Page 1 December 2012

BROADBAND FOR INDIA

A BACKGROUNDER

A Brief Report for the ASSOCHAM Digital Society Summit - prepared by Mahesh Uppal, Director, Com First (India) Pvt Ltd, & Naresh Ajwani, Elected NRO APNIC & Address Council for ICANN.

COM FIRST INDIA PRIVATE LIMITED

Page 2 December 2012

INTRODUCTION

A nationwide broadband network can be a veritable game-changer for a developing country like India.

Such connectivity can help to disseminate a wide range of services ranging from communications,

governance, health, education as well as entertainment across India. It can empower people,

irrespective of their social status, region, income or gender to partake of the fruits of development.

A nationwide broadband network can also be a major enabler of inclusive financial services including

direct cash transfer of government subsidies and welfare schemes to millions of people. This links

effectively to the Aadhaar Project which is likely to cover the entire country by end of 2013. In

addition, the massive network will encourage new business opportunities and services including e-

Commerce and entertainment.

- The potential of Internet and broadband is now even higher. The growth of social networking has

compounded the power of broadband to impact social, political and economic life like never before.

The imminent move from the current network of people to the “Internet of things” raises the prospect

of virtually infinite capacity for transformation. No country can afford to forgo these benefits.

The National Telecom Policy 2012 (NTP-2012) rightly focuses on broadband growth. Its vision of

Broadband on Demand reflects a clear acceptance of the many types of benefits of a nationwide

broadband access. NTP-2012 “envisages leveraging telecom infrastructure to enable all citizens and

businesses, both in rural and urban areas, to participate in the Internet and web economy thereby

ensuring equitable and inclusive development across the nation.” This is both, desirable and urgent.

India faces considerable challenges as it attempts to realize the NTP-2012 vision. According to

recent ITU-UNESCO report1, India ranks behind over 100 countries, in broadband penetration –fixed

or wireless. It lags many of its peers and also sadly, behind much smaller and often poorer countries.

Barely 10% of India’s population uses Internet, placing it behind 90 developing countries. This puts

India at a serious disadvantage as it seeks to further develop its economy, health, education etc. and

through that, the lives and livelihoods of its people.

- 1 “The State Of Broadband 2012”,,Achieving Digital Inclusion For All, A Report By The Broadband Commission,

September 2012, published by International Telecommunication Union & UNESCO

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Considerable all-round effort will be necessary to improve broadband access in a country as large and

diverse as India. It will require the coming together of stakeholders ranging from users, device

manufacturers, content creators, services providers to regulators and government.

STATUS OF BROADBAND IN INDIA

A key objective of the NTP2012 is to

“Provide affordable and reliable broadband-on-demand by the year 2015 and to achieve 175 million

broadband connections by the year 2017 and 600 million by the year 2020 at minimum 2 Mbps

download speed and making available higher speeds of at least 100 Mbps on demand” and to

“Provide high speed and high quality broadband access to all village Panchayats through a

combination of technologies by the year 2014 and progressively to all villages and habitations by

2020.”

This is a considerable, though not impossible, challenge in view of the current status of broadband

access in India. The following data from Telecom Regulatory Authority of India (TRAI) provides a bird’

eye view of connectivity and broadband in India:

Internet / Broadband Subscribers

Total Internet Subscribers (excluding Internet Access by

WirelessPhone Subscribers)

23.01 Million

Broadband Subscribers 14.57 Million

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Internet Usage in India

Subscriber's Base (in millions) Quarter Ending

June 2011

Quarter Ending

June 2012

%age change

over 12 months

Internet (excluding Internet Access by wireless phone

subscribers)

20.33 23.01 13.18%

Internet (<256 Kbps) 7.98 8.44 5.77%

Broadband Connections (>=256 Kbps speed) 12.35 14.57 17.97%

Wireless Data Subscribers 346.67 460.84 32.93%

It is clear that despite the modest definition of broadband, as data speeds greater than 256Kbps, as

opposed to several megabits per second in many other markets, a tiny fraction of India’s

telecommunication users access or are able to access broadband. With less than 25% of India’s phone

lines able to support broadband technologies and limited rollout of 3G and bare beginnings of 4G

based broadband services, there is clearly a supply problem. However, given the low penetration of

broadband services even in larger cities, where supply is less of a challenge, there is considerable

evidence that the users may not see sufficient value for money to justify a subscription. Therefore, to

improve broadband usage, India will need to address not just supply issues, but also demand and

any other factors hampering the growth of broadband.

