Mobile Connections for the Poor-Is this the Right Way

I have written on more than one occasion on USOF India's Schemes aimed at providing subsidised devices and mobile connections to the rural poor. This scheme has finally been cleared by the Government for implementation. In general my posts have inter alia tended to caution against potential  implementation problems. These can be seen under the label USOF India.

A news item about  FCC's detection of rampant misuse of the United State's Universal Service Fund's Lifeline Programme in North Carolina should further caution us. Here people in the eligible category were found to be beating the call limit associated with this subsidised facility by taking multiple connections under the programme (from different telephone companies in the state). While in this case the fraud has been detected, there are calls to close this programme.

USOF's own experience with the (fixed line) individual rural household phone scheme has been that it posed a monitoring headache. Why compound the error with mobile connections?

US Regulation in a liberalized environment

An interesting article titled "As Regulatory Power Wanes, State Crafts New Telecom Plan" about the state of Vermont captures the problem of achieving Universal Service (US)  in an advanced, competitive and liberalized without making typical public investment mistakes and in my view underlines the importance of US Regulation.

The article points out that when much of what the telecommunications sector does is de-regulated the government has only investment as a tool to achieve the desired level of penetration. However, it cautions against the government getting involved in the following quote:

“The danger, of course, when government gets involved in these kinds of investment activities, is: Is government going to put money in the right places?”

My answer would be to better define government's role and methodology within the regulation of US so that public interventions don't end up doing more harm than good. 

Digital Literacy and the Huge untapped Demand for Internet in Rural India

An article in the Financial Express titled "Time to Push the Pedal" highlights yet again the huge potential of imparting digital training to rural Indians including grown ups and particularly women. 

My own experience with USOF India's project for ICT facilities and skills  for women is exactly as stated in this article. Parents/mothers in rural India and even ultra conservative states would like their daughters to educate themselves and seek employment as a means of financial independence. For that purpose alone they would happily embrace a tool like the internet which provides convenient access to information and knowledge on a vast range of topics from online courses, university admissions to entrance exams and job opportunities. Please see my post titled " Special Initiatives, ICTs for Women" under the label ICTs for Women. My articles on this scheme may also be seen at 

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2103235

and

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=230247

Needless to say along with supply side measures like broadband infrastructure, local language content and useful applications, efforts to precipitate demand as envisaged in India's National ICT policies are of critical importance. While doing so we must focus on adult education and ensure inclusion of women and the disabled.

Adopting Open Access Models

Today's newspaper carries a report about USOF India's project to provide mobile towers in naxalite affected areas. This project is being implemented by the incumbent PSU BSNL on nomination basis. The report states that BSNL is soon to finalise its tender for equipment which is being sourced from indigenous manufacturers.

I have written earlier on this topic in my post, "USOF India's Scheme for Mobile Towers in Disturbed Areas" under the label USOF India and mentioned that this project could have  been awarded based on  bidding basis as there is no information in the public domain that indicates that private operators were unwilling to compete for such a project.

In my view, competitive neutrality is possible even when security concerns are paramount and viability is non-existent in the short to medium run. 

Bidding could have been carried out for setting up and running of the sharable mobile towers at hundred percent government cost (as is being done in this case)  for a predeclared period covering at least the the life of the towers. Thus the company setting up the tower would be fully compensated for its costs and (possible) lack of tenants/customers. 

Additionally, the possibility of (other/multiple) service providers being willing to compete in the access segment could have been explored. The  underlying condition could have been the requirement for the infrastructure providing operator to provide non-discriminatory access to licensed mobile service providers. The latter would be enabled to  hoist their antenna on this tower free of cost and provide access to customers in this region. This would bring in competition both from economy in use of public funds (assuming that at present USOF would necessarily bear the cost of service provision by BSNL too) and from choice for customers.

Given that some of these areas may not attract service providers even with rent free passive infrastructure being in place, BSNL could have been asked by the government to be the provider of last resort on towers where no service provider came forth with due compensation.

