Use USO fund to create rural telecom infrastructure

With the auction of 3G expected in January, the availability of increased bandwidth will expand the VAS applications that can be delivered to the customers, foresees Neeraj Jain, Director, Strategic and Commercial Intelligence, Transaction Services, KPMG. “If the aggressive 3G pricing strategy adopted by BSNL/ MTNL is an indication of the extent of affordability of 3G services, 3G has the potential to make a significant impact on mobile telephony and allied areas.”

This is because in a country with limited wireline infrastructure, