The basic problem is that Bsnl is managed by old farts who are not in touch with market conditions and technology. In India, every tom dick and harry digs up the road, not to mention hundreds of overhead wires from all ISPs and cable operators creating unstable connections.
They cannot compete on high speed so why bother. 90% of the market is still on below 4 Mbps connections....... what more do they want.
The same minimum 1Mbps plan would have been a big hit in 3G if someone thought of it.