Such a scheme would require more effort on the part of USOF in terms of design and implementation. It would however be worth the effort as it would lay the ground for access competition in in the medium to long run if not short run even in thsi disturbed region.

There is a need to learn from past experience regarding the easy option of monopoly service provision, especially when public funds are used.

Infrastructure Regulation and the Market Efficiency Gap

An article caught my eye today. It is titled "Biting the Silver Bullet" in the Economic Times and is about the need to improve regulation of infrastructure (utilities) which speaks of dismantling superfluous ministries and concentrating on strengthening regulatory institutions in India and doing it now when a (political) revolution of sorts is underway and change is perhaps possible. Significantly he points out the need to improve infrastructure rather subsidize services to make them accessible to all.

Personally I believe that much of the lag in telecom penetration in India is the consequence of poor regulation especially in the fixed line segment. There is a pressing need to undo some of the competitive neutrality issues in USOF regulation too. 

My views on this subject can be seen in posts under Market Efficiency Gap and Competition

Is this what NOFN was Meant to Do?

Another article appeared today in the Economic Times about NOFN/BBNL  plans to acquire an ISP license to provide e-services based on Wi-Fi in rural areas.

I had written earlier about the proposal to provide Wi-Fi for India's rural local Government offices and my worries on this count. 

Firstly focusing energies on the Village Panchayat Telephone or Government sponsored Common Service Centres(for internet) has not met with notable success in the past. What has succeeded  is the creation of a conducive environment for services and applications to flourish on a commercial basis.

 Thus, in the pre-mobile revolution era, India's subsidised Village Public Telephones which were supposed to be the village life line were often found to be lying in disrepair or being used as private phones of rural elite but once wireless appeared on the scene, commercially run public phones did roaring business.

Secondly, I fail to understand why the Government must select the technology and service provider to deliver e-Government services to citizens. If this was bid out with desired specifications, the lease cost solution could be selected. This would be conistent with the regulations laid down for Universal Service Funding in India

Thirdly, public money (USOF) is being used to fund NOFN/BBNL's OFC roll out which was meant for areas that markets would not serve. Thus, the network was to provide high capacity backhaul from villages to blocks on a non discriminatory basis. NOFN was never meant to be a service provider. If the argument is that its viability is uncertain, well, that is exactly why it is being fully subsidised. If  USOF was to float another tender for broadband access in non viable areas, then the selected access providers would need  back haul and BBNL would get its business and revenues. Ignoring competitive neutrality today means a heavy cost in terms of poor telecommunications in the future. We have already seen this pan out in the case of fixed lines and rural broadband in India.Should we be repeating the same mistakes?

Please also see my posts on NBN and lessons for NOFN.

Limiting Public Funding to Access Gaps

It is reported that the fact Sing Tel Optus has plans to roll out fibre to the  "basements of apartment buildings and shopping complexes [ and use] [t]he existing copper wiring within the buildings .. to deliver faster, NBN-like broadband speeds is being seen as a threat to NBN's viability. There are apparently other operators with similar plans too.

My question is why should the Government sponsor/fund NBN like roll outs in cities where markets may (and will) serve customers? Why should NBN's business model have factored in markets where competition cannot be ruled out?

It has been stated that,

Breaking NBN Co’s business model could force it to be reclassified from a profitable investment to a multibillion-dollar expense on the federal budget... NBN Co’s entire business model ran on the assumption of a flat national price for all customers. Labor’s NBN was designed to act as a cross-subsidy system where the higher revenues generated by city users paid for broadband in the bush.

This business model was discarded with the onset of  competition in  erstwhile monopolistic and fixed line based telecoms markets across the world. I have written earlier about the flawed and "Back to the Future" feel of ambitious National Broadband Plans based on incumbent centric National Broadband Networks.

Again there are lessons for India's NOFN which is basing its arguments of veering way from its original mandate of strictly (actual access) gap filling based on similar fallacious business viability models.