India Telecom

January 6, 2005
Need for radical approach in Indian rural communications

Lalit K. Chandak

NEW DELHI -- Despite several initiatives undertaken by the government of India, the regulator, TRAI, telecom service providers and socially conscious entrepreneurs, rural India has not witnessed as much growth in telecom services as has urban India.

While urban teledensity has shown a healthy growth rate, the same has been stagnant in rural areas. Discussions in numerous seminars call it the 'digital divide' but the truth is that most of rural India has yet to get simple analog phones. Providing a telephone connection in a remote village costs almost the same as provisioning a broadband IP connection today, but given a favorable policy and regulatory environment, new technologies can rapidly roll out modern communication networks across rural India. While the government has adopted the 'stick' approach for rural telephony, it has not seriously considered the introduction of incentives (the 'carrot') to facilitate the bridging of this digital divide. At the same time, the USO approach only recognizes large telecom players as serious participants in its plans for rural communications and has no scope to support new entrepreneurial initiatives in this area.

The rural landscape
From the telecom perspective, rural India has over 600,000 villages. Of these, approximately 27,000 villages are not connected by either road or rail and are yet to get power connections. Telecom facilities do not exist either. Being located in extremely remote and difficult terrains makes them unlikely to get connected in the near future. Most of these villages are located near international borders in the Himalayan region, and are therefore, of considerable military importance. Besides these, there are approximately 200,000 villages that have yet to get a simple analog telephone.

With the advent of NTP-91, NTP-99, as well as the USO Fund, we have been able to provide one analog phone each to approximately 350,000 villages. This was mostly provided by BSNL for motives other than profit. Despite NTP-99 and the subsequent mandatory clauses in the license agreement for new and emerging basic/NLD operators, private telcos have failed to meet even a small fraction of their obligation to connect rural India.

Need for new policy initiatives
A favorable policy and regulatory environment will provide the means for rapid deployment of modern communication networks across India. The current approach of the government/regulator, under the existing policy, places entry barriers on entrepreneurships. This discourages new players to look into building broadband-based communication networks. If broadband usage has to spread rapidly across India, a new approach has to be adopted to encourage its speedy deployment using new technology solutions. The recently announced broadband policy does not touch upon this seriously.

Broadband presently has 125 million subscribers worldwide, with the US having 29 million subscribers, China 19 million, Japan 16 million and Korea 12 million. If India has to achieve the policy-led target of 20 million subscribers by 2010, it has to think more radically. The present cautious, step-by-step approach is not the right method to address the challenge of ensuring rapid growth of bandwidth usage across India. The temperance of expectations, based on the need to move gradually, is the advocacy of mediocrity. Mediocrity predicates measured steps, while innovation compels breaking the mould.

Therefore, the step-by-step approach has to be replaced with a more aggressive approach that will help to jumpstart the process for using new technology solutions. The thinking has to be guided not merely by industrial specific economic considerations, but more by a dynamic and pro-active policy framework that facilitates the speedy launch of advanced services so that they become more widely available to consumers. Some key steps suggested in this direction are outlined below.

Create new policy for growth of rural communications:
Much like the industrial policy for the promotion of industries in rural areas, a new communication policy must be designed to facilitate rapid growth of telephony and Internet services in rural India to bridge this digital divide. The new approach should eliminate regulatory and financial policies that are hurdles in improving teledensity in rural areas. New regulatory and financial policies also need to be defined in such a manner that telecom business cases in these areas become financially viable, which is not the case at present and it does not become so, even if the government was to accept the recommendations in TRAI's Paper 16/2004 in toto. New rules have to be framed, under which telecom operations in these areas are encouraged to become self-sustainable and viable business propositions in three to four years. Much akin to India's policy for rural telephony, broadband deployment in unconnected/rural areas should also be provided support from the USO Fund to licensed ISPs to encourage its spread and usage.

The policy must allow new, small entrepreneurial players to provide telecom and IP services in rural areas - as identified by the government of India - and provide the following incentives:

• Free spectrum for such areas, along with access to VSATs, OFC of PSUs and NIB of BSNL for IP backhaul;
• Give connectivity from telcos without levying any interconnect charges;
• Exemption from paying ADC;
• Exemption from customs duties on equipment imported for deployment in these areas;
• Seed funding (up to 80 percent of total capex) as soft long-term loan; and
• Support from the USO Fund.

The digital divide will best be bridged across India if converged services do not remain restricted to the urban areas in the startup phase, but also spread out to rural areas - much as TV and wireless telecom has been reaching out to the masses.

Technology options for rural India:
To connect extremely backward regions by road or rail is prohibitively expensive. Similarly, to bring power to these areas may also be an uphill task. However, these areas can be connected by satellite. A VSAT at these villages can provide 2Mb IP connectivity. Power required for VSAT, one PC and one telephone, etc., has to come from the UPS, supported by either a solar charger or a hand-operated charger. The complete system may cost approximately Rs. 7-8 lakhs. At Rs. 8 lakhs per village, the one-time cost of connecting 30,000 villages would be approximately Rs. 2,400 crores at the present price and tax structure. This is not a very big price tag for a country that has visions of becoming a super power by 2025.

