State Speared Fibre Roll outs-NBN

Australia's NBN is almost always in the news for political reasons. An article titled, "Quest for 21st Century Broadband: A Tale from Down Under" also mentions  problems of slow roll out and slow uptake apart fro  NBN being the subject of "political football."

Thus it is written therein that,

 "The project had only reached 207,500 homes at the end of June, well below its target of 341,000. And only 70,100 of those with access to the network had signed up as paying customers......

 ....Work had to stop earlier this year when deadly asbestos was found in the pits where workers were laying new fiber cabling, and some sections of the network had to be redone in the nation’s capital Canberra because of poor workmanship.  The latest blow came on Monday, when the the Government-owned NBN Co. announced it would have to find new contractors to install fiber cabling in homes in South Australia and Western Australia."

Perhaps the problem lies in the size of the venture being implemented by a single telecom operator. Readers may also like to see "Broadband Networks through the Infrastructure Sharing Route" where I have described projects for state/regional OFC network roll outs by USOF India where the implementing USP is selected through bidding. Also see posts on Broadband Networks

One Size Does Not Fit All: US and Unique Needs

I have written earlier about reforms of USA's Universal Service Programme. A news item titled, "FCC suspends some cuts in rural high-cost support funding" tells us that FCC has announced that the suspension of its cuts in case of rural Alaska  planned as a part of its High Cost programme reforms. It has been stated by FCC that,

  “These measures will provide additional predictability and certainty for rate-of-return carriers as the Bureau works to adjust the benchmarking methodology as directed by the Commission through an open and transparent process.”

As explained in this article, "The Connect America Fund was designed to ensure that consumers in rural, insular and high cost areas have access to modern communications networks at rates comparable to those in urban areas. The program provides federal reimbursement to certain eligible carriers for some of the costs of serving rural communities."

As said by the Chairman of the American Indian and Alaska Native Affairs Subcommittee

 “The reforms they are suspending today is great news for rural Alaska, and is confirmation of what we have been trying to tell them this whole time: Alaska is different." He also emphasized that it has unique needs.

It has been recognized across the world that top down one size fit all approach will not work and Universal Service Funds and programmes must allow more stakeholder collaboration and bottom up projects to cater to different needs of geographies and communities.

Readers can also see  previous posts on U.S.A's Universal Service Programmes,  International Experience and related articles w.r.t  Indian USOF.

USOF India's Unspent Balance under Criticism

In my previous post titled, "Questioning the Efficacy of Universal Service Funds: GSMA Calls for Re-evaluation and Reduction of the Universal Service Fund Levy,"  I had written that funding for Universal Access/ Universal Service is mostly from either the general budget or levies on operators. Given that it imposes a form of taxation and given that it is expected to meet certain legally, politically and ethically important targets, the subject of US in general and US funds (USFs)  in particular is always under scrutiny and debates on this issue range from questioning the need for US regulation in a competitive  market to arguing in favour/against inclusion of broadband  in its purview. Off late the balance seems to be tilting in favour of USF for funding national broadband plans and nation-wide OFC networks.  Thus discussions range from trashing the concept to seeing it as a vehicle for achieving state of art ICT services.

I had mentioned that the April 2013 GSMA Survey and Report available at GSMA Calls for Re-evaluation and Reduction of the Universal Service Fund Levy question the efficacy of USFs as means of  achieving the objectives of US.  As far as India is concerned there is praise for transparency in financial reporting and criticism for " inadequate or misguided articulation of USF objectives and strategy” that have encouraged urban rather than rural roll outs. (Please  also see my post on USOF India.). The findings of the survey including inter alia the large unspent balances point to the need for better institutional mechanisms that guarantee transparency, accountability and competitive neutrality while still being tailored to a country’s local context. Further we need to adopt a more innovative and flexible approach to US funding. We need to consider more bottom-up PPPs, more demand-driven projects and also projects that address demand side gaps to penetration of ICTs.

