Telecom Revolution in India and the Government’s Role in Making it Happen (or not)
Note: Please see comments at the end of this article for updates and opinions.
New Broadband Telecom Projects in India
The legendary Sam Pitroda presented the closing keynote speech at TiECon 2012- The Indus Entreprenneurs annual conference. Sam is a pioneer in design and development of digital switching technologies (in the 1970s) and the man behind India’s telecom revolution (in the 1980s and ’90s). Mr. Pitroda is currently Adviser to the Prime Minister of India on Public Information Infrastructure and Innovations. A technologist, inventor and entreprenneur, Sam initiated India’s telecom revolution in the 1980s and sparked India’s outsourcing boom in the late 90s. In 2007, IEEE ComSoc awarded Mr. Pitroda the award for Public Service in the Field of Telecommunications. (http://www.comsoc.org/about/memberprograms/comsoc-awards/telecom/bios)
A comprehensive article on Mr. Pitroda’s speech appears in the July 2012 issue of IEEE Global Communications Newsletter, which is published in IEEE Communications magazine.
Sam believes that Public Information Infrastructure is critical for driving innovation and entrepreneurship, as well as for improved delivery of public services and accountability.
The first step in modernizing India’s IT infrastructure is the National Knowledge Network (NKN). This high speed fiber optic network will interconnect all educational and research institutions in India (including 22,000 colleges) as well as global research networks in the U.S., EU, Singapore and Japan. Its goal is to enable real time collaboration and research. The target users for the NKN are institutions engaged in the generation and dissemination of knowledge in various areas, such as research laboratories, universities and other institutions of higher learning, including professional institutions.
NKN has already connected 774 institutions (as of 26 May 2012) and aims to connect over 1500 Institutions/ Organizations /Laboratories throughout the country. The network design is based on a proactive approach that takes into account future requirements and new possibilities- in terms of both usage and perceived benefits. The NKN is characterized by a 40G bit/sec fiber optic backbone, multiple 2.5/10G fiber add/drops, and a total of 1500 nodes. It’s projected cost is $3B.
Another government funded fiber optic network is being built to connect 250K Panchayats (local government bodies) in India. Broadband connectivity to these rural Panchayats will improve delivery of public services and empower village residents (which make up 70% of India’s population). It will transform eGovernance, education, health, hospitals, and agriculture. The India government launched this rural broadband program in late October 2011 under the Universal Service Obligation Fund (USOF) to increase broadband penetration in rural and remote areas.
At these Panchayats there will be a cell tower and other related infrastructure for all public and private operators to share facilities for proving last mile wireless services to rural customers. Broadband wireless access will consists of a mix of 3G/4G cellular, mesh WiFi, and WiMAX. Those wireless access networks will be interconnected to India’s fiber optic backbone for extended reach and a multiplicity of services.
This fiber optic network to Panchayats has a projected cost of $6B and will be totally operational in two years time.
In May 2012, Indian Television’s Digital Edge reported: “A total of 1,47,463 ( 59.49 % ) out of a total of 2,47,864 village Panchayats had been covered with broadband connectivity as of March 2012.
A rural Wire-line Broadband Scheme has been launched under Universal Service Obligation Fund (USOF) to increase broadband penetration in rural and remote areas. Under this scheme, BSNL will provide 8,88,832 wire-line broadband connections to individual users and Government Institutions over a period of five years. As on March 2012, a total of 3,58,978 broadband connections have been provided.”
Perspective and Conclusion
While lots of people say government should get out of the way and let the private sector take over industrialization and information infrastructure in India, Sam believes that most companies won’t take on those projects due to uncertain ROI and capital expenses. In sharp contrast, the Indian government now has the political will to move forward with its innovation agenda.
Let’s hope so.
Here are three incisive comments from very respected sources, plus this author’s opinion and a rebuttal:
1. Madhu Pitke, an IEEE ComSoc member for several years who is helping expand its activities in India
“Communication in India has been, until recently, under the total control of government. In the 90s, with the liberalization of the economy, mobile communication has caused a revolution in India. There are probably be more than 700 million mobile phones now. The main reason has been affordability. However, broadband communication has yet to make significant inroads into the village.This is changing rapidly with the emergence of new low cost technologies and the several initiatives undertaken by the government. Fiber networks have reached areas that are within a 10 to 20 km from a large section of the 600,000+ villages. A new Gigabit National Knowledge Network – NKN (Sam Pitroda’s initiative) is being set up to provide broadband connectivity to schools and other educational institutes throughout the country. NKN is also expected to play a key role in taking the broadband to the villages. This is further aided by the goverment’s plan of making available low cost tablets (Aakash) for around $ 50 to each school student.
The problem to be tackled is providing an affordable, user friendly access solution which in my opinion is already on the horizon. About $50 of fixed cost per connection and a monthly rental of about $5 for unlimited use of the broadband (2+Mbps). I hope to write a separate article on this some day.
