What does India really need – broadband penetration or speed?

Yesterday I read an interesting article in Mint (Nov 3, 2009) titled “Dialling up India’s growth” – Cellphone, Internet aur growth should be the development slogan for India this century.  The article had few interesting statistics,

• Internet and mobile penetration contributes to the gross domestic product (GDP)
• India’s mobile user base: 1999 – 1 million, Oct 2009 – 450 million (45,000% growth)
• Mobile density in urban areas is 75% but a mere 12% in rural.
• Greater mobile penetration will improve efficiency in the rural economy.
• Every 10% increase in connectivity leads to a 0.61% increase in GDP (see page 4 of the McKinsey report in 2008)
• McKinsey reports for every 10m mobile connections there is a positive impact of $1 billion on GDP
• McKinsey reports forever 100m connected via the Internet, there is a $40m GDP impact (this cannot be Indian figures but the US)
• India must adopt worldwide standards of definition of broadband – at least 10 Mbps for all (not happening anytime soon)
• Deploy WiMAX
• The author (R Sivakumar) recommends every broadband user has at least a speed of 2 Mbps.
• CII says pervasive availability of broadband can add 65 million new jobs and $180 billion to the Indian economy.

After reading that article I wanted to blog immediately but did not find the time. I wanted to say we need broadband speed but we really need to improve broadband penetration first.  And lo, I do see a similar article written by Ajit Balakrishnan.

Currently, the cost of broadband in India is 260 times higher than in South Korea, while in China it is 65 times higher. South Korea offers the world’s cheapest broadband rates. The high cost prohibits many users from accessing Internet in India, he said, limiting usage to just checking emails.

I had written a few months back that unless we have a dedicated Minister for Internet one cannot expect to see exponential growth in the Internet user base.

In many parts of Bangalore broadband is STILL not available. First, this basic issue needs to be addressed, then comes the speed. I have just 256k connection at home, works fine for me.

Increase the penetration, reduces the broadband prices and we will see a cyber revolution in India.