I have written earlier comparing the flexible bottom up multi-stakeholder approach of Sanchar Shakti programme that succeeded, with the more rigid, operator dependent approach taken in USOF's ICTs for PwDs project that did not. 

Traditionally, USFs have folowed a supply centric, top-down  approach wherein gaps are identified by the USF Administration and then projects are designed and bid out to select the Universal Service Providers (USPs). This approach may however not be flexible enough to meet the needs of various sections of the population and to address different reasons for the access gap.  Hence there is a need to consider a more flexible, consultative, collaboartive and multi-stakeholder approach to designing USOF programmes.

Again, USFs in many developing countries have problems of under-spending whereby funds continue to accumulate as not enough projects are initiated in comparison to collections.  This is partly on account of difficulties in conceiving appropriate projects meet diverse and ever evolving stakeholder requirements.  I believe that USFs set aside a percentage of available funds to be utilised for demand-driven projects emanating from the user community. Broad eligibility criteria could be pre-decided and placed in public domain along with transparent but mainly qualitative evaluation criteria and procedures. This would allow USF Administrations to maintain a shelf of projects that are useful and pertinent to end users. This is especially true for needs that are more application-centric such as projects for marginalised communities that may have a major content and capacity building component. This approach would lend a much needed dynamism to USF activities. It would also help USOF address demand side gaps in telecom penetration as opposed to supporting only supply side initiatives.

An article dated 28.7.2013 titled "Disconnect in India's rural telecom fund; $4.65 bn idling” highlights the unspent balances of USOF and comments of Administrator USOF thereof.It quotes Gabriel Solomon, the public policy head of Groupe Speciale Mobile Association (GSMA), the global association for mobile companies as having said that, 

"One  of the main reasons why such funds remain unused in many countries is that a competitive industry like telecom moves at a pace which these funds cannot keep up with," 

and that

"In a matter of a few years, the mobile industry in India has built huge infrastructure, connecting hundreds of millions of people. Why even consider a USOF (Universal Service Obligation Fund) now? If the private sector is appropriately incentivised it will always outperform the public sector."

As per the same article, the USOF Administrator has clarified as follows

"Out of the Rs.27,949.91 crore left unused, some Rs.20,000 crore will be deployed for the national optic fibre network project and another Rs.3,046 crore for installing 2,199 mobile towers in the nine Left-wing extremism-affected states."

"The criticism is valid for the time being. But we are evolving. As the projects start rolling out, we will need more funds," he said, adding the projects include one to link each of India's 250,000 village councils with high-speed data cables."

USOF India has many good schemes to its credit.(Please see many previous posts USOF India). What is  perhaps needed is a more imaginative, flexible approach and assurance of a level playing field between private and public sector operators.

Special Initiatives-ICTs for PwDs

The other special initiative of USOF was the one for persons with disabilities (PwDs) in rural areas. 

India is home to one of the largest disabled population in the world. As per census 2001, 21.9 million Indians suffer from some form of disability. Seventy five per cent of persons with disabilities live in rural areas. A good percentage of these would either be unemployed and/or illiterate. Information and Communication Technologies (ICTs) can play an important role in facilitating the socio-economic and political inclusion and mainstreaming of Persons with Disabilities (“PwDs”) as ICTs can enable them to access various services (health, education, government services etc.), information, employment opportunities etc. and most importantly, to communicate effectively in spite of their particular disability. In recognition of the significance of ICTs in improving the daily lives of PwDs, enhancing their well-being and productivity and enabling their active participation in society, a scheme of Pilot Projects for access to ICT facilities combined with ATs for PwDs in rural India was launched.

