USOF India-Problem of Plenty

My last post suggested that perhaps USOF India needs to consider a review of regulation to ensure a level playing field. It should not become a another channel for funding the incumbent operator. The idea of the Universal Service Levy was in the nature of pay or play i.e. it would go back to those operators who participated in rural roll out. However the exception of funding the PSU incumbent by nomination rather than designing schemes for tendering is becoming the norm and private operators continue to expand their rural market share at the cost of the incumbent at their own cost!

A news item titled "USO Fund: Higher levy, lower allocation" bemoans the rising collection of USL and quotes an operator association (GSMA) as follows:

“[The USOF} needs to align the funding demands made on operators with its funding needs and with the financial state of the operators, seeking alternative funding sources where appropriate. It also needs to develop clear, transparent policies that are aligned with defined short- and mid-term milestones. USO policies should also focus on needs not met by markets,” 

Of course the NOFN project shall take up the lion's share of accumulation of USL and this project given on nomination basis to a SPV of three PSUs is already showing the typical signs of time and cost overruns. 

Plus ça change, plus c'est la même chose

An article in the Economic Times today laments that poor rural teledensity is lie to hamper achievement of India's broadband target of 175 million subscribers by 2017. Teledensity in rural India is crawling and is at present 41.64% compared to urban teledensity of 146%.We still have only about 16 million broadband connections. The usual culprits have been blames-poor rural demand and higher costs of rural roll out including non availability of fibre. 

I have recently written about NOFN/BBNL and why it should focus on its core objective of providing           non-discriminatory OFC backhand rather than trying to become a vertically integrated service provider. We already have one such public sector operator in BSNL (which has continuously resisted sharing its fibre with other service providers in spite of regulatory recommendations).

The poor results of USOF's substantial funding to the incumbent BSNL for rural wire lines and broadband are evident. Perhaps there is a need to review the entire strategy of promoting rural telecommunications. Perhaps the solution lies in a more level playing field via regulation (fixing the market efficiency gap) and public funding that encourages private participation. Please also see my previous articles on competition.

NOFN Veering Away from its Core Objective?

In a post titled BBNL and Competition Neutral Broadband Funding I had mentioned the proposal to make India's USF funded rural broadband back haul provider into a service provider.

In an article from the Economic Times it is now learned that BBNL is likely to acquire only an Internet Service Provider license. While this is better than it trying to become a unified service provider it is not what a state funded broadband back haul network is supposed to do. It would become difficult to regulate BBNL's wholesale bandwidth and ensure a level playing field vis-a-vis its own service provider arm. 

As regards the lack of interest among ISPs to venture into rural areas to provide internet, I would not agree with the justification provided in the article. The whole idea of NOFN/BBNL was to eliminate the high speed and bandwidth back haul issue and to allow private and public players to provide last mile access (with this problem taken care off). If the Government was to provide the latter too, the funding may as well have gone to the incumbent BSNL by way of budgetary support instead of creating another PSU monopoly.

A proper study and public consultation process would be in order before assuming a lack of interest  in tapping the rural market among India's multiple  ISP's. (392 as per Department of Telecom's website). There are competition issues here which invariably mean issues realting to long term health of the sector.

Internet for Rural Livelihoods

I have written earlier about internet based applications and services and their positive impact by way of bridging infrastructural gaps. An interesting article in this regard tells us about Taking Indian handicrafts online.

As per the article Craftsvilla.com is an e-commerce site that tied up with an NGO to provide an interface to about 5000 artisans across India to sell their handicrafts online thereby expanding their market access. There are challenges in terms of commissions paid to various service intermediaries and continued dependence of craftsmen on wholesale dealers but the reach of the handicrafts themselves expands to a larger market. 

My grouse is that the website does not sell handicrafts as handicrafts but rather tries to entice buyers by using references to popular culture.  Other than that this is a welcome initiative. What India needs is lots more connectivity and e-literacy so craftsmen can deal directly with buyers through e-commerce portals much as we use e-bay like sites as individuals.

Internet/Broadband in India-So Important and Yet So Scarce

An article by Mr Manzar in the Mint  highlights at the end of 2012, internet users were only 10% of the population making it among the lowest in the world in internet and computer penetration.

