Growing up as a kid in the ‘70s, one thing that stood out often as symbol of status for the great Indian middle-class was the famed four-wheeler Ambassador. While inside the house, the babus [Indian bureaucracy] also sought two things that were symbols of ‘having arrived’: one was the famous black rotary analogue phone and the other was the 15Amps thick wired cable for the All Electric Home. Looking back it seems laughable that having your house wired with a 15Amps electrical circuit was such a big deal for the simple pleasure of hanging off couple of electrical appliances from it. Not to mention, considering the woeful power supply situation in the town you lived, it really didn’t mean a whole lot.

Fast forwarding to 2011, it might be said that we are in an exactly similar situation when it comes to broadband infrastructure in modern India. Most homes are simply not wired for broadband. The incumbents did a miserable job of delivering Copper to homes and when the market opened up, Copper had already lost the battle to wireless. With all the new townships springing up across India it is only now that pre-wired broadband homes are still coming into shape. Fully broadband, Intelligent buildings where climate / ambient lighting / password protected garage doors and remote Video surveillance of the home is unheard of and Intelligent cities where a layer of service provider [ex pharmacy and drug distribution] connects with physician [ex hospital network] and medicare delivery station [ex health kiosk] is yet to be conceptualized.

Some of our observations indicate things are changing rapidly and we could be setting the stage for a great big broadband inflexion point sometime in 2012.

• For the first time ever, notebook sales have exceeded one million units per quarter in Q3 2010 (this is a 2.2 fold increase compared to same quarter 2 years ago
• PC sales [including desk top and notebooks] exceeded 2.68 million units per quarter Q3 2010, highest ever in a quarter
• At current rate of PC consumption, we are likely to cross an install base of about 100 million PCs in the country sometime Q1 2012. [still the current TRAI figures of just about 10.x mil broadband users is paradoxical!]
• Olive, Lava, Micromax are targeting a host of low-cost tablets to be launched before end 2011. Samsung Galaxy tablet is already selling (at Rs. 28.5k) and Apple’s India-friendly pricing for IPAD is sub-$30k. Dell’s Streak looks very cool and is beginning to appeal to up market users already.
• 2Mbps internet speed [a segment which is common across many homes / SOHO / SMEs ] has highest level of subscribers in the enterprise (38%) compared to any other speed category.
• Enterprise broadband tariffs have continued to fall and as a result P2P[point to point ]leased circuit consumption went up Q3 2010 by 9.51% compared to 3.5% previous quarter
• Total Minutes of use of Dial-up users has gone to an all-time high of 486 minutes per user per month (a 19.9% increase over previous quarter) and an all-time high. This also means broadband carriers have either not understood how to position the service or do not yet know where to offer broadband service. (Invariably after a point, Dial-up is more expensive than broadband access)
• More risk capital is beginning to flow into digital content start-ups, traditional media players are making investments into rich media, multi-media properties are gaining attention and digital advertising is making noticeable in-roads into publicity budgets.
• Massive government led projects such as UID and eGovernance, could make digital governance main stream, thus nipping future scams in the bud.

We believe the market is displaying all the early signs of a broadband economy in the making. Device consumption growth and broadband tariff drop are encouraging signs. Interestingly, this has nothing to do with which transport / access technology is involved.