A presentation on the scheme can be seen here.http://www.usof.gov.in/usof-cms/Stakeholder-Meeting%2007.09.11/USOF-India-Scheme_PwDs_A.G.Gulati.pdf

USOF  was heedful of the advise of disabled persons organisations (DPOs) and went through a fairly elaborate consultation process to evolve its scheme and float an Expression of Interest (EoI) with four project categories: 

• Setting up of ICT centres equipped with appropriate ATs for PwDs in educational/rehabilitation/vocational training institutions in rural areas

• Provision of special handsets with/without access to bundled content for PwDs in rural areas

• Public access to ICT facilities with ATs in villages or in/near rural institutions dealing with PwDs

The anticipated outcomes are explained in the diagram below:

To facilitate partnerships, all information about stakeholders including contact details and their feedback was placed in the public domain. Appropriately, evaluation was to be based on a combination of qualitative and quantitative factors. The EoI was however structured and had an outer date for application.

In this case service providers had to be lead bidders with proof of partnership with NGOs/DPOs and other relevant stakeholders depending on the category of project. The project submission dead line was extended several times but even so USOF received only two incomplete applications from non-service providers.

This would suggest that the more informal and flexible approach of Sanchar Shakti would have worked better in this case as clearly there was a lot of interest from technology providers and NGOs/DPOs. In hindsight, it would seem that USOF could have helped in collaborations between partners and in development and design of projects rather than following the more rigid EoI route with fixed deadlines etc.

Details of this initiative are available at http://www.usof.gov.in/usof-cms/disabled.htm

A SWOT analysis of the bidding vs consultative approach (like Sanchar Shakti) can be seen below:

Source: Archana.G.Gulati

Special Initiatives-ICTs for Rural women

In my very first post I had mentioned that USFs need to devise schemes to meet needs of specially disadvantaged groups and address demand side gaps.  I had alluded to USOF, India's special initiatives by way of pilot programmes to bring the benefits of ICTs to rural  women and the disabled. Today I will cover the former.

We in USOF labelled our project for women Sanchar Shakti. This name signifies the synergies to be achieved by empowering  women with  communications while recognizing the inherent importance and power of women. This scheme  aims to provide a highly customized bundle of relevant information and mobile value added services (mVAS ) to the rural SHGs to suit their unique cultural and socio-economic context.

Given the capacity of telecommunications services to deliver valuable information, impart education, connect with markets and supply essential citizen services, while transcending economic, social, cultural, physical and literacy barriers it is apparent that ICTs can make a significant contribution to the lives of rural women. From the very beginning, we were clear about our objectives. We wanted our projects to empower rural women in a manner that would enrich their personal lives while bringing about a sustainable change in their economic position.  

Our early discussions with stakeholders made it clear that given the strength of the Self Help Group (SHG) based model for positive interventions; our efforts must focus on rural women’s SHGs in rural India. We strove to educate ourselves and our project applicants about the needs of our target beneficiaries and thus the correct design for our projects so as to best address their requirements. In this journey we were competently assisted by NGOs dealing with women’s SHGs, gender experts from U.N Women (now UNIFEM) and telecommunications service providers. They helped us decide the broad contours of the scheme which were later refined to a project application template. The scheme was however kept open and flexible allowing plenty of scope for innovation and customisation. We went through a very lengthy process of shortlisting and refining the project proposals we received in collaboration with stakeholders with USOF playing a patient, supportive role of active facilitation role.

It is felt that the huge amount of time and effort that we put into multiple rounds of meetings and thorough proof of concept (PoC) roll outs has eventually resulted in four genuinely valuable projects that will have a positive and permanent impact on the gender equity and ICTs scenario in the covered rural areas. The four projects cover about 10,000 SHG members in 10 districts in the states of Maharashtra, Rajasthan, Uttarakhand and Andhra Pradesh Other projects may follow. These four projects focus on breaking the dependence on intermediaries when it comes to access to input and final product markets for SHGs engaged in cottage industries. The SHGs themselves are engaged in multifarious activities ranging from  handicrafts to agricultural/livestock rearing. Information on weather, crop/livestock diseases, markets and market prices, training courses, raw material /inputs etc. are covered in these mobile VAS bundles. Also covered are inputs on literacy, child and maternal health, pertinent government programmes, social issues such as domestic violence, child marriage, dowry etc. It is hoped that our initiatives will encourage the greater use of mVAS/ICTs in the delivery women-specific government services and influence the private sector to look beyond voice services for rural India. 