BUILDING THE ECOSYSTEM FOR BROADBAND

Given the scale and scope of the task, deployment of such a network - and to deliver useful services on

it -is impossible without support for the ecosystem required for this to happen. A sustainable

ecosystem must address interests of all stakeholders ranging from consumers (services), investors

(returns), to government (governance and strategic interests).

This will enable funds, expertise, knowledge, skills to be mobilised for creating the infrastructure and

providing fair access to services that can be provided through it.

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A healthy broadband ecosystem will need efforts in the following areas:

Carriage/Physical Infrastructure – deployment of the physical network. They include:

Backbone networks

Access Networks

Content - gamut of information and other services of user interest that can be delivered using the

carriage network. This includes:

o Government controlled or mediated content such as e-Governance, public services, emergency,

municipal services, taxation, health etc.

o Private sector created or mediated content e.g. entertainment, e-Commerce, etc.

Devices – various devices such as phones, smart phones, computers, tablets, smart pod etc. that

people can use to access the many applications and services electronically.

Skills- Information and skills needed to identify and use the services of interest. The relevant inputs

include:

Familiarity with devices and services

Training to use or exploit Internet and related data services.

CARRIAGE/PHYSICAL INFRASTRUCTURE

Wireless technologies are emerging as the predominant means of expanding broadband penetration.

According to the ITU-UNESCO report, cited earlier, there are 589 million fixed broadband

connections. However, there are now more than 1 billion broadband connections powered by wireless

technologies. With the increasing power and popularity of smart phones the role of wireless

technologies is set to expand further.

Last mile wireless access is especially important for India which already relies almost exclusively on

mobile technologies. It cannot boast of a significantly large fixed line network which barely serves 40

million of India’s over 900 million phone connections.

Substantial investments are required in the backbone. Irrespective of whether connectivity is wire-

line or wireless, massive funds are required to build virgin broadband networks or to upgrade current

narrowband networks. There is a broad consensus today that for countries like India, wireless is the

faster, scalable and, therefore, feasible option for last mile access. However, for the backbone

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network, the speeds and capacity required for data transfer are best obtained through optical fibre,

despite the high initial investment.

The Government of India’s Bharat Broadband project meets a critical need by connecting over 2.5

lakh Panchayat villages by optical fibre. This can both, support as well as trigger larger data use,

especially in rural areas. The latter arguably need to leverage this connectivity most for speedy

development and growth of services. The government’s plans to invest roughly Rs 20000 crores for

the optical fibre backbone will go a long way to help to aggregate the data needs of users from the

wireless access services provided by multiple telecom operators.

A framework is necessary for use of Bharat Broadband resources by wireless access providers.

Since, barring Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited

(MTNL), all of access providers are private players, there will be need to design terms on which private

players can use this optical fibre. Such terms will inevitably have a bearing on how efficiently the fibre

is utilized by service providers. That, in turn, will influence the penetration of broadband in India.

Wireless towers are indispensable to wireless communications. Towers are enabling rollout of

connectivity in much less time and at much less cost than installing conventional fixed lines would

take. The sharing of towers has added substantial new efficiencies in this. There are currently over

400,000 towers in India and more will be required to expand the broadband access. Towers are

however, still expensive and time consuming to erect. The task becomes even more complex and

expensive due to the many types of approvals and rights of way required to erect towers.

