There is more to Broadband Penetration than Physical Infrastructure

This is a theme that runs through by blog. In this case I am speaking not only about broadband enabled services and capacities of stakeholders but also the need for a vibrant market with multi-stakeholder participation and abundant competition at every level, infrastructure, services and content.

An article in the Economic Times titled "Why Broadband is Stuck"  by Mr Pradip Baijal, draws attention to the heavy reliance on PSU incumbents in India to the detriment of outcomes. An example cited by him is the present NOFN scheme which is still in the roll out phase. He speaks about the need for sharing available infrastructure including the aspect of unbundling available fixed line infrastructure. There is also a mention of spectrum sharing. 

What this boils down to is Telecom Regulation. I have argued time and again in  this blog about the need for regulation to keep customer interest in focus and that encouraging competition is one of the best ways of doing so. As regards, the regulatory issues in universal access to broadband services in the Indian context, my article titled "Universal Service Policy in India-Theory and Practice" pointed out the damage done to rural wire line and broadband penetration by regulation that favoured the incumbent at the cost of competition and growth  of services. This paper was written in 2010 but we perhaps have not progressed much in practice as is evident from USOF India's current activities.

Broadband for Sustainable Development

Sustainable development demands that economic growth is inclusive and balanced in terms of trade offs between short term gains and long term consequences.

Broadband Commission's new report,  “Transformational solutions for 2015 and Beyond"  explores the importance of broadband for sustainable growth. It states that,

" while national broadband plans increasingly recognize broadband’s role in socio-economic development, much more needs to be done to support this ‘invisible technology’ transforming our world. A regulatory environment that encourages widely accessible and affordable broadband deployment is the only way to realize its potential to advance sustainable development – for example through proactive policy on spectrum and the protection of inventions.

As far as comprehensiveness of National Broadband Plans goes, the figure below is telling

Inclusion of Socio-Economic Elements in National Broadband Plans 2013

Encouragingly more and more countries include education, employment and health as important elements in national broadband plans. However, the lack of emphasis on universalizing access is evident from the last 4-5 bars. Broadband cannot work its magic unless it is universally accessible, relevant and affordable.

The report makes 10 recommendations to fully leverage the potential of broadband in this regard:

1. Make ICT and high speed broadband universally available at affordable cost for all.

2. Ensure that ICT and broadband are embedded in all of the universal goals and national targets to be defined as part of the Post-2015 global development agenda to fully capture transformative, sustainable solutions.

3. Deploy national development policies and plans to actively drive cross-sector integration of economic and social outcomes deliverable and scalable through ICT and broadband.

4. Create a streamlined and enabling regulatory environment for the broadband era that accelerates removal of barriers to market entry for broadband ICT uptake.

5. Provide consumer incentives and harness government procurement to drive demand and stimulate private sector innovation and investment.

6. Twin broadband innovation and investment with sustainable multi-stakeholder business models to capitalize on the transformative potential of universal ICT

7. Drive the game-changing potential of mobile broadband through the optimized use of radioelectrical frequency spectrum for universal ICT for development penetration

8. Promote the utilization of global standards to enable the harmonization and interoperability of ICT and broadband-enabled services and applications, putting special emphasis on affordability and accessibility.

9. Establish a comprehensive monitoring framework for broadband deployment and robust accountability mechanisms to track development progress via industry-wide broadband ICT metrics and indicators.

10. Develop appropriate solutions to maximize resource mobilization, innovation and investment in broadband for both developed and developing countries.

The report also analyse broadband's actual and potential role in achieving sustainable development goals such as ending poverty, hunger and gender inequality and provides best practices from across the globe.  

Please also see previous posts on National Broadband Plans and Broadband Ecosystemhttp://ictsforall.blogspot.in/search/label/Broadband%20Ecosystem

NBN-Changes Ahead

Australia's Financial Review carries an article titled "Coalition mulls NBN Co split to speed construction"
The new government is considering creating two separate entities -one in charge of construction and the other,operations. This article stats that,

The proposal comes as the NBN rollout struggles to ramp up and meet its targets. Under Labor, the NBN rollout missed several key construction targets. NBN Co’s 2012 corporate plan forecast it would pass 359,000 homes and businesses with fibre by June 30, 2013, but it only reached 207,500 premises.

The delays were frequently blamed on labour shortages, planning issues and a range of other problems that resulted in dissatisfaction among unions, contractors and sub-contractors.

Leaked internal forecasts showed NBN Co was set to miss its target of connecting fibre-optic cabling to 1.13 million existing homes and businesses by June 30, 2014, by 273,065 premises.

Service Stream, one of the key companies building the NBN, reported a 672 per cent fall in net profit as it pulled out of the project.


