Why exactly is connectivity so expensive in India? For instance, these days in Pune I pay Tata Indicom Rs 880 (US$20) a month for 64kbps (max) speed. Compare that to 5 years ago I used to get 256 kbps unlimited usage ADSL connectivity in Berkeley CA for only about $20 a month. One can naively ask why I don’t get 256 kpbs unlimited usage for say Rs 200 a month in Pune today?
OK, just to frame the question a little better, let me state that I recognize that prices depend on the underlying costs and on the degree of competition in the market. First, underlying costs. There are technical costs and there are statutory/regulatory/government imposed costs. Technical costs in India cannot be more than the technical costs in the rest of the world. Equipment costs approximately the same, modulo local taxes and import duties. Of course, average fixed costs vary depending on scale, and I do recognize that there are scale economies. So that is one factor that needs consideration: the scale of the operation. Perhaps the BB market is so small that some variant of average cost pricing makes the prices so high.
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