What has been truly heartening is the tremendous increase in self-confidence of the beneficiaries as observed during the three to six month period that they were in touch with USOF during the Proof of Concept stage. There is no doubt that these women are truly hard working and contribute greatly to family income and well-being through their dedicated hard work including entrepreneurial activities. The Sanchar Shakti project gave them a source of information, a voice with which to express their aspirations and a hope to enhance their knowledge, contribution and self-worth as earning members of society. They quickly mastered the use of the mobile device and interacted enthusiastically with USOF, NGOs and Service Providers to demand the particular information and services that they needed. They demonstrated an amazing capacity to use data and knowledge to enhance their skills and incomes even in the short span of a month in which the projects were test run to prove concept.

The approach adopted for the Sanchar Shakti Scheme is very different from the usual competitive bidding model of PPPs. The legal framework of USOF allows pilot projects to be exempt from the mandatory bidding process for selection of service providers. This proved to be important in the case of Sanchar Shakti as it enabled USOF to allow diverse stakeholders  much needed time to find each other to partner in these projects. In fact USOF Administration played an important role by transparently placing information on interested parties on their website to allow mVAS providers, Equipment Manufacturers, Service Providers and NGOs to approach each other. In particular NGOs dealing with rural SHGs and the former three stakeholders are not natural partners and without USOF intervention it is doubtful if they would have found each other. As mentioned earlier, each project went through a lengthy design phase wherein USOF and U.N Women assisted the  private partners in development of gender appropriately VAS packages to deliver content identified by NGO partners in consultation with SHG members. Given that Sanchar Shakti’s consultative and iterative methodology was very different from traditional bidding, due care was taken to maintain complete transparency by placing details of all meetings and stages of consultation/project formulation on the USOF website. In the absence of the same it may have been difficult to pass muster as far as the government’s legal and financial vetting and approval processes are concerned. 

It is felt that for delivery of public services aimed at disadvantaged groups such as rural women, the consultative, collaborative, bottom up PPP approach of Sanchar Shakti is very valuable. It is not possible to carry out such schemes in a rigid, structured top down manner. For one thing the stakeholders involved are multiple and diverse and for another such programmes demand intensive customization and localisation. Sanchar Shakti’s success can be emulated for similar efforts towards other segments of society such as the disabled in rural India. In fact a USOF attempt to follow bidding for schemes for disabled did not meet with much success for exactly these reasons. 

It is added that Sanchar Shakti is subject to systematic reporting and monitoring & evaluation requirements as in case of other USOF OBA projects.

Details of the Scheme can be seen at  http://www.usof.gov.in/usof-cms/gender.htm

Broadband Networks through the Infrastructure Sharing Route

I had mentioned earlier that we should perhaps be concerned about the current trend of state funding for broadband roll outs. It is often presumed that private sector will not roll out high capacity Optic Fibre Cable (OFC) networks at the speed or with the spread required for desired levels of broadband penetration.

It is true that private sector may need various incentives or even subsidies to venture into less lucrative markets or uneconomical areas. However, in my view, a variety of measures can be taken  that still fall short of state funding or state ownership.