My views on massive  incumbent-centric state sponsored broadband roll outs can be seen under the labels National Broadband Plans, Broadband Networks. I believe lack of competition is a major concern in such initiatives. 

Regulate in Haste Repent at Leisure-Comments from India and EU

I have used this title for another post  under the label Telecom Regulation, but I feel compelled to use it again.

 I read a very interesting article in the Financial Express yesterday. It is called, "A little less lazy pragmatism please" While its focus is monetary policy, it makes an interesting observation which applies across the board,

"In India, we have largely abandoned basing policy and reforms on theory and empirical evidence. Instead, we have chosen to justify badly structured ad hoc policy changes on pragmatism and reality."

It also states that,the label 

"...Only when policies are based on theory and empirics and not on the insiders' insistence on pragmatism does market efficiency increase."

I agree wholeheartedly with this thinking. I believe that In India policy making and regulation could benefit greatly from sound theoretical and empirical analysis rather than the current trend of short cuts and literally what the author of the above mentioned article calls "lazy pragmatism". Correcting this problem calls for greater role of subject specialists in policy making. They are in fact slowly being allowed into the Government regardless of a  bureaucracy who believe they are smart enough to manage anything through a common sense approach and don't a theoretical basis for their decision making. 

It is interesting to note that  BEREC, the body of European electronic communications regulators has come out in similar criticism of the European Commission's draft regulation on a single telecoms market. Please see my post titled "Bold Brave Telecom Reforms in EU."

They are quoted to have said that, they fear that these proposed reforms will be "rushed through the European legislature without proper explanation and full exploration of its potential consequences..... the proposals represent an aggregation of several unrelated measures, whereas the EU Framework is a complex regulatory ecosystem that should be approached as a coherent whole." It is said that "BEREC is concerned that the draft regulation will jeopardise the integrity of the EU framework and its achievements, in terms of investment, competition and consumer benefit."

Given that EU's regulatory framework for electronic communications is indeed an excellent one so far I would hope that they are not right. 

More about USOF India's Device Subsidy Scheme

The Economics Times today reports that the Telecom Commission of India has approved a Rs 50 billion scheme to provide subsidised mobile phones to specially identified beneficiaries in rural areas. the original proposal was to provide these to workers enrolled in the state funded MNERGA (employment guarantee scheme). However it now appears that a more detailed mechanism for identification of beneficiaries is to be determined. further, the TC has also raised objections about choice of the incumbent operator on nomination basis. These are in my view positive developments. Please see my comments under USOF India. The last post on this subject was titled, "Reactions to USOF India's Device Subsidy Schemes & the Confusion over Universal Service Funding"

Simple Solutions

An article titled "Mexico sees its first village cellphone network" on New Europe online caught my attention. It tells us about a village in Mexico where earlier the residents had to trudge to a community phone to make very expensive calls. Community phones are provided by big telecom operators.

However now,

"Using simple radio receivers, a laptop and relatively inexpensive Internet technologies, the people of the village have leapfrogged into the 21st century by setting up what amounts to their own mini-telecom company — one capable of handling 11 cellphone calls at a time at a small fraction of what they used to pay....in just six months, more than 720 residents have signed up to use the new system. Local calls made on off-the-shelf cellphones are free, and phoning relatives in Los Angeles costs just 20 centavos (1.5 cents) a minute. What's more, every subscriber has a distinct mobile number."

I remember a company approaching USOF India for funding a similar solution for inaccessible villages which could not be taken forward.In this case it appears that rather than look for formal funding, the village pooled money and with the help of a not for profit organisation they were able to set up this system.

Regulatory Tug of War

I found a post titled "Here’s how the telecom industry plans to defang their regulators" very interesting. In real world economics equilibrium is rarely stable. It is generally dynamic. So it would seem is the empowerment/dis-empowerment of a telecommunications regulator. 

In India, the Communications & IT Minister has criticized the Deptt. of Telecommunication's tendency to impose heavy penalties regardless of the nature of default by operators and has suggested that these powers be removed from bureaucrats and be given to TRAI. The TRAI is often at loggerheads with the Competition Regulator CCI, on jurisdiction. However, TRAI has recently come to the rescue of a  beleaguered telecom industry with its recommended reduction in reserve prices for spectrum. See "Regulate in Haste, Repent at leisure" under the label Telecom Regulation.

It would seem from the above mentioned post that USA's telecom giants want to remove/reduce FCC's powers to regulate issues relating to privacy, competition and net neutrality. While there motives are obviously their commercial interests, all these issues have an important bearing on consumer welfare which should be the primary concern of the sector regulator. Ex ante competition issues too would normally lie in its realm.