If you read me on a regular basis, you will know that I'm certainly not amongst those that condemn regulation by default, far from it. I think in many countries, and at least as far as the telecom sector (and the finance sector, but that's not the topic here) are concerned the issue is not too much regulation it's too little.
However, there are clear examples, especially in emerging markets of regulation and policy pulling in opposite directions. Case in point: India. The Indian government in the last couple of years has been gung ho about broadband deployment and adoption, especially wireline broadband (to a large extent, wireless broadband deploys itself in India). India is a very odd market in that respect: with a population upwards of 1.2bn inhabitants, there are only 10m homes with wireline broadband in the whole of the country, a penetration rate over population of 0,8%, one of the lowest in the world.
The Indian government plan is therefore necessary and timely (if not a little late). The most visible aspect of the plan is the intent to fiber up 250 000 panchayat. These aren't planned as access networks but rather aggregation networks which can then be extended to customers by wireline or wireless access networks. And in a market where copper deployment is minimal, there is a clear opportunity to leapfrog copper altogether.
Or there would be, if prices for rights of way weren't unbelievable punitive. This recent article from the India Express entitled BSNL complains of higher digging charges by civic bodies details what we're talking about. BSNL (the state telecom operator operating over the whole of India except Delhi and Mumbai) is complaining that the rates charged by certain states for rights of ways are three times higher than the rates paid by electricity companies for no apparent reason. Said states respond that that's the "standard" rate for telecom players, so there's no reason to complain.
Here's the hitch though: the rate that the eletricty company is paying is equivalent to USD 30 000 per km. And the rate BSNL is charged is therefore USD 90 000 per km. In a country where existing "unlimited" 512kbps broadband offers cost roughly USD 15 a month (750 Rs), a price that is definitely not affordable by the majority of the population, the business case for widespread deployment of any wireline network simply collapses on the basis of costs of rights of way alone.
It's a shame when one thinks of the potential in a country with an emerging middle class, low labor costs and an appetite for content... My understanding though is that these costs are under the jurisdiction of state governments or even municipal bodies below state governments. While that may explain in part why the national government policies are at odds with the punitive rates for rights of ways, it suggests that there is opportunity for an enlightened local or state government to dramatically lower these costs and thus open up the infrastructure market in a radical way... and reap the economic benefits in added growth, business attractiveness and other income taxes... Anurag Bhatia, a local blogger and tech brain who alerted me to these rates tells me that the state of Gujarat may be implementing such a policy. I need to investigate that.