The Universal Service Fund of India (USOF) had initiated two excellent schemes for the remote and relatively backward North Eastern states of Assam,  Meghalaya, Mizoram,  Tripura (N.E I Telecom Circle) and Nagaland, Manipur Arunachal Pradesh (N.E II Telecom Circle) that involve high capacity OFC backbone networks being laid out in rural areas (from district to block level) through Output Based Aid projects. These were bid out (reverse bidding) after a painstaking bench-marking exercise to arrive at the upper limit of subsidy, keeping in view possibility of renting out existing OFC from incumbent operators, apart from laying fresh cable. The resultant network is to be shared by the lowest bidder i.e. designated Universal Service Provider or Host Operator  on non-discriminatory, open access basis with other service providers. The tariff  offered by the USP has to be at a specified rate of discount vis-a-vis the Telecom Regulatory Authority's  (TRAI's) ceiling rates for leasing OFC. Discounts were worked out keeping in view capital cost subsidies, revenue projections and operating cost requirements. The bid for the states of Assam was won by the incumbent fixed line operator BSNL. However interestingly for the N.E states Railtel won the bid even without BSNL's  advantage of ownership of majority of OFC networks. There is a strong possibility that it has relied on back-end agreements for renting OFC from private operators rather than laying fresh cable to achieve its obligations in a cost effective manner. This is permitted by the USOF tender. 

The above Private Public Partnership model could have been successfully replicated for block to village level roll outs too. Given that OFC as a technology/broadband platform is here to stay, adeqaute subsidies on reverse bidding basis could have attracted private capital in many (if not all) bidding units (states/telecom circles). This model was rejected during decision making on the National Optic Fibre Network (NOFN) on the debatable grounds that bench-marking takes too long. Personal experience with the above mentioned schemes tells me that this is not correct and that the benefits of involving a large number of market players in laying of the nation's OFC backhaul far outweigh the effort involved in tendering individual bidding units.  I have mentioned earlier relying on public ownership or funding the incumbent is perhaps more attractive in the short run in terms of  relatively less time and effort required to commence roll outs. However the long term impact of monopoly ownership of even open access networks (on competition and accompanying aspects such as innovation/customer service/technological neutrality) and regulatory burden involved in ensuring open access on continuing basis, merit consideration.

It is interesting to note that Indian telecommunications players are looking at voluntary sharing of OFC networks and setting up joint ventures to invest and manage shared networks as the way forward. This may be happening only in cities and towns at present, but it is a moot point whether this trend would not have been replicated eventually in rural areas if the PPP approach to network roll out had been followed.

As of now 2.5 lakh village panchayats (local government centres) are to be connected through NOFN or the public sector SPV called Bharat Broadband Network Ltd. This roll out would take high speed broadband  to rural India and hopefully revolutionize rural telecommunications. It is hoped that the roll out is achieved on time and  that the resultant network is effectively regulated to ensure open access and a level playing field between participating Public Sector Units (PSUs) and various private entities involved in the broadband eco system. needless to say these supply side initiatives must be accompanied by measures to address other aspects of the rural broadband value chain.   

Another important, not entirely unrelated development is the forthcoming creation of a Telecom Finance Corporation to provide capital to telecom operators in India at internationally competitive rates. This should give a fillip to network and service expansion and will hopefully be used to fund not only infrastructure but also content and capacity building  related projects.

USOF India

The funding position of the Indian USOF as on 1.4.2013 is available at http://www.usof.gov.in/usof-cms/usof_fundstatus.htm 

It makes me proud that the website that my USOF team and I created in 2010  has earned USOF praise for transparency in financial reporting. (See 18.6.2013 blog).  The secure embedded software which needs a log in and password allows both subsidy claim settling  field units (Controllers of Communications Accounts) and Universal Service Providers to interact with USOF Headquarters on matters of subsidy authorization and claim settlement, ensuring also that all stakeholders have access to a common MIS which is exhaustive and comprehensive. Apart from that the site is designed to be a one stop shop for information on USOF including legal and implementation aspects.

USOF India is an active Fund as can be seen from articles describing progress of NOFN and the recent Cabinet approval for towers in Left Wing Extremism(LWE) affected villages. What is also needed is a greater focus of demand driven PPPs. These require considerable effort on USOF Admiration's part to consult, collaborate and design innovative programmes /projects and to see them through. However, this is  badly needed if we are to reap the benefits of  USOF's  bigger supply side initiatives. 

Govt needs Rs 13,645 crore to meet rural broadband target

 USOF left with Rs 21,800 crore for rural telecom projects