The reason, as Bharti Airtel’s President Atul Bindal says, is that “broadband equipment costs are much higher than mobile equipment”. Every optic fibre line to the consumer costs telcos at least $750 (Rs 30,000) while mobile phone networks can be set up for as little as $90 (Rs 3,600) a line. “Broadband is a lot more challenging,” says Prakash Bajpai, CEO of broadband business at Reliance Communications. “Here you need to lay fibre, get permissions from municipal authorities, housing societies, etc. In mobile there are no such issues.”

Bajpai admits that India needs a lot more optic fibre capacity. According to him, broadband can’t take off unless 10-15 million buildings in the top 30-40 cities are wired up. But few are coming forward to do that. Reliance itself is adding 30,000-40,000 buildings to its network every month. That’s just short of half a million a year.

More importantly, mobile networks are earning them net profit margins of 25 per cent, nearly as much as the IT sector and far higher than most other industries. In 2006-07, companies such as Bharti and Reliance were among the most profitable firms in India. While Bharti had a net profit of Rs 4,257 crore, Reliance netted Rs 3,163 crore, higher than net profits of prominent companies such as Tata Steel (Rs 4,222 crore) and Infosys (Rs 3,777 crore). Hence, telcos have dragged their feet over diverting investment towards the more capital intensive wireline networks.

Most telcos approached by BW refused to say why they have failed to offer broadband nationwide. What they did point out is that they are not required to offer higher speeds under the current norms.