I found this interesting and useful post on BSNL Bangalore website explaining speed related queries its users have.

Speed performance of Dataone connection

Most of the broadband subscribers find it difficult to understand why they are not getting the desired speed as promised by the Service Provider. They simply wander and suspect that ISP is not providing the desired bandwidth. However there are lots of other factors contributing to poor performance of broadband connection even though full bandwidth is available and ADSL line is perfectly all right. This document summarizes various such reasons with performance figures collected from public Internet.

Bandwidth vs Throughput

The terms bandwidth and throughput are not same. Bandwidth is the rate at which information can be moved over a given connectivity whereas the throughput or speed normally we observe on browser window while downloading a file or through various speed test sites is the throughput of single TCP/IP connection. The throughput depends upon lot of other factors like Hardware, Operating System, latency etc. Therefore even if the enough bandwidth is available, you may feel that ISP is not providing the full bandwidth as promised.

Kbps Vs KBps

The bandwidth specified by ISP is Kilobits per second (Kbps). However Browsers and other file transfer agents tend to show speed in terms of KiloBytes per second. So 1KBps will mean 8Kbps. Some customers mistake KBps as Kbps and feel that they are not getting the desired speed.

Internet uses IP as the protocol for communicating, therefore, and in particular, TCP/IP. So your data is going over your DSL line via TCP/IP over PPPoE.

TCP and PPPoE will have overhead bytes which can vary from 5% to 25%, So you can expect up to 25% of your purchased speed at least when counting application data transfer rate. Making up a rule of thumb here: Given a broadband line speed, dividing by 8 and taking off 15% is a reasonable estimate of the maximum likely data download speeds (in bytes of data) you will manage to get.

The ideal Situation

In an ideal situation, you should be able to see in your browser download window, during a sustained transfer, a rate equal to your purchased speed, divided by 8 (to get bytes), less 15% (TCP/IP and PPPoE header overhead). It is unlikely you will ever see that speed though, and the reasons given below explain why.

1. Badly configured PC

The single most common cause of poor performance is a windows PC that is in poor shape for broadband.

1. Insufficient memory (128mb is really the lower limit now for any windows install),

2. Underpowered processors;

3. An aging and unstable windows installation,

4. Accumulation of shareware, particularly SPYWARE and MALWARE - Over-clocked motherboards that cause unusual problems. The problem gets intensified if connection is shared by multiple computers. The unwanted traffic chokes the Ethernet port of the modem and you may find the speed worse than that of dial-up connection.

The list is endless. If you experience frequent application crashes or blue-screens, the disk churns like crazy as you switch between applications, windows reports warnings about virtual memory becoming low, pop-ups keep happening, and your modem shows a lot of flashing lights indicating "data" even when you are not doing anything, then you've not got a stable system for experiencing top speed, especially from the point of view of the browser!

2. Many servers cannot currently offer high speeds to you.

Many servers would not provide the "broadband experience" to any user who thought they had speeds of 768kbps or more. Many servers offer speeds far slower than even this, because they are busy, and you are sharing their bandwidth with hundreds of other people. Even some of the most popular sites provide throughput as low as 100 Kbps regardless of any bandwidth available.

3. Latency

Although it may seem that the information traveling at the speed of light should not be matter of consideration, but surprisingly it is. The round trip delay (to & fro traveling time of information flow) from India to US will vary 300 to 400 ms on fibre links. For satellite links it will be even high. This is the major cause for reduction in throughput because of TCP/IP limitations as explained below.

TCP/IP limitations and its effect on throughput

TCP/IP implementations typically have a limit on the maximum throughput possible from a station. Why? Simply because the TCP/IP stack has a maximum outstanding amount of data that can be in transit from one point to another without acknowledgement of delivery.

In practise, as mentioned above, most TCP/IP stacks run with an 8 KB maximum window size (Linux, Windows 9x, Windows NT, etc. Windows 2000 has a 16 KB maximum receive window size. Here is an example on how adverse impact of TCP/IP limitations can be on throughout (taken from a study published on Internet).

