Free 2 Mbps broadband by 2009

The government proposes to offer free, high-speed broadband connectivity to all Indians by 2009, through state-owned telecom service providers BSNL and MTNL.

While consumers will cheer it, the move holds the potential to kill the telecom business as we know it. You may have heard of free municipal broadband—many cities in the US have drenched themselves in wireless broadband connectivity, freely accessible to residents. The idea is to boost economic activity in general. The central government plans to achieve free broadband connectivity at a speed of 2 MB per second across the country, with a similar goal.

Senior government officials expect to be able to achieve this goal by spending only a portion of the burgeoning corpus of the Universal Service Obligation Fund (USOF)—all telecom operators contribute 5% of their revenues every year to this fund. It is estimated that the unutilised sum from USOF touched Rs 9,194.12 crore by March 2007.

The current technological trend is for voice calls also to shift to the internet, using voice over internet protocol (VoIP). The quality of VoIP calls, patchy to start off with, has been improving steadily over the years, and by 2009, is likely to be as good as current analogue calls that establish a circuit between the calling and called parties. When that happens, revenue streams from calls would dry up and telecom companies would need to develop value-added applications to make money from the connectivity they provide for free or virtually free.

The Department of Telecom (DoT) will be taking a series of steps to make its plans for free broadband a reality. These include using the Universal Service Obligation Fund to set up an extensive optic cable network across the country and opening up the long-distance sectors to further competition.