionality, but it is the widespread deployment of 3G and WiMAX that is expected to provide more affordable access and make broadband a mass market consumer proposition in India. The long awaited 3G and BWA spectrum auctions took place place in mid 2010, with the first private operators launching 3G in late 2010. In addition, the Indian government released its comprehensive National Broadband Plan in December 2010. As a result, the broadband market is poised for substantial growth over the following few years.