AOL India’s Managing Director P.G. Ponnapa says broadband rates in India are among the highest in the world. Little wonder, then, that in the first six months of this year, India has barely added half a million subscribers (256 kbps). In comparison, China is adding 1.5 million new subscribers, most of them using 1-2 mbps lines, every month.

Ernst & Young’s telecom industry leader Prashant Singhal believes that affordability can help break the vicious cycle of poor PC penetration and lack of broadband and vice versa, and that “if telecom infrastructure issues are not resolved within the next three years, they will begin to hamper growth”.

High-speed broadband, for instance, helps convert PCs into multi-utility media machines such as live TV and home theatre, driving up their demand. Since the PC import duty is 5 per cent, there is little scope for lowering prices via imports. But with companies such as Dell setting up manufacturing facilities in the country, PC prices are likely to come down.

Together, affordability (of PC) and competition could do to broadband what they did to mobile telephony in the early 2000s. Once the National Telecom Policy 1999 brought in greater competition, mobile tariffs crashed to the lowest in the world. In July 2007, India added 7.3 million new subscribers, the highest by any country. Telecom-related businesses follow the classic J-curve, where the growth is exponential the moment it’s past the curve.