Currently, most of the roughly 11 million subscribers, or five percent of households that have broadband in India, are in urban areas. That is “far shy of the ambitious government goal of 20 million connections by the end of 2010,” according to a report from management consulting firm Booz & Co. But with mobile networks poised to bring broadband to rural areas, home to more than 72 percent of India’s population, the picture is due to change radically.

Following the auction of 3G and 4G mobile spectrum in 2010, KTMT Consulting Director Mahesh Khera estimates that up to 50 million subscribers in India will log onto broadband using these networks in the next three years. In addition, cable companies are expected to consolidate and upgrade last-mile connectivity in order to provide up to another 70 million connections in the next few years.

“India has the ability to absorb technology and use it on its own terms.”

– Ashish Sharma, Principal, Booz & Co.

All told, there is the potential for around 2,000 percent growth in broadband penetration across India between now and the end of 2013.

At the moment, many of the online business models in India are similar to those in other countries, but their reach and scale are more limited due to low broadband penetration. As access to broadband grows across rural India, however, the focus of new business models is likely to be on public services such as telehealth, financial services, government administration, agribusiness, and learning.

The latter, in particular, has already been the subject of much technological innovation in India. (It’s not surprising given that only 12 percent of students get a chance to go to college.) Four Indian entrepreneurs have created a system called Report Bee that can provide comprehensive academic performance records for everything from a single student to a whole school, in a matter of minutes. And the World Bank-financed Hole-in-the-Wall system provides PC-based outdoor “learning stations” that can be used in playgrounds so students can continue to learn outside the classroom.

As cable companies start to deliver broadband services to Indian homes, Khera says second TV sets could easily become a virtual classroom for the 88 percent of students who are denied college access. Although most homes do not have television sets, of those that do, almost half have more than one.

“These are young people who are keen to study,” Khera says. “They have to work during the day but could study courses from 8 p.m. to 11 p.m. using a PC-over-TV service.”

Booz principal Ashish Sharma also expects a huge explosion in user-generated services. “We will see lots of new content business models, plus a migration of government services online, driven by a strong bottom-up pull,” he says.

Gaming and local-language content likely will also get a boost from heavier broadband penetration. “Localization of content to suit particular communities and language groups has happened already in TV and written media,” Sharma says. “That will get emulated in digital media.”

Many of these applications, from online learning to localized or user-generated content, are likely to draw heavily on video. According to the Cisco Visual Networking Index study, India is expected to have more than 14 million Internet video users by 2014.

And whatever new applications and services arise in the Indian market as a result of broadband, the chances are they will not be restricted to the sub-continent. “You will see a lot of content going to non-traditional markets,” Sharma predicts. “India has the ability to absorb technology and use it on its own terms. The results will surprise all of us.”

Jason Deign is a freelance writer located in Barcelona, Spain.