Meanwhile, it’s true that the Panchayats (local government bodies) are responsible for providing (wireless broadband) connectivity to the villages…. ultimately.”
Alan’s comment on Panchayats providing last mile wireless broadband to the villages: I don’t believe they have the IT/wireless telecom skills or experience to select and deliver the appropriate wireless broadband access network along with the compatible/ matching wireless devices from different vendors. Even if they did complete the job, the result would likely be a proliferation of technologies and frequencies used throughout India, which would make it prohibitively expensive to standardize on mobile devices for the villagers/population. Those wireless devices (fixed or mobile) would have to be ultra low cost as villagers don’t have income to pay $500 or more for a smart phone/device.
Sam Pitroda’s rebuttal: Here is an attempt to clarify the confusion raised about Panchayat provided last mile wireless broadband access to villages in India.
About the role of IEEE ComSoc (by Madhu): “It has helped the communications engneering and academic community (including the students) well informed of the progress in research and development and prepared them for dealing with future challenges through the large number of conferences, workshops and lecture meetings throughout the country.”
2. Suhas Patil, a colleague and friend of Alan’s for almost 30 years, Prof. Patil set up Alan’s 6 week business development trip to India in Nov-Dec,1990. A former Professor at MIT and the University of Utah, Suhas is the founder of Patil Systems (later renamed Cirrus Logic) and the CEO/Chairman of Cradle Techologies (with offices in Puna, India and Mt View, CA).
“Lots of success for India’s telecom revolution, but credit for it should not go to the Indian government. They came to opening the communication segment kicking and screaming. The advocacy role that TiE (and maybe US government) played in persuading the Indian government to open this segment. Again, there are Department of Information and Electronics changes in the (government issued) rules that play havoc with investment. The Ministry of Finance is now proposing a retroactive tax, which would be very damaging to those who have taken the risk of investing in India (infrastructure developement).”
Editor’s Note: A recent article in the NY Times corroborates Mr. Patil’s view expressed above, especially regarding the proposed retroactive tax.
India’s ‘Telecom Revolution’ Turns Ugly, May 4, 2012
Facing new regulation and retroactive taxation, telecommunication companies in India are revolting – foreign companies are pulling out of the country, local executives who were once cozy with government are publicly condemning official policies, and several operators are suing or threatening to sue the Indian government.
“We have probably the most destructive regulatory environment virtually since the inception” of this sector, said Sanjay Kapoor, chief operating officer of Airtel’s South Asia operations, during a meeting Thursday of telecommunications operators in New Delhi organized by the Cellular Operators Association of India. “The recommendations are flawed and retrograde, regressive and uncertain in a fashion that it would irreparably harm consumer interest.”
India’s Finance Ministry said during the budget announcement this year that it plans to retroactively tax foreign acquisitions into India, a plan that seems aimed at Vodafone of Britain, which could owe several billion dollars. Vodafone is fighting the Indian government in international courts, and other foreign companies, including telecom operators, could follow suit, deal-making experts say. Vodafone’s chief executive attended the Wednesday meeting but did not speak publicly.
Already, telecom operators are shutting shop in India.
Basant Khaitan, a life long colleague and friend of Alan’s who spends considerable time in India with two start-up companies he’s involved with there.
“India will become a large market but one has to have patience (relative to fast growing economies like China, Brazil, Russia, etc.) I have often said China is a country which has a high and different trajectory than others. The Indian Government should actively do whatever it can to provide for BB infrastructure. My considered judgment is India’s broadband subscriptions will grow about 15-20% a year. That’s not a bad growth number by any stretch, but the current base is small for a country like India.
Even if Government somehow manages to implement the so called NKN I, personally, remain skeptical about dramatic growth in broadband use. Less than 4% of Indian households have broadband service. ARPU for most (500M+ out of about 650M) cellphone users is less than $4 per month); these users don’t have a smartphone and often are not capable of reading or sending a text message. I am not sure how many will just shell out even $5 extra each month for Internet which they barely know about. I am also equally skeptical about $50 tablet. It is also one of those government hypes; over-promised and grossly under-delivered! I sent my application online to get one about 8 months ago. As of today, I have not even received an acknowledgment of my application. My Indian friends are living the same experience.
The problems are education and cultural including leisure time. Much of growth in Internet usage is due to the educated class (high school or beyond). Corporate use is also growing but it is asymmetrical. Government sector including many government-owned industrial enterprises have also been quite slow to adopt Internet. For every Sam Pitroda you will come across at least 20 senior officers who barely use the Internet.”
2 thoughts on “Telecom Revolution in India and the Government’s Role in Making it Happen (or not)”
Nice write up. You very nicely defined each point.
Your website has excellent content. Thank you so much. Please keep us updated on telecom trends and activity in India.
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