Regulate in Haste Repent at Leisure

There are many stories in Indian newspapers at present wherein one can read about the Telecommunications Regulator's recent recommendation in favour of  a considerable reduction in reserve price of spectrum and those relating to permitting spectrum trading. As expected, some are and for and others against these recommendations. Also see "Cheers for old telcos, worries for new" and "Pragmatic way forward."

Either way, in my view, what is important is that all regulation must be based on sound economic analysis placing consumer interests above all. The latter includes a healthy, viable and competitive telecom sector.

This brings to notice the recent controversy over TRAI's 12 minute cap on  advertisements in its role as a broadcasting regulator. The decision is at present subjudice with TDSAT (Telecom Dispute Settlement and Appellate Tribunal) . Now the Ministry of I & B is said to be collecting data on potential revenue losses as a result of this measure. It would be much better if this exercise (and such groundwork in general ) was done before the regulator recommends and the government accepts its recommendations. 

An extract from a news item is placed below which is quite self explanatory:

In May, the Telecom Regulatory Authority of India (Trai) had said commercial advertising limits for TV channels should be capped at 10 minutes. A two-minute-an-hour cap was allowed on ads promoting the channels or their shows, putting the overall ad cap at 12 minutes an hour. Meanwhile, I&B Minister Manish Tewari said a solution should be found through consensus.

“There is a need for both the regulator and the stakeholder to work out a road map regarding the ad cap. There cannot be a regulator if there is no stakeholder and the stakeholders have said they would suffer a loss if the rule comes into effect, while the regulator is doing what they have to,” said Tewari.

I think we need to take regulation much much more seriously in this country as much of our recent economic woes have been identified as arising from inadequate regulatory capacities and fairly clumsy regulation with serious negative repercussions.

Another article which is worth reading on this subject is "Regulators Must Promote Not Strangulate Industry"  in today's Times of India. It speaks about the above issues and correctly highlights the need to improve regulation in all sectors in India. 

Please see my previous posts on this subject under Telecom Regulation.

The Oldest Item in the US Basket-Still Indispensable

An article in the Times of India on 8.9.13 titles "As PCOs hang up, distress calls drop" highlights the importance of public calling offices (PCOs) or pay phones as thet are called in some parts of the world. It is said that ever since the number PCOs are in decline, the number of calls being received from distressed children on the government funded Child Helpline has decreased sharply. As many of these children would be orphans, homeless or from marginalized segments of society, the Helpline would have been a lifeline of sorts to report mistreatment or to locate shelter. It is suggested that the solution lies in installing free phones to the child hotline. 

In India the Village Public Telephone (VPT) schemes were the first to be launched by the Universal Service Obligation Fund and have now been discontinued. As private PCOs outpaced the USOF subsidized in numbers and quality of service this was the right thing to do. However, the government does need to ensure the availability of PCOs in both rural and urban areas. 

One option could be to install purely government/CSR funded phones which can dial all types of public /welfare related hotlines and emergency services. These phones should also be equipped with assistive technologies to make them disabled friendly.This would serve the public well and is a worthy cause for USOF to espouse and support. The revenue earned from calls could meet some of the installation and maintenance costs.

Mapping Broadband Availability-CAF

Detailed mapping to establish market failure before universal service/state funding is resorted to is a wise step which is economical and would also create less market distortions. Indian USOF does this for many schemes but the results are not available in the public domain. They should be.

A news item reports that, In USA, a  "[t]]he FCC has released an interactive map of the 600,000 or so homes and businesses getting broadband thanks to the second round of funding in phase I of its Connect America Fund (CAF) broadband subsidies.That will give independent telcoms information with which to challenge those funds if they believe they are going to areas already served by broadband. The FCC points out that the map could change due to those challenges.The Connect America fund [CAF] is part of the commission's effort to transition Universal Service Fund monies from traditional phone subsidies to broadband. The FCC last month announced that over $385 million had been requested by providers in 44 states. Now it is identifying where they will provide service down to the census block level as part of an effort to insure the money is not used to overbuild existing service.Phase I money goes to incumbent telcos in the best position to get expand quickly to unversed areas."

The mapping is a great idea, but favouring the incumbent is one I am not so much in favour of.

Namibia's Progress in Telecommunications Regulation

The Communication Regulatory Authority of Namibia (CRAN) is following the footsteps of communications regulators across the world in terms of establishing the regulatory basis for licensing, universal service policy and fund, spectrum and digital dividend, infrastructure sharing, open access, number portability, green ICTs etc. This can be seen at "Namibia: CRAN Expects to Award More Licenses."

Newcomers on the scene have a wealth of international experience to learn from and to adapt to their own national context. Sufficient care to ensure competition and level playing field for all at the outset can prevent costly regulatory errors.

South Africa's Plans for a National Broadband Plan

It has been reported that at a recent industry event with the theme of "Broadband – A Catalyst for Sustainable Economic Development and Promoting Digital Inclusion" the need for better policies, "collaboration between stakeholders," vertical separation and demand side measures like "ICT Skills Development, digital literacy programs for students and adults, IT resources and training"  and the" need to move to impact and creating an ecosystem … and mesh together supply side and demand,” have been emphasized by participants from government and industry.

