Note: Since Balakrishnan’s talk, the TRAI released its recommendations for a national broadband plan. Download the PDF here.

In an alternative universe, India has 20 million broadband connections, and Rediff CEO Ajit Balakrishnan believes that at that level, the revenues of Rediff, would be 20 times current levels. Speaking at the IAMAI Digital Summit, Balakrishnan said that the growth in broadband would have  dramatic impact on business, with the Internet in India becoming a mass medium, and hence attracting substantially more advertising. But what’s holding it back? Many things, according to Balakrishnan:

What’s holding back broadband

– Policy Maker Mindset: Policy makers think that “broadband is what my son uses to download music.” It’s an ideological barrier, and some policy makers feel that education and healthcare are higher priorities. (ED: that explains why those pitching 3G and 4G to policy makers kept harping on Education and Healthcare as benefiting from the growth). Balakrishnan gave the example of the Aravind Eye Hospital in Madurai, which is delivering eyecare at 2 cents, using mobile technology.
– Challenge of getting multiple stakeholders to work together: Mobile phone companies, device makers, ISPs, cybercafes: they all need to speak the same language. I’m spending a third of my time on this, so that multiple stakeholders say the same thing.
– Ideological baggage: “Some people in the industry have an ideological baggage that the government should stay out of things. It shouldn’t.” Balakrishnan went on to explain how the government, though funding computer colleges, forcing banks and railways to computerize, setting up software technology parks with cheap land, among other things created a base for the software and IT services companies to grow.

False Leads

Balakrishnan also believes that there are a few false leads currently doing the rounds:
– 3G: He believes that 3G will not solve the broadband problem. All broadband operators in the first five months wil use it for voice.
– Unbundling the local loop: “This is fiction”. There are 16 wireline million connections (ED: almost double of that, according to TRAI data), and copper is corroded in many. There’s nothing there, even if you unbundle the local loop.

Balakrishnan likened broadband to roads – the payback is 25 years, and the US had put in fibre during the telecom boom, which helped fuel its broadband revolution.

Target Market and Pricing

India’s not going to be a one-size-fits-all market, but the industry needs to target the consuming class that is 75 million households strong, not the top end of around 6 odd million. Then there are the price point buyers are 78 million.

In Balakrishnan’s opinion, we need three types of broadband connections:
– Unlimited downloads or uploads at 256kbps for Rs. 200, so the consuming class can afford it. That’s the same as price of Cable TV. This will target a base of 100-200 million users.
– Rs. 1500 at 300-400kbps, consistent, targeting the premium users
– Carrier grade connections for mission critical applications, like for websites, with negotiated price high quality option.

“Broadband must be affordable, with reach, you need content and access devices. You need free market vs an activist state. I’m for an activist state.” He said that the government needs to lay fibre everywhere, right up to the villages, and there needs to be a government funded fibre backhaul. “You need broadband and low latency broadband. We need to figure out a way to solve the puzzle of gaming (which hasn’t worked in India).”

In order to make broadband affordable, he suggested peering of Indian websites, so that the extra cost of bandwidth is not occurred. That was attempted with NIXI, but he says that the Indian ISPs don’t peer still. “The moment you peer, you’r commoditizing the usage. One view is to host Gmail and Facebook in India. So long as you go to International sites, there is a problem. The Chinese don’t have international sites to go to. It adds Rs. 100 per month to the cost of a connection. We need more sites in India. There are very few, so you go to International sites, and pay for International bandwidth.”

Balakrishnan also touched upon the issue of net neutrality, which we (at MediaNama) think is going to be a significant issue with 3G services going live, since mobile operators are more keen on controlling access than ISPs are.