There is a critical need to ensure that the fibre network works seamlessly with the tower

infrastructure. The value of both will increase substantially if the fibre reaching villages actually

terminates at tower locations. This will allow more efficient use of resources such as power, buildings

and staff. It will also users in villages to access other services at those locations. The latter include

sitting of banks, post offices, ATMs, cold storage which can profitably use the power and other

infrastructure available at the tower

Lack of power from the electricity grid is a major handicap for tower players. This is especially true

for rural and remote areas where infrastructure is arguably needed most. This has led to widespread

use of diesel that is unfortunately implicated in increasing greenhouse gases. There are also

concerns- contested by players – about the effects of radiation, skylines etc. Wireless based

broadband growth will, therefore, depend on how effectively regulation can ensure that towers can

be leveraged without any attendant risks.

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Access to appropriate spectrum is a prerequisite for wireless access to user services. The speed

with which this can happen will depend on players who won the auctions for spectrum for 3G and 4G.

3G services are now available in most cities. 4G services are, however, in their infancy. The coming

months should see deployment of 4G services more widely. It is expected that, despite the slow start,

demand for broadband will continue to rise in the coming months. This will require a clear programme

on how the government plans to allocate and price broadband spectrum in the coming years.

CONTENT

Content will be key to exploiting broadband networks beyond simple telephony. Broadband

networks in several countries already support hundreds of applications and services. These include

access to public information such as municipal services, emergency services, health, education,

financial services, entertainment etc. India’s broadband network also needs to offer affordable

content that is relevant to the country’s diverse population, characterised by

Multiple languages,

Varying levels of literacy,

Uneven physical and social infrastructure

Low levels of income.

National e-GovernancePlan (NeGP) will expand access to government information and services

using the broadband network. The NeGP has ambitious plans to deliver a wide range of services

including the following2:

Central Government Projects

1. Banking—provision to all of services in government owned banks to be

accessed from any branch and on the internet and nationwide clearance and

settlement system;

2. Central Excise & Customs—filing and payment of all taxes relating to excise

and customs;

3. Income Tax—filing and payments of income tax returns online;

2http://india.gov.in/outerwin.php?id=http://mit.gov.in/content/national-e-governance-plan

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4. Insurance—education for citizens, issue of policies on line and a grievance

redresses system;

5. MCA21—online filing of documents, registration of companies and public

access to corporate information through a secure portal;

6. National Citizen Database (NCD) or Multipurpose National Identity cards

(MNIC)—to create a nationwide database of citizens and to provide a unique

ID for every citizen;

7. Passport, Immigration & Visa—online filing of applications and tracking their

status

8. Pension—a portal for providing information and handling grievances;

9. e-Office—to streamline intra government information transfer to make it

more efficient and amenable to citizen services ;

Projects at State Level

10. Agriculture—information and advice to farmers on seeds, fertilizers,

pesticides weather, crop management, marketing of agriculture produce;

11. Commercial Taxes—electronic filing of returns, payment of taxes, clearance

of refunds payment of tax etc.;

12. eDistrict—provision of Government documents for citizens including

certificates for income, domicile, caste, Birth, Death, ration cards, etc., arms

licenses, information on entitlements, e.g. schemes for aged, widows and

Right to Information Act, payment of utility bills;

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13. Employment Exchange—information about job vacancies available;

14. Land Records—copies of ownership records, crop, irrigation, and soil details,

help with mutation of ownership;

15. Municipalities—citizens services at urban centres in states;

16. Panchayats—issue of documents, information about meetings and decisions

taken, funds received and method of utilization, digitization of village

geography;

17. Police—improving police effectiveness;

18. Property Registration—payment of stamp duties; registration of documents

and issue of copies of certified documents

19. Road Transport—driving licenses, car records

20. Treasuries—computerisation of state treasuries to integrate payments of

salaries, expenses, reconciliation of accounts

Integrated Mission Mode Projects

21. Common Service Centres—the delivery of e-governance services

22. e-BIZ—business support services

23. e-COURTS—to support information needs of judicial administrations,

litigants and judges

24. e-Procurement—support for government procurement

25. Electronic Data Interchange (EDI) For Trade (eTrade) support for electronic

clearance of import, export and other trade documents

26. National e-Governance Service Delivery Gateway—core infrastructure for

achieving standards-based interoperability between various e-Government

applications across India

27. India Portal (www.india.gov.in)—common portal for government services

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Aadhar project for unique identification can effectively leverage the broadband network. This is

good news not just for users who would gain access to entitlements hitherto difficult to claim, but also

to investors in networks, for whom efficient usage is a commercial priority.

