Incumbents Win in India’s Broadband Battle

Posted on December 13, 2004  /  2 Comments

Pyramid Research
(December 2004)

The push for broadband in India has once again taken center stage with the country’s government formally announcing its broadband policy, and deciding, as many had predicted, not to accept the regulator’s proposal for local loop unbundling. Instead, the Department of Telecoms (DoT) has deemed that the last mile copper loop isn’t a bottleneck for the adoption of broadband services, and thus leaves it up to the state owned incumbents (BSNL & MTNL) to enter mutually agreeable arrangements with private parties for access to the last mile if needed. Together, both incumbents have 45 million copper loops, of which only 25% is adaptable for broadband application given the poor state of the copper plant in a majority of areas in India….
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  1. This is what happens when the government is both referee and player. In country after country one can see the correlation between local loop bundling and broadband rollout & prices. India of course is not on planet earth and nothing that works for the rest of the world will work for India! Indian consumers are goingto suffer until either technology allows broadband competitors to bypass the local loop or the government somehow manages to run MTNL/BSNL to the ground in the process of squeezing out the last paisa for the general coffers.

    At the risk of asphyxiation, please do not hold your breath for MTNL/BSNL to meet their broadband roll-out targets. What a bunch of hypocrites and liars! All these years theyhave been lording over the telecom sector and had every opportunity to provide broadband to the masses—but where were they?? At the first whiff of competition they run to mommy (mai-bap) for protection.

    You have heard it here first: MTNL-BSNL merged unit will be known as MT-BS :)

  2. Just as I had predicted, MTNL/BSNL combine have fallen short of the broadband roll-out target. Way too short actually. Target was set at 3 million subscribers and they only reached 0.8 million. Everyone, starting with the regulator knows what needs to happen–unbundling of the local loop but not until the Indian government changes its policies.

    “Our growth in the broad band area is very less and we would reach approximately 0.8 million users, from the present 0.6 million users a month back, by the end of this year”, Pradip Baijal, chairman, Telecom Regulatory Authority of India said on .

    “There is a huge potential for the broadband in the rural areas where other means of communication are not that effective, and in comparison to South Korea and China we are way behind the broad band connectivity”, he added.
    “There needs to be unbundling of the connectivity loop by BSNL and MTNL to achieve a desired growth in this area,” Baijal said.