Action plan for connectivity

THE success of Mission 2007 depends to large extent on the level of telecommunication connectivity. If the recommendations of the Telecom Regulatory Authority of India (TRAI) bear fruit, one can expect increased Internet and broadband penetration in the near future.

According to TRAI Chairman Pradip Baijal, telecom operators are going into the villages because they realise that at current tariff rates, a huge market awaits them there. Currently, 200 million people in 1,700 out of 5,200 towns have mobile connections but penetration of mobile phones in rural areas is negligible. By 2006 it is proposed to increase the coverage to 300 million persons in 4,900 towns and 450 million in 350,000 villages.

As regards Internet connectivity, at the end of 2003 there were only 0.4 connections per 100 persons in India compared to 26 in Korea, 12 in Malaysia and 2.5 in China. The broadband connections were only 0.02 per 100 persons as compared to 25 in Korea, 0.4 in Malaysia and 1.4 in China. According to Baijal, there will be sufficient bandwidth in the near future but utilisation needs to be increased. Around 670,000 route kilometres of fibre was deployed across the country and the Bharat Sanchar Nigam Limited (BSNL) alone has equipped 30,000 of its 35,000 exchanges with fibre. There is a possible capacity of up to 20 Gbps at each of these 30,000 locations. Using wireless, satellite and other technologies, these 30,000 exchange locations can be leveraged as hubs to distribute broadband connectivity to all the surrounding villages.

The growth of broadband connectivity is driven by the interplay of three distinct factors - infrastructure for access, access devices and content. Availability of viable infrastructure promotes proliferation of access devices, which in turn promotes content creation, and increased content levels promote further demand for quality infrastructure. Baijal feels that when technology is made available at critical mass and appropriate price, the bright entrepreneurs would develop applications of that technology. In his opinion, much of the infrastructure exists, but a comprehensive action plan is required.

The TRAI has made a number of recommendations to accelerate the growth of Internet and broadband penetration. It wants the unnecessary technical restrictions and licence conditions on DTH (Direct to Home) and very small aperture terminal (VSAT) to be removed so that they could be used effectively at a low cost. It has advocated an "Open Sky" policy, as in the case of Internet service providers (ISPs) and broadcasters, so that operators can avail themselves of the best prices and technologies available. Extraneous fees, such as NOCC and DTH uploading spectrum royalty, need to be removed. Technical curbs on VSAT, such as minimum dish size and throughput caps for upload and download should be removed. Another recommendation is that VSAT should be allowed to distribute connectivity to multiple customers outside a common users group (CUG) and clearance process should be accelerated.

To promote wireless broadband, the TRAI has recommended the encouragement of alternative technologies. It has also suggested delicensing and vacation of appropriate bands quickly, exploration of alternative spectrum to be used for wireless broadband services and streamlining of the clearance process. It has stressed the need for providing fiscal incentives to reduce the cost of relevant equipment and stimulate domestic manufacture of equipment. Its recommendations in this regard include 100 per cent depreciation of personal computers (PCs) and broadband customer premise equipment (CPEs) in the first year, tax benefits to donated PCs, removal of anti-dumping duty on import of recycled PCs, rationalisation of import duties, income tax exemption for Web hosting, and service tax exemption to ISPs. With the present penetration level of just 2 in 10,000, the tax and duty revenues collected would be negligible. Widespread deployment of broadband by government in its day-to-day functioning has also been recommended. For example, if the government orders that all financial transactions above Rs.50,000 must be done electronically, it would have a tremendous impact on the growth of broadband and Internet connectivity.

Baijal said: "If these recommendations are implemented we are confident that the growth of broadband would be more spectacular than that in the mobile sector. Exciting times are ahead of us and if the right steps are taken India can show the world her true knowledge power."