By early 2004, India had just 74 million telephone connections and 16 million Internet connections for its more than one billion people. Furthermore, most of these connections are confined to areas in and around the 100 largest cities. Bharat Sanchar Nigram Ltd. (BSNL) loses money or just about breaks even in providing connections beyond these urban areas, and no private operators have any significant plans to expand coverage into more rural markets. Consequently, small towns and rural areas have very little connectivity.
With the cost of providing telephone and Internet connections being around Rs. 35,000 per line, a revenue of about Rs. 1000 per month is required for an operator to break even. This is affordable to barely 2-3% of Indian households, the majority already located in major cities.
In contrast to this, cable television connections have increased from almost none barely a decade ago to about 50 million today. The key to this has been: affordable cable charges (Rs 60-150 per month), low cost second hand colour TVs or new black and white ones, and small-scale cable TV entrepreneurs whose overheads are far lower than that of the corporate sector. Through various cost reductions, cable TV is now affordable to nearly 60% of Indian homes, not only in large cities, but also small towns and rural areas. Thus, by decentralizing the distribution and using lower cost technologies, cable TV has been widely adopted in a short period of time.
To meet the communication needs of rural India, n-Logue has adopted a similar model of decentralized delivery and management of its services. It is also taking advantage of appropriate technologies that are being developed by the TeNeT Group at the IIT Madras. Several of the companies it has incubated have come up with innovations that make possible significantly lower per-line cost, making it much more affordable to rural areas.
corDECT Wireless Local Loop, for example, provides a simultaneous telephone and 35/70 kbps Internet connection to a user at a per-line access cost of about Rs. 8000. Other technologies, such as the "Minnow" ISP-in-a-box software, support a low cost Internet infrastructure which requires a considerably lower initial investment. These cost savings enable a small operator to invest and provide services in a limited area, and make incremental expenditures as his total number of subscribers grows.