Private Sector mediated content will meet other needs and help commercial viability of

broadband networks. Public information and services though necessary are not sufficient. While

access to government services will be key reason and justification for deploying broadband networks,

it would be difficult to see public services as sources of significant revenue. So, private sector will play

a key role in delivering other information and communication services needed for social and work

purposes. These networks promise significant avenues for generating revenues through services for

which users are willing or able to pay. These would include entertainment, e-commerce, premium

services and hundred more. Such revenues could go a long way towards attracting private investors. A

broadband network, for example, would have special interest for media companies, music players,

banks, and private players in the education, health etc.

DEVICES

Availability of Devices remains a key concern for end users. The massive growth of mobile

telephony would be impossible without access to affordable handsets and internet enabled

community devices. The massive surge in cell phone users coincided with the entry of sub-Rs. 1000

handsets. This enabled even the very low income subscribers to use phones in their social and work

life. A similar challenge exists for broadband data services. Unlike mobile phones, that offer a

personal experience, an internet enabled device that can connect to any TV can be game changer too.

It can be used by rural communities in for example, a gram panchayat room to learn new skills as well

as get entertained using broadband connected services.

The mobile phone is emerging as a key device for connecting to the Internet and other data

services. The price of personal computers (PCs) and laptops, which many traditionally used for such

access, makes them out of reach of the typical Indian user with a relatively low income. However

mobile phones, especially smart phones, today offer much of the same functionality for a fraction of

the price. The outpacing of PCs by mobile devices reflects this reality.

NTP-12 proposes to Reposition the mobile phone from a mere communication device to an

instrument of empowerment that combines communication with proof of identity, fully secure

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financial and other transaction capability, multi-lingual services and a whole range of other

capabilities that ride on them and transcend the literacy barrier. This is welcome shift from earlier

focus on desktops.

Tablets, like Aakash, fill an important need by offering a cheap and portable device to access data

services. The long battery life of the device is particularly suited for rural areas with poor power

supplies. This could play an important role in allowing the end users to sample the data services on

offer and to slowly influence what innovators and service providers will deliver in the coming days.

Indeed, Aakash and other ultra-cheap devices could fuel a much awaited virtual circle of demand

and supply to benefit users, especially rural population with low income. This will in turn improve

the viability of the large investments required for broadband networks

Like tablets, there is a new candidate device for large scale data access that can be personalized to

requirements of individuals or communities. A SmartPod – an Android based solution connects to

any TV and converts it to a Super-Smart PC and is a promising all-in-one digital hub for homes,

community& education centres and offers almost full functionality of Internet content.

SmartPod – an Android based solution

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SKILLS

Those without technical literacy need intermediaries for information and skills.

Several potential beneficiaries of the many services already available on the Internet, say municipal,

online buying, etc. are simply unaware of their existence or have no exposure to PCs, keyboards or

mice needed to access them. A key barrier to use of Internet and data services is the lack of rather

simple handholding that the young, urban users have but often don’t need. This can be addressed

through human intervention.

Internet kiosks, cybercafés etc. have emerged as key players in imparting skills to access data

services. The vast network of over 100,000 kiosks around the country, and being augmented by the

Common Service Centres (CSCs), are thus helping to address this simple but significant barrier to

broadband growth.

TRAI Recommendations on National Broadband Plan of December 2010, highlighted the importance

of programmes like Cybercafé Association of India’s Project Gyan, a 10 day Internet Learning

Program, offered free from Cybercafés/CSCs and taught in the language preferred by users., Such

programmes can be invaluable for sensitizing people about broadband and its benefits.

