We could give the journalists the benefit of doubt. Including the worthy guys and greyed hair “intellectuals” who spew their wisdom without realising the import of it all. There has been a lot of talk about the “affordability” factor of Indian Telecom and as usual, I digress.

Purchasing power parity or PPP:

This is an estimate of the exchange rate required to equalise the purchasing power of different currencies, given the prices of goods and services in the countries concerned. PPP exchange rates are used for a number of purposes, most notably to compare the standard of living of two or more countries. It is necessary because comparing the gross domestic products (GDP) using market exchange rates does not accurately measure differences in income and consumption. Market exchange rates fluctuate widely, and the purchasing power parity hypothesis suggests that the long run equilibrium value is that which yields purchasing power parity.

(As usual, the ever useful Wikipedia comes to my rescue).

Well, this is a broad definition of PPP, Further, the Wikipedia discusses it as:

A common measure of the standard of living is the per capita Gross Domestic Product, which is calculated by dividing the GDP of a country by its population. In order to compare the standard of living in two nations, one first needs to express these numbers in the same currency. Using actual exchange rates when making these comparisons can give a very misleading picture of living standards. The PPP method is used as an alternative.

However, there are various factors that undermine the true value of PPP and it’s not virtous. I won’t go in details here, but suffice to say that PPP can allow us to measure the consumption patters across countries. Roughly speaking (I using approximations here) it is the value of the goods being purchased by citizens in a nation compared to other nations. For example, if one dollar can purchase 1 litre of petrol in US and the same dollar can purchase 10 litres in xyz country- the PPP of US dollar is more than the xyz country.

This is a rough idea but suffice for our present purposes.

Now Atanu writes in:

I keep hearing “India is cheap” from people who are going around comparing some Indian prices while carrying US dollars in their pockets. But Indians don’t carry around dollars. They carry Indian rupees when they go to the market. To an American some stuff (and only some stuff) may be cheap in India. But then if the American is Bill Gates, everything is cheap. It is not the subjective experience of a person that I am concerned with here. I am concerned with whether the prices that a person faces in India is objectively higher than the prices a person faces in, say, Canada. Since prices one pays translate to costs one bears, it is important to measure costs to understand what it means that India is more costly than Canada.

(Emphasis mine)

The same discussion is carried forth in second post :

Costs can be measured in terms of time, provided we have an invariant. In our case, we really don’t have an invariant because the time to earn a unit of money varies from person to person, and from region to region. However, there is already a measure of average incomes in a specific location. That is the total production of final goods and services measured in monetary terms over a year for a specific collective of people that is called the gross domestic product (GDP). GDP divided by the number of people gives you the GDP per capita.

To put in simpler words, calculate the time it takes to earn the same amount of money in measurable quantifiable units of time- like years, months, days, hours etc. By the rationale, Atanu explains:

I have done some back of the envelope calculations and it appears that India is many times more expensive than the US in pretty much any goods and services I measure. This should not come as a surprise to anyone who has observed that Indians can afford a lot less stuff (goods and services) than Americans can. Basically, the cost of any good is the time that you have to spend to produce an equivalent amount of stuff so that you can exchange it for that good. Indians on average produce less stuff per unit of time and therefore they can buy less stuff per unit of time as compared to Americans.

I hope this is clear here. So, for the first time, we can explain in concrete terms- the affordability of the telecom services. I don’t have the exact figures for US but what I hear is that the telecom companies charge equivalent of $70 dollars for unlimited Mbps Speeds (I guess around 10Mbps download and 3 Mbps uploads) with unlimited calling to ANY number within US. Of course, it comes in with a locked in period of a specified time but then, we are not going in the details there. At current exchange rates, it would be roughly Rs.3500/- which is indeed highly undesirable. Would you pay this kind of an obscene amount to surf internet?

Now, one has to be suffering from a terminal case of “BSNL itis” (so as to say- an incurable disease which stunts normal intelligence and renders an individual incapable of thinking normally)- that the telecom services are “cheap” by any standards. Well, what we have seen is a drastic fall in prices- but to call it one of the THE cheapest- would be sheer stupidity.

Fine. We are being exposed to this inane crap for ages. We all know it that Broadband access is present in this country. That it is “available” but not widespread as yet. Still we persist in labelling this as “Broadband” or whatever version we have in this nation. The prices are expensive figuratively speaking, but those who can surf, chat/ email should consider yourself lucky. We are just 1.14% of the TOTAL INDIAN POPULATION who can afford computers. This number was gleaned off from National Sample Survey held recently.

So, what we get for whatever our money’s worth? A watered down service. Don’t blame anyone i.e. the ISP’s / the Government/ or Mr. Maran. The root cause of the problem is that we are a third world nation and we are going to remain as such; as long as the Congress is determined to keep it that way. We are still in the kbps stage and I don’t foresee any “light at the end of dark tunnel”.

We are moving in towards a massive digital divide which is going to become more acute as the days pass by.

By the way, this is part of the series of Digital Divide that I had promised long time back. As usual, I d suggest that you read thisWikipedia entry that defines the scope of digital divide. I shall take it up some time later. 

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