Tuesday, June 02, 2009

Honey, is there a problem?

The Most Revolutionary Concept In Education PLANMAN CHE CENTRE FOR HIGHER EDUCATION, Supported by IIPM India’s Leading B-School

In a market characteriszed by a progressive consumer and rising income, broadband service has not been a particular success. 4Ps B&M’s Surbhi Chawla finds out why..

There are plans and there are visions. While the former involves the laying down of foundations for experiments to materialise, the latter envisages the ultimate culmination of the entire cycle of events. The government’s directive to achieve 20 million broadband subscribers by 2010 is an instance where the ‘plan’ fell short of the ‘vision’. According to a report by E&Y and CII titled ‘India 2012 Telecom growth continues’ in 2007 (termed as the year of broadband) there were only 3.1 million broadband subscribers, increasing to 5.8 million by the end of 2008. Going by the current growth rates, it is expected that there would be only 14 million broadband subscribers by 2010, missing the target by 6 million! In contrast mobile services are growing at a much faster rate, adding 15.41 million subscribers in January 2009 alone. As a result, takers for internet services are rising faster in the mobile segment than are for broadband services. “In India mobile broadband would be more popular,” informs T Ramachandaran, DG, COAI. In an evolving society, even though such anomalies can be attributed to consumer preferences, the reason behind the failure of a cheaper service vis-a-vis an expensive alternative is still unexplainable.

“There is no denying about the potential of broadband in India, the problem is that we do not have any infrastructure and it would be futile to advertise when you can’t deliver,” informs an insider from Reliance Communications (RCOM). This fact can be well-illustrated by looking at the definition of broadband. Broadband is defined as an ‘always on’ data connection that is able to support interactive services, including internet access and has the capability of minimum download of 256 kilo bits per second (kbps) to an individual subscriber. In sharp contrast to its capability, the Indian version delivers only 100 kbps. Also there are no real content that is available to the Indian users.

Even if the logic pertaining to an increase in the consumer base holds true, it is hard to ignore the fact that it is actually not possible for the private sector companies to offer entire junket of broadband services in India. Despite the vast fibre optics that these operators have already laid, they still do not have the last mile covered. Additionally, these telecos require multiple permissions in order to dig and lay new fibre optic cables, a situation which is herculean if not impossible. The only player that has these end points covered is state-owned BSNL. In the year 2004, Telecom Regulatory Authority of India (TRAI) had recommended that the state provider should unbundle these local loops in order to give access to the private players, but to no avail. The other option for connecting the fibre optical end points could be the introduction of WiMax but there are indications about the auctions being held before March 31, 2009 and it would be only by the beginning of 2010 that it would be functional.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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