Delay in NOFN Roll Out-As Expected

The Economic Times today reports yet another delay in roll out of NOFN by BBNL as the PSUs are unable to award contracts worth Rs 6 billion for cable laying and trenching. 

I would invite readers to review my post titled, "National Broadband Plans-The Largely Unexamined Competition Debate" under the label NOFN. I have already covered in previous posts, my reasoning as to why  India should have hesitated before venturing to roll out a country wide network using the nomination route involving Public Sector Incumbents. When various option were being examined as to which methodology to choose for NOFN, there was an explicit impatience with the usual USOF method of first arriving at subsidy benchmarks and then bidding out a scheme on a regional/sub-regional basis to all eligible operators. This was frowned upon as too tedious and a source of delay. 

It was decided that creating an SPV of PSUs would be the better way forward especially as BSNL already owns the chunk of rural OFC networks.

I have examined this debate in my post "Broadband Networks through Infrastructure Sharing Route"  (also placed under the label NOFN). An alternative model has been presented to readers. One that is based on bidding.

 The right way in  my view would have been to encourage/mandate  BSNL to share its OFC capacity with the region wise winning bidder and to include the leasing plus incentive cost in the subsidy benchmarks. With this arrangement the network could have been rolled out by multiple USPs thereby creating the required  non-discriminatory open access  OFC backbone in rural blocks  with no adverse impact on competition. The facilitation extended by USOF (Central Government) by way of coordination with state governments for right of way clearances could have been done in this model too. This would probably have gone faster and ensured that at least  a good proportion  if not all villages would be reaping the benefits of high capacity OFC backbones connectivity by now.

Lesssons for US Regulation from Plight of Government Schools in Rural India

An article titled "Education Scam" in today's Financial Express speaks about the poor service delivery from government schools  wherein relatively well-paid government school teachers don't go to school to teach. Students of these schools have been found fare much worse in terms of educational performance compared to those attending private schools in rural India. The former  do much better when given tuition but that means parents having to spend themselves in spite of the state funding school infrastructure and regular teacher's salaries. It has been concluded that it would be much better to allow private schools to flourish and give poor parents cash to pay school fees. 

This reminds me of the billions of Rupees pumped by USOF/Government into rural land line infrastructure (incumbent owned) with abysmal results in terms of improvement in voice or data connections.

On this analogy would it not be better to address the Market Efficiency Gap in rural telecommunications through effective regulation and resultant competition and then to focus targeted subsidies only where markets fail either because there is no viability for suppliers or certain population segments cannot afford required services. 

 I would much prefer a situation where there are a multiplicity of suppliers for the public to choose from, even if in terms of various (less than state of the art) technology platforms, than one in which much money is spent on a supposedly ideal technology platform but with sub optimal  results.  This could well be  the fate of ambitious government sponsored roll outs of OFC networks which recreate monopolies and limit competition at huge costs.

Progress the E-way

A though provoking article "Solving Social issues through Technology" draws attention to the progress India has made in the realm of technology (reference the latest Mars mission) and the need to harness technology to bring education, facilities and opportunities to rural Indians and others who aspire to break out of poverty. It pins hope inter alia upon the NOFN.

Another article, "Technology rings in Financial Inclusion" highlights that in India, 65% of population has no access to banking but mobile phones  can change that. Innovative applications can enhance financial literacy and in fact, it has been proven by field research that even illiterate Indians take to financial inclusion apps and become adept at mobile banking.

All this has been said before (and posted about before in this blog). What we need most in my opinion is the Market Efficiency side of reforms to ensure that connectivity is widespread and universally available and that regulations encourage the use of ICTs including all aspects of the mobile/broadband ecosystem. This includes of course Universal Service Regulation.

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