Conference Program

Abstract

Telecommunications networks of India and China are among the largest in the world. Broadband networks in some regions in these two economies such as Shanghai and other coastal towns of China (Mallaby 2005) and Bangalore and Hyderabad in India are more developed than in some parts of the industrialized world (COMMWEB, April 26). Sperling (2004) notes that “there is better broadband in Bangalore than Buffalo”.  Likewise, citing an experience of a U.S. based firm, Wilson (2005) has observed that it is easier to get a broadband connection in some cities in India and China “than to get one to [a] factory 70 miles away in Batesville, [Mississippi (USA)]”. As of 2005, China ranked the second in the world only after the U.S.- in terms of the numbers of the Internet users as well as broadband users. One study suggested that by the early 2006, a Chinese Internet user was more likely to be on broadband connections than his/her U.S. counterpart (Koprowski 2006). By the early 2006, over half of Chinese Internet-users had broadband compared to only 6.6 percent at the end of 2002 (The Economist April 29, 2006). Moreover, China’s broadband network growth rate is among the fastest in the world (Oil and Gas Investor 2004). By the end of 2006, China is expected to have more Internet users and broadband lines than any other country in the world (Business Week, March 15, 2004). Currently, India is far behind China in terms of broadband and other related indicators. A report released by Forrester Research in May 2006 indicated that the top three socio-economic classes in urban India had only a 3 per cent broadband adoption rate (zdnetindia.com 2006). Nonetheless, India is expected to rapidly catch up in the broadband race. India's Ministry of Communications & Information Technology hopes that broadband will reach 12 million homes in the country by 2010 (Burrows et al. 2005). The two countries, however, differ drastically in terms of major drivers of broadband industry. China outperforms India on factors such as consumer innovativeness, potential of possible broadband applications such as multimedia and animation, business-to-business (B2B) and business-to-consumer (B2C) e-commerce, and IT enabled services, level and composition of base technologies and supporting infrastructures required for broadband development. India’s position as a global capital of outsourcing industry, on the other hand, has been a major trigger for spurring broadband demand in the country.

The proposed paper compares and contrasts critical broadband drivers in China and India. Following Beise (2001), and Lehrer, Dholakia and Kshetri (2002), we divide factors driving the growth of broadband industry into three groups: nature of domestic demands and inputs (Linder, 1961;Vernon 1966), industry structure (Porter 1980, 1990), and export and transfer conditions (Beise 2001; Tilton 1971).  Nature of domestic demand and inputs include factors such as consumer preferences, income, availability and costs of input, infrastructures and government regulations (the roles of technology parks will be covered in detail) and technological economies of scope (a function of prior national experience with previous generations of technology). The importance of industry structure on the performance of broadband industry can be explained in terms of the industrial organization theory. According to this theory, industry structure determines a firm’s behavior, strategy and performance (Bain 1956, Porter 1980; Scherer and Ross 1990). Competition level, size and distribution of broadband suppliers as well as nature and structure of related industries will be analyzed under this category. Factors such as trade policy, export orientation of the firms in the country, strategic regulation, and market size will be covered under transfer and export conditions. We also provide selected cases to illustrate critical drivers of broadband industry in the two countries. Our approach is important because it contributes to theoretical, managerial, and policy debates on the drivers of ICT industry in general and broadband industry in particular. The study is expected to provide insights into broadband drivers in two Asian giants that account for about two-fifth of the world population and are among economies that are experiencing fastest broadband growth rates. Our findings of broadband drivers in these two developing is also expected to help policy makers devise appropriate policies to accelerate the broadband industry and bridge the global digital divide.