Does telecom bandwidth foreshadow international economic growth?

Business 2.0 writer Om Malik asks an interesting question about Reliance Infocomm's new fiber link opening up between China and India: Can broadband predict economic shifts? He notes that currently the biggest pipes are between New York and London, and much of China's traffic to India has been routing through the US. But with the new FLAG-enabled fiber (does anyone remember the FLAG techno-journalism articles in Wired Magazine?), that traffic can now go direct. The question is, will economic value follow the bits?

Blackfriars answer: not really. While international communications is important to growing economic activity, what is even more important is in-country communication. While a direct fiber link between, say Hong Kong and New Delhi is useful, the economies of both countries actually need more bandwidth from their major cities to more modest concentrations of people than better international links. with only about 300 million fixed-line telephones and about the same number of cell phones in China, telecom penetration is still only about 25% of the population. India has a similar profile. This wiring (both fixed line and celluar) of these countries' populations will be a much larger effect than what route their international bits take.

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