The three PSUs are BSNL, RailTel and Power Grid Corporation, which are the main shareholders of Bharat Broadband and which are laying the fibre. Bharat Broadband is the best way to take Internet to India's 1.2 billion people — its 100 mbps capacity optic fibre cables will be the backbone for mobile networks carrying 2G and 3G services.
"There are synergies between wireless networks and optic fibre network for broadband proliferation. Last-mile access will be wireless," says Shanker. Subho Ray, president of the Internet and Mobile Association of India (IAMAI ), an industry grouping, is concerned by the trickledown effect of the delay in the Bharat Broadband rollout.
"The government has a target of 600 million Internet users by 2020 and half of them will come from rural areas . Here, Bharat Broadband is vital to create the e-infrastructure," he explains.
"The problem is, for such a hitech area, we have 100-year-old laws that govern digging and permission to lay fibre, leading to delays." So far, Internet services have largely been an urban phenomenon.
According to IAMAI data, of the 213 million Internet users as on December 2013, 70% were in urban areas. Of this, about half of them accessed the Internet on mobile devices, but only 20 million did it on speedy 3G connections. That's partly because of the limited rollout of 3G and the higher cost of 3G-enabled smartphones (upwards of Rs 6,000).
Bharat Broadband, with its pan-India spread, is capable of increasing both usage and speed at a significant pace. "The next five years should see the completely converged network along with affordable devices and cheaper access," says Shanker.
Demand for services is driving the growth of the Internet. "The benefits the more savvy users are able to get — like, apply for passports online, pay bills, buy tickets without standing in long queues — will trickle to other areas and boost Internet growth in the country," says Asheesh Raina, principal analyst, Gartner, a research firm.
Raina says this is not just true of urban areas; it's also true in rural areas. "For long, we have been talking about how fishermen from Kerala benefit by using phones," he adds. "Now, this trend has migrated up north, with sugarcane farmers from Uttar Pradesh using smartphones to access markets and tie up logistics to transport produce from fields to factories." That creates the pull factor. There's also a push factor.
Facilitating such shift in usage are handset makers and telecom operators. Handset makers are launching more smartphones and dropping price points. Nokia, for instance, has launched 19 devices in its affordable Asha series in the last two years. Similarly , local handset maker Karbonn has brought 50 smartphones into the market in the last two years, at a price between Rs 3,500 and Rs 20,000.
The other push is coming from telecom operators, who are eyeing data as their next growth lever. "Data revenue for telcos is about 10% (of revenues) at present and will be 50% in the next three to five years," says Debdas Sen, leader, technology consulting, PricewaterhouseCoopers India.
"That will come from higher mobile Internet use. Also, growth of e-governance and six new bank licences (which the central bank is expected to announce soon) will propel financial inclusion and mobile banking to remote areas, creating demand for newer Internet services, like mobile banking."