Another article by him points to the sheer importance of internet in creating awareness about government services and entitlements among illiterate rural poor who otherwise remain ignorant and are duped by unscrupulous elements. This was in the context of Indias' MNREGA-a rural employment guarantee scheme.
 An inspiring  article on "'Enabling access to vocational training content on cellphones" tells us about "'SkillTrain" being run Mr Ganesh.B in the state of  Madhya Pradesh.

"The company records videos of the module that students can download on their mobile phones for free and learn from it.SkillTrain offers four courses—mobile repairing, electronics, computer science and computer hardware—that extend from 12 to 20 modules. It plans to extend it to wider subjects such as welding, two-wheeler and automobile mechanic, electrician, plumbing and tailoring next year." 

The article also states that,

 "It is estimated that about 15 million Indian students drop out of school every year. The gross enrollment ratio in higher education in India is at 17.9%, much below the the global average of 27%.
The government has set an ambitious target to train 500 million people by 2022 to help them acquire vocational skills and provide an efficient workforce for industry. There is a shortage of trained manpower and even the available talent does not match the requirements of industry.
School dropouts fail to go for mainstream education for several reasons, including ineligibility, the family’s financial conditions, academic pressures and regulatory requirements."

Learning on the mobile for a fees was found to be more economical by students rather than travelling long distances to a training centre.

All this goes to show the importance of broadband connectivity which India is struggling to provide to especially its rural population.Please also see previous posts on Mobile VAS and USOF India's Mobile VAS Scheme Sanchar Shakti..

BBNL and Competition Neutral Broadband Funding

The Economic Time reports that BBNL(NOFN) which is at present an infrastructure provider may acquire a unified license and become a service provider. This broadband network funded by USOF India was to provide OFC connectivity to 2.5 lakh village panchayats (local self government offices) up to block level as private operators were not likely to cater to this market segment.

It is reported that,

"The government is looking to "revise BBNL's mandate" as it wants it to directly deliver high-speed broadband services down to the district level to maximise utilisation of NOFN infrastructure, which is the communications ministry's biggest telecom venture.

The immediate plan is use the NOFN resources to build a "government-user overlay network" — akin to a virtual private network — for delivering a host of citizen-centric e-services to bridge the digital divide across rural India.

The DoT has proposed joint funding of the "proposed overlay network" by the Universal Services Obligation Fund (USOF) and the ministry of rural development. It wants USOF to handle the entire upfront capex payout — pegged at Rs 3,750 crore — and the rural development ministry to handle opex over a 10-year span - estimated at about .`1,860 crore a year - putting the total cost at Rs crore, excluding taxes."

In my previous posts on National Broadband Plans and incumbent centric, public funded Broadband Networks I have highlighted the importance of competition and avoidance of market distortions or recreation of monopolies. I believe that if BBNL were to complete roll out and the government was to focus on            e-government services (applications), a host of private and public sector telecom service providers would step in to provide last mile connectivity for broadband enabled services on commercial considerations.

In fact it has recently been reported that India has croseed the billion mark as far as e governance transactions go. Also that, "[w]ith more parts of the country getting connected through the National Optic Fibre Network, industry watchers expect more citizens to be accessing government services over the internet. ... The network has been launched in pockets of Rajasthan, Andhra Pradesh and Tripura, with some 80,500 transactions already recorded."

Mobiles for Medical Help in Rural Areas

In an article titled "Soon Medical Services through Phone"it is informed that

"Notwithstanding challenges like low bandwidth and internet penetration, health professionals feel that there is a huge market (900 million Indian cellphone owners) waiting to be tapped. A recent study conducted by Apollo Hospitals and Georgia State University , Atlanta, gives credence to this belief. The survey found that nearly 28% people in rural areas and 46% in urban areas owned smartphones. Conducted across a sample of 1,866 people spread in five states — Chhattisgarh, Andhra Pradesh, Gujarat, West Bengal and Tamil Nadu — it also found that one-third of those interviewed had not undergone a health check-up in five years with 55% saying they were open to accessing medical services through mobile phones."

Given the overall underdevelopment of rural areas, doctors are not easily available. Providing medical services through ICTs is the best bet in rural India. This underlines the importance of universal availability of high speed broadband.