This is a simplified model of TCP/IP over Ethernet behaviour of a single TCP connection intended to provide insight into throughput limitations of TCP/IP due to network transit latency. In the model, TCP/IP sends the maximum TCP receive window size worth of application data (filling the maximum possible receive buffer), then waits for a single acknowledgement for the entire max. window size burst. The model also assumes that the instant the acknowledgement is sent, the data is emptied from the receive buffer and the entire window size is again fully available.
This latency vs Speed table assumes the all other factors in ideal conditions like No data loss All datagrams of Maximum size, No TCP/IP slow start, Computer hardware/software and network equipment can support peak TCP allowed data rates etc.
Round Trip Latency (2T)	Maximum User Data Throughput (64KB Window)	Maximum User Data Throughput (WinNT,Win9x)	Maximum User Data Throughput (Win2K)
150 mS	2,555 Kbps	445 Kbps	851 Kbps
200 mS	2,054 Kbps	338 Kbps	653 Kbps
250 mS	1,718 Kbps	272 Kbps	529 Kbps
300 mS	1,476 Kbps	228 Kbps	445 Kbps
350 mS	1,294 Kbps	196 Kbps	384 Kbps
400 mS	1,152 Kbps	172 Kbps	338 Kbps
420 mS	1,103 Kbps	164 Kbps	322 Kbps
440 mS	1,059 Kbps	157 Kbps	308 Kbps
450 mS	1,038 Kbps	153 Kbps	302 Kbps
470 mS	998 Kbps	147 Kbps	289 Kbps
480 mS	980 Kbps	144 Kbps	283 Kbps
500 mS	944 Kbps	138 Kbps	272 Kbps

Source: http://www.babinszki.com/Networking

You can see how badly the throughput is affected because of high latency and TCP/IP limitations and that is the reason why customers having WIN98/ NT/2000 machines may get speed as low as 130 Kbps that too if every thing else (i.e. Good line condition, PC is configured for optimum performance and free from infection) is in ideal condition.

4. Upload vs Download speed

The upload and download speed in ADSL connections are not same. Normally ISP will specify the download speed only. The upload speed will be less than the download speed and so if your application needs more upload speed, you may not experience the desired throughput. BSNL Dataone connection is configured for 256kbps upload speed for all the customers.

5. Poor ADSL line:

Some times the ADSL line conditions becomes poor due to various reasons like poor insulation in underground cable, Interference, loose connection, improper house wiring etc.. This results in poor speed especially for higher bandwidth customers.

The ADSL modem supplied by BSNL for Dataone connection has got advance functionality, which gives fair idea about ADSL line condition. The subscribers can login to http://192.168.1.1 and see the various parameters displayed on home page. The most critical parameter is SNR (Signal to Noise Ratio), in normal line SNR value should be around 12 or more.

Conclusion:

Now you can understand why you do not get the desired speed in your broadband connection. Most of the content being accessed by users is located out side the country that means a high latency varying from 300 to 450ms (After all information has to pass through several hops and it can not travel faster than light). Therefore if you are having Win98 PC you can expect the speed throughput of 130 to 170 Kbps only. If some body subscribers for 2Mbps connection and even if he is having latest machine and operating system, still he will not get more than 1Mbps throughput from International sites because of TCP/IP limitations.

Some software programs are available over Internet, which modify the TCP window size of Windows machine, but you have to use those on your own risk. Some download accelerator software programs are also available which increase the speed by establishing multiple connections simultaneously. In fact the bandwidth plans of higher than 512 Kbps are assumed to be shared by multiple computers for utilizing the full bandwidth.

The most important thing is that you can not leave your PC unsecured to allow viruses, Spy wares and worms to get into your PC which will not only make your connection slow but cost you heavily as all the bytes upstream or downstream through ADSL connection are counted as Usage data.

More Sources:

http://www.tcpipguide.com/free/t_NetworkPerformanceIssuesandConcepts.htm