They are so innocuous you might miss them completely. Yet two small paragraphs in two unheard of reports are broadband's new hope. One is in a Confederation of Indian Industry (CII) discussion paper on the India Broadband Economy, and another is in a Telecom Regulatory Authority of India (TRAI) consultation paper. Both papers recommend that state-owned Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL) open up their last mile access to other companies. Between the two of them, the telephone operators own 98% of the fixed phone wires that connect a total of 42 million Indian subscribers.

Unbundling the last mile into homes means anyone - Reliance, Bharti, Siticable, Hathway and others - can use the existing copper to offer telephony, net access, TV, films, gaming, or anything else they want. Most importantly, they can do this at a third of what it would cost to enter every home with fresh wires.

That one-third figure is critical. It would cost close to $9 billion , or Rs 40,500 crore, to enter 10 million Indian homes with broadband over fresh copper wires with DSL technology over three years. In the same time it would take over $3.6 billion, or Rs 16,200 crore, to make cable TV wires in just 10 million homes capable of two-way broadband. But if BSNL and MTNL's wires are thrown open, all it will take is $2 billion, or about Rs 9,000 crore. These are the numbers presented by the CII discussion paper, based on research by IBM Consulting Services.

If the reports become policy, as expected by June or so, the rules of the broadband game in India would be altered. Imagine MTNL, Reliance and Hathway all fighting to give you cable TV, music, gaming and net access for Rs 600-800 a month, the ideal price according to the CII paper.

For years we have heard about how 'convergence' or 'triple play'- the availability of voice, data and video on one pipe - was going to change our lives. Well, it hasn't yet.

After over Rs 51,000 crore of investment, the dozen or so companies involved don't have much to show. All they have is about 100,000 subscribers who think broadband means just faster Internet access. In some of the world's largest broadband markets - Korea, Japan, and to some extent the US - it is household penetration that set the broadband market on fire and made it profitable. In these countries, demand for entertainment in the form of either cable TV or gaming created a demand for fatter pipes at home, and therefore broadband. In Korea and Japan, telecom operators fulfilled this demand. In the US, cable operators did it.

Yet in India, hardly any push has happened to make telecom operators offer cable TV, or vice versa. Both have made some half-hearted forays, promising a lot but delivering just net access. "Our broadband penetration is just two per 10,000 people (0.02%), and we say we are a knowledge-based society," exclaims Pradip Baijal, chairman of Trai and now the country's broadcast regulator.

Baijal is communications minister Arun Shourie's man in the field, and kick-starting broadband penetration is one of his priorities. He thinks that broadband can play a vital role in prodding GDP growth. The availability of the net, telephony and video on demand at low prices means that distance education, tele-medicine, tele-working, and research become easier. It means transaction costs for businesses go down, and overall gains in productivity. Korea, Japan and the US have all seen the positive impact of higher penetration on per capita GDP. Over 30% of Korea's GDP, or $148 billion, was transacted on the net, according to the Trai paper.

The final Trai report, to be released any day now, also includes recommendations on duty cuts for hardware, permission to import second-hand PCs for education, intellectual property rights for digital content and so on. But Baijal knows that he will face hell for the unbundling recommendation. It is going to upset BSNL and MTNL, which have been state monopolies for a long time. Baijal is sanguine about all that. "Incumbents sit on a gold mine, and that has to be unbundled to put pressure on them to use it. Unlimited competition is possible only with unbundling. I derive all my faith from what I went through last year," he says. In 2003 Baijal cleared the logjam in the mobile telephony business. He wants to do to broadband what he did to telecom: throw the gates open.

But will it work? Maybe, just maybe, unbundling could trigger a fresh spurt of investment by telecom companies into the last mile. That, in turn, could push cable companies to offer more than just cable TV, regulation permitting. That, in turn, could push prices down, and so on. Whatever happens, there will be lots of confusion over the way it will work. There will be fights over who will invest and who will get a larger share of revenues. There will be endless debates on the technologies best suited to do this - DSL, cable or wireless - and more regulation may be needed in the initial phases. But for India's frustrated broadband dreams, any hope, however slender, is welcome.

To figure out the ifs, buts and whys of the broadband issue, let us flashback a little.

An Unfinished Network

Over the past four years more than a dozen companies have laid over 5 lakh km of optic fibre pipes across the length and breadth of India. The idea was to sell video (read TV and films), music, net access and telephony together, and charge Rs 1,000-1,500 a month. But that did not happen. For one, most did not bridge the all-important last mile. All those sunk investments are made in trunk lines carrying optic fibre cables from across the country, some of it within cities. A lot of it is not 'lit', or active fibre, because there is no demand for it. Most of it doesn't reach homes. The old guard consists of 35,000 cable operators who enter 55 million homes, 21 million BSNL/MTNL homes lines and about 1.1 million homes with private landlines. None of the new players have any significant last mile penetration. Either someone rides on BSNL/MTNL or the cable operator's network, or they duplicate it.

When they did reach homes, all that broadband companies managed to offer was net access. Globally, entertainment has been the 'killer app' on broadband. Most research in high-usage markets shows that broadband subscribers are overwhelmingly using it for downloading videos, and video usually spurs consumers to use broadband for other things. In Korea, gaming has driven the demand for more access. In the US, it is cable companies and the television programming they offer that drove the demand for voice and data services. In Latin America, UT Starcom, an American broadband equipment company, is talking to three major

telecom operators: Telefonica, Telecom Brazil and TeleMex. "All of them are talking video, not net access," says Ruchir Godura, country manager, UT Starcom. That has to hold true for India as well, especially considering cable penetration (55 million) versus home telecom penetration (21 million). "If PCs (2.5 million) are the medium then the market is very restricted," says E.V.S Chakravarthy, CEO Iqara India. Iqara is British Gas' broadband subsidiary.