Backward regions are those that are connected by road and have been mostly electrified. However, the electric supply is very erratic and one has to cater for outages lasting three to seven days. These villages can be easily connected using terrestrial means of communication from the nearest BSNL exchanges. In most cases, the distance between the village with the nearest BSNL exchange around 20-25km away. One BSNL exchange can generally cover 10-15 villages. Fixed broadband wireless access base station systems at such BSNL exchanges can provide each village with 2Mb IP connectivity. This system will use technologies like WiMax and operate in the 2.4GHz ISM band. Wireless alone will cost approx Rs. 1 lakh per village, at the present price and tax structure. Is this burden too heavy for a country who's PSUs alone generate Rs. 100,000 crores in market capitalization in a matter of a few months?

2Mb connectivity can be made available to every home in the village by using broadband-on-power line (BPL) technology. Each electric socket will have IP, whether or not it has 220V power. BPL technology for last mile access has matured over the years and successful commercial deployments are working in Europe and the US since 2001. This will be most suitable for last mile access to home in villages that spread out laterally. BPL in each village will be of great use to power distribution companies. It will automate meter reading, billing, load management, prevent theft and fraud, reduce distribution loss, etc. The cost of one head-end is approximately Rs. 35,000 and the CPE is approximately Rs. 10,000.

For the Indian broadband policy to succeed, the government must clearly define what it expects to achieve. Once the main applications have been defined, it would be easier to build public opinion and support for it. Cost-effective IP based technologies should be promoted to achieve socio-economic objectives. ICT should be used for economic and social development, with an emphasis on the promotion of education through e-learning, health and hygiene through e-health and good governance through e-governance.

Good communications should be made the prime mover for rural development. Just as PCOs have made a difference, cyber centers should become the focus for knowledge disbursement. Once broadband is available in the rural areas, it should be used to carry all kinds of services to build the operational viability of such networks.

Allow the use of new communication technologies for rural communications:
Rural communications can only proliferate if they are made affordable to the large masses of India's poor. Where mere communication is the felt need, the quality of service need not be the prime focus at the initial stage. However, simplified methods of billing, preferably through PCO type rural connectivity centers should be encouraged.

For such communications, the following technologies should be promoted:

• WPC clearances should be speedily given for wireless deployments (using PTP and PMP solutions) that cater to rural areas.
• Incentives should be given for bridging the last mile through the use of MMDS-based wireless radios (FBWA) or power line communications (PLC) and solar-energy based power supplies.
• IP-based voice calls using VoIP/SIP-based solutions should be promoted that permit Internet telephony as a parallel network to the existing PSTN. This should be more on the lines of regional/state-wise VPNs. Encourage the setting up of Internet-based community communication centers that facilitate SIP-based Internet telephony in rural areas. Finally, promote subscription-based broadband, bundled with VoIP, which permits free/cheap calls.
• Wherever feasible, existing power lines should be used to spread the use of broadband. Incentives should be provided to enhance use of PLC because of the inherent benefits that are associated with the use of this technology.
• Since the government has invested in a nation-wide VSAT network, rural communications' IP backhaul should be allowed on this network with an asymmetric approach to pricing to the benefit of rural communications operators. Data connectivity for the promotion of e-learning, e-health and e-governance should be encouraged.
• As niche broadband networks will always be 'walled gardens,' a well defined interconnect regime has to be promoted to ensure connecting all such niche broadband networks with the National Internet Backbone (NIB) of BSNL.
• TV is a great medium for education and entertainment. Hence, broadband should be used to promote digital video platforms that transport broadcast-quality TV channels over the Internet.

Once such new technology based networks are created in rural areas, they should be allowed to carry every service. Let us stop discussing VPTs with one or two phones per village when a broadband connection can provide tens of phones on one link. Change today's license conditions that prevent us from leapfrogging, by linking such areas to the rest of the country and the world, without disturbing the business case of the existing operators like BSNL, Bharti, Reliance and Tata. The services required to be delivered, as decided by the dynamics of the rural market, are paramount for the viability of this project.

The experience of pioneer networks has shown that once they are established, many enterprising usages are discovered including health, governance and entertainment. Our mobile telephony experience has shown that there is tremendous value in allowing entrepreneurs to first develop the market, and then use that infrastructure to provide the applicable services. This will save time and money, and will allow tremendous opportunities for rural India.

Final thought
Unconnected rural India is looking for a visionary who can give them access and bridge the divide between rural and urban India. Everybody expects political functionaries and the state to see this opportunity and to rise to the occasion.

While the telecom industry has performed well under the liberalization policies of the Indian government, the benefits have still not reached rural India. Our rural areas have not been connected to the national mainstream. This 'digital divide' that exists can best be bridged through the full use of broadband under a policy that promotes its usage for the triple play of services - voice, video and data - across the country and not merely restricted to the urban areas. Only this will bring the people, goods, and markets together to bridge the digital divide, thereby providing a boost to the national economy.

Good communications has a direct impact on a country's GDP. While India is building its communication networks, it should use new communication technologies to spread the use of broadband, such as wireless and PLC to the benefit of our rural population's social development.

(The author is president, Span Technologies, New Delhi.)

Contact:
Span Technologies
lkc@spantec.org
www.spantec.org