[1st-mile-nm] Broadband to go free in 2 yrs in all of India to everyone

[Steve Ross]

Not sure the government can deliver what it promises. But it will be
fun to watch.

The number of rupees below is given in crore, a unit of 100,000. So
the amount of money available in the fund to do this is 9,194,000,000
rupees. A dollar buys 43 rupees, so this is about $220 million. There
are about 10 million households served by landline phone in India, but
there will be 400 million cellular customers (almost all GSM) by 2010.

Clearly not enough money to provide this much bandwidth even to the 10
million who are wired, if they need massive network upgrades. Wireline
quality varies around the country, BTW. Some is quite awful. Most
broadband customers get only 128 Kbps or 256 Kbps (DSL), but the
network is probably capable of more in some places -- the government
has limited connections because the overseas fiber from India to
Europe and the rest of Asia has been capacity-constrained.

Also, it looks like a subsidy to people rich enough to afford
landlines now -- they are NOT offering free wireline phone service,
just free internet over the phones that do get connected.

Use of VoIP over data lines has been legal in India for only about two
years. Cell growth has been amazing -- they will catch up to China in
2010 or 2011. So the only charge a household would have is for the
connection itself -- and probably a landline that would be used only
for local calls, in the transition period.

BTW, just to be clear, the government owns the communications
companies named (no public stock has been sold to "privatize" them).
But despite the ownership, they are no longer monopolies.

Steve Ross


On 4/30/07, Andrew Cohill <cohill at designnine.com> wrote:
>
> On Apr 28, 2007, at 12:27 PM, Dewayne Hendricks wrote:
>
> > [Note:  It looks like exciting things are in store for India as far
> > as broadband is concerned.  So where is this kind of bold thinking
> > here in the U.S.?  DLH]
> >
>
> It is not at all clear that "free broadband" is sustainable.  The
> longstanding problems with free services (in any market, not just
> broadband)  include market distortion and low quality service.
>
> Market distortion occurs because "free" services suggest to users of
> the service that supply is inexhaustible, and so users use as much as
> possible.  Not everyone thinks this way, but a small number of users
> who hog bandwidth can consume all available supply.
>
> This leads to low quality of service, in part because there is no
> pricing feedback to users (see above), and in part because the lack
> of revenue makes it difficult to expand capacity as demand increases.
>
> In fact, fees alone do not guarantee a sustainable business model.
> In the U.S. and most other markets, the current broadband business
> model is upside down.  Service providers enjoy maximized profits when
> customers, paying a fixed fee for Internet access, don't use the
> service at all.  Service providers make the least profit if customers
> like the service and use it a lot.
>
>  From an economic perspective, charging a fixed fee no matter how
> much bandwidth a customers uses is exactly the same as giving the
> service away for free.  Neither one provides the funds necessary to
> expand capacity, increase service areas, pay for proper maintenance
> and upkeep, and add new services.
>
> A solution is to move to a service oriented architecture (a different
> network architecture AND a different business model) that conveys a
> clearer relationship between supply and demand to customers.
> Customers pay for services, rather than buying a bucket of
> bandwidth.  Service fees are based on the real cost of providing the
> service, thus providing information to customers about supply and
> demand.  This can be done easily with both wired and wireless networks.
>
> Andrew
>
> -------------------------------------------------
> Andrew Michael Cohill, Ph.D.
> President
> Design Nine, Inc.
>
> Design Nine provides visionary broadband architecture and engineering
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>
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-- 
Steve Ross
201-456-5933
781-284-8810
editorsteve at gmail.com