This echoes much of what has been agreed internationally as posted earlier under National Broadband Plans and Broadband Networks. 

An earlier report about the Government's plans for broadband expansion and reactions of the industry may be see here.

http://www.zdnet.com/can-south-africas-grand-broadband-plan-succeed-7000007165/

An extract as below indicates that the 3 options being considered are similar to those which may have been considered by many a nation and certainly same as those considered in India. (Please see post titled "Broadband Networks through the Infrastructure Sharing Route"

"The government currently owns a number of assets in the telecoms market – including long-distance infrastructure provider Broadband Infraco and a 39.8-percent share in South Africa's fixed-line incumbent Telkom. The state now wants to work with the private sector to build a wholesale national broadband network along open-access principles. With around 3.5 million PC broadband connections and 10 million smartphones between South Africa's population of more than 51 million, the country is far from achieving its goal of universal access by 2020.

Though there are many broadband expansion projects underway, they are fragmented, and a comprehensive, centrally planned strategy is essential to boosting broadband in South Africa .., three funding options for the national network [are]:

• Financing a state-owned enterprise.
• Incentives for operators to offer services in economically unattractive rural areas.
• Equity and incentives provided by government could be ring-fenced in a special purpose vehicle."

The public consultation paper on National Broadband Policy suggests that for OFC backbone the incumbent (Telekom) will play the lead role in providing whole sale access even though service competition will be encouraged in service provision to customers . The document lays a welcome emphasis  on developing the broadband ecosystem.

ICTs for Indian farmers

A 2009 Deloitte Assocham Report on mobile VAS as a means of inclusion speaks about the sheer enormity of the problem of reaching out to a billion plus population to ensure provision of "basic hygiene and sanitation, clean drinking water, basic healthcare, primary education to adequate housing, roads, higher education, banking facilities, disease control, and disease management. Each problem is exacerbated by its sheer magnitude.  (Refer Table 1)."

Thus, India is a country where rural areas in particular are financially excluded. The RBI has officially directed banks to explore ICTs based solutions through the business correspondent model whereby a village can be covered even in the absence of a brick and mortar branch.

Recently, the Mint carried an article about RuPay a card payment network like Visa and masterCard that is revolutionizing how Indian farmers handle money. Through RuPay Kisan (farmer) cards farmers can make electronic payments at lower transaction costs. It is a domestic system launched in 2012 by the National Payment Corporation of India and many banks (national, private, cooperative and rural) provide vards affiliated to it for population in small towns and villages. While RuPay cards are usable at all ATMs, only 25-30% of the point of sale(PoS) machines are compatible and this is being tacked. Nevertheless, such facilities are empowering farmers through ICT enabled financial inclusion.

The Indian USOF  had also initiated a scheme for ICT enabled banking services in rural India on pilot basis in collaboration with BSNL as an adjunct to the Rural Wire Line Scheme. It dis not succeed due to various stakeholder coordination issues but USOF should in my view continue to strive to support such services. 

Responsible Policy Making Needs Sound Regulation

I was impressed by an article published in the Times of India today- "Muddling through Food Security" by Ashok Gulati, Chairman of Commission for Agricultural costs and Prices. Writing about the recently passed food security bill, this economist has succinctly explained the pitfalls of the food subsidy programme proposed to cost Rs 1,30,000 crore at current prices. He has stated that it will probably not achieve its objective of better nutrition, but will drive up our fiscal deficit while diverting precious funds from other critical areas such as sanitation, drinking water and female education needed to address malnutrition and health in our country.  Commenting that, "the art of policy making lies in achieving desired ends with minimal costs" he has pointed out that instruments like conditional cash transfers can achieve desired ends much more efficiently without distorting agri-markets.

I draw attention to this contentious issue as an example of India's desperate need to mandate a full fledged, transparent economic analysis of state funded schemes. Tax payers have a right to know that we are achieving short term growth and equity in efficient ways that will not cause long term harm to our economy. We do have a lot of debate in the media and in the parliament, but it should be based on a structured analysis of the proposed regulation backed by hard facts and figures that policy makers own up responsibility for. Decision makers may not then find it so easy to ignore rationality in favour of other considerations. Placing hard facts and figures in the public domain would empower citizens.

My blog concerns ICTs penetration. This issue is relevant for that as well. In a developing country like India, we have less than satisfactory institutional capabilities, leading at times to less than efficient policy making even when we have sound inputs from within and outside policy making bodies.Regulation that mandates transparent economic analysis and placement of the full justification for policy measures in the public domain can in my view counter regulatory capture and rent seeking.

Take the example of subsidising Universal service.  I have written earlier about USOF India's proposed scheme to subsidise mobile devices.  If regulation mandated a transparent socio-economic cost benefit analysis of this measure necessitating justification that this is the only/best way of increasing mobile penetration among the rural poor, it would help policy makers make better decisions. 

Another  area where much improvement is required in Indian policy making, is that economic analysis of a policy has to capture a much larger canvas as.  has been painted for us by Mr Gulati in his article. We have to  examine the impact of policy making on the sector and economy as a whole rather than conveniently bury our heads in the sand. This reminds me of my concerns about state funded broadband roll outs. Previous posts can be seen under the labels Competition , National Broadband Plans and Broadband Networks.