ROLE OF ENABLING REGULATORY AND POLICY ENVIRONMENT

In an infrastructure sector that touches the whole population and all regions of the country, the role of

government is paramount. Its role in rural areas is particularly, important since it is often the only

player in rural areas. It is involved in not just in governance, but also service delivery ranging from

payments, schools, educations, agricultural extension programmes etc. The government provides the

regulatory environment for investment, infrastructure creation as well as service delivery. This role

will only increase as the role of communication networks increases even further in other sectors such

as education, health, finance and even entertainment.

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NTP-2012 acknowledges the role of government in creation and orderly growth of broadband

networks. Some of its proposals on licensing and mobility, if implemented effectively will go a long

way to reducing the cost of setting up networks and improving the environment for providing services

on them.

The NTP-2012 proposes key reform in the licensing regime. It proposes to “Simplify the licensing

framework to further extend converged high quality services across the nation including rural and

remote areas and to “Create One Nation - One License across services and service areas”. This will

ensure that regulation or policy is in line with reality of technology and the business of

telecommunications. It will help investors and users by ensuring that there is no barrier to the

provision and use of services that technology can support and operators can deliver to end users.

Towers and Rights of Way are areas of key concern. The government is a key player in installation

and maintenance of towers. Its support is indispensable for tower companies, operating within the

rules and guidelines. Its intervention in the matter of rights of way for the Bharat Broadband project

has helped obtain speedy approvals for rights of way in states. Such support for private players doing

similar work can expedite broadband access in many parts of the country.

Spectrum Allocation and Pricing must reflect priorities. The government has made important

strides by delinking spectrum from licences for wireless services. This key reform can potentially

prevent many disputes in the sector. More importantly it could create an enabling environment for

broadband growth in the country. Recent events have confirmed the importance of reconciling two

seeming divergent objectives of ensuring spectrum. Its price must reflect its value as an important and

scarce resource and its allocation the need to ensure it is used effectively and efficiently and not left

idle.

PUBLIC-PRIVATE PARTNERSHIP

Broadband networks cannot deliver value without active government partnership with private

players. The nature and extent of services possible using the infrastructure are diverse and frequently,

urgent. The government and private players bring unique value to the table. The government brings

legitimacy and facilitates economies of scale. Private players on the other hand bring efficiencies

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borne out of commercial approach. They complement the investment of the government’s

investments with often comparable resources of their own. This makes active mutual cooperation and

support a priority. It requires recognition of the complementarities of efforts of government and

private players and their importance for ensuring that broadband networks are created and

commissioned speedily and its huge potential delivered to citizens of India.

RECOMMENDATIONS

1. Broadband networks could be a game-changer for inclusive developing and rural prosperity.

2. There is a critical need for active partnership and concerted action by all stakeholders

including government and private sector.

3. Take calibrated steps to strengthen the broadband ecosystem of carriage, content, devices,

skills etc.

4. Government led Bharat Broadband project to deliver optical fibre to Gram Panchayat can

transform development. Create a framework to enable effective sharing by private players.

5. Reduce cost and speed of building broadband infrastructure.

6. Reduce fees and levies and streamline approvals for towers and other infrastructure to speed

up network expansion.

7. Reduce costs and improve environment for Internet Service Providers involved in delivery of

broadband services to low income and rural users.

8. Address concerns about allocation and pricing of spectrum to realize the unique potential of

wireless broadband in India. Release additional spectrum to minimise lost value of idle

spectrum.

9. Expand and expedite roll out of the National e-Governance Plan to deliver public services and

to strengthen the content ecosystem.

10. Extend support for low cost devices such as mobile phones, smartPods and tablets(e.g.

Aakash)

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Contributors

DR. MAHESH UPPAL DIRECTOR, COM FIRST (INDIA) PVT LTD

MR. NARESH AJWANI ELECTED NRO APNIC & ADDRESS COUNCIL FOR ICANN

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