In contrast to the explosive growth of mobile in India, the country is struggling to get broadband connectivity off the ground with its limited fixed-line infrastructure -- paving the way for WiMax as a potential savior.

On the face of it, 2005 was the year broadband arrived in India –- it started the year with just 49,000 broadband subscribers, and ended with 835,000, according to the Telecom Regulatory Authority of India (TRAI) , a 17-fold increase. But considering India has a population of 1.08 billion, broadband penetration was less than 0.01 per cent.

The most recent available figures from TRAI show there was a total of 6.1 million Internet subscribers in September, and analyst firm Tonse Telecom estimates that rose to somewhere between 6.9 million and 7.1 million in December. That means about 1 in 8 connections was broadband (defined as higher than 256 kbit/s).

Table 1: Internet connectivity in India

"It's absolutely abysmal compared to other countries with equal per capita GDP," says Ravi Bhagavan, vice president at consultancy Galileo Global Advisors LLC , noting that the government's broadband policy target was to have 3 million subscribers by the end of 2005. "Talk about aiming at the sky and shooting the treetops... In fact, I think they hit the trunk."

There are carrier efforts underway to encourage adoption -- offering cut price packages and PC bundles, looking for ways to build out networks -- but the existing network is not extensive enough to meet demand, and so far their focus has largely been on handling the rush for mobile services. (See India's Telecom Market Accelerates.) "There is a certain level of buildout of the fixed network, but it's mostly mobile and fixed wireless," says Bhagavan, who was surprised to see the majority of Bharat Sanchar Nigam Ltd. (BSNL) 's $4 billion-plus network investment going on mobile. (See Mega BSNL Contract Looms.) "The carriers may have lost focus on broadband development... They may be struggling with that issue."

There are several reasons for the lack of investment in India's Internet connectivity:

In Tonse Telecom's latest report, founder Sridhar Pai writes: "It is now clear that India needs a broadband savior to reduce the great divide." And that's where WiMax comes in.

The cost of fiber and the logistics of laying cable in the ground continue to turn off carriers from building out their fixed networks, whereas mobile technologies enable them to install equipment above the ground relatively quickly.

WiMax -- the metro version of wireless LAN -- is being heralded by vendors and carriers alike as the way to roll out broadband services wirelessly, given that around 70 percent of India's population lives in rural areas where there is little telecom infrastructure of any description. "Everybody agrees wireless is the way to go," Pai tells Light Reading.

The Indian government has committed to using its Universal Service Obligation (USO) fund (under which alternative carriers compensate incumbents for providing services in uneconomic locations) to build out rural telecom networks and is looking at inviting bids from operators to build and run wireless base stations. "There may be sharing to some extent between the top three bidders," says Bhagavan at Galileo. "That is going to substantially open things up not just for cellular service, but for WiMax as well."

Several of India's major carriers, including Reliance Communications Ltd. , Bharti Tele-Ventures Ltd. , and Sify Technologies Ltd. (Nasdaq: SIFY), have acquired spectrum licenses to deploy wireless broadband services and have expressed interest in going with WiMax. BSNL, the largest carrier, has announced plans to offer WiMax services in Chennai, Bangalore, Kolkata, New Delhi, and Mumbai in 2006.

On the equipment side, vendors see developing markets as a major opportunity for WiMax, and Table 2 lists those who are active in India.

Table 2: WiMax vendors in India

Companies based in India, like Beceem Communications Inc. and Telsima Corp. , are already firmly on the WiMax bandwagon. "Local Indian vendors have a natural advantage to manufacture at lower costs compared to their international peers," says Bhagavan. "They can produce indigenous versions of WiMax systems at a fifth or a tenth of the cost." (See Beceem Accelerates WiMax, India's VC Race Boosts Telsima, and Moto Pushes WiMax in Asia.)

But there's a note of caution to the WiMax hype. As Pai writes, "The problem with WiMAX as a solution for India today is it may be too little, [and] too early" for the kind of large-scale rapid deployment that's needed.

The first wave of WiMax products is coming up for certification by the WiMAX Forum . But even then, it's not just a case of installing some WiMax kit. Pai says that the fiber network in India is typically 15 kilometers from the last mile. As Light Reading's WiMax Guide notes, "Although the maximum radius of a cell is theoretically 50 km (depending on the frequency band chosen), typical deployments will use cells of radii from 3 to 10 km." Pai reckons it's more likely that "WiFi/WiMax combinations with 3G might be able to do the trick."

In the meantime, he writes, "While much is being discussed about the last mile and the optimal technology to get there, the undeterred Indian internet user perhaps is less concerned about getting the RJ45 into his home wall socket. He has already left for the nearby cyber dhaba [Internet café]."

— Nicole Willing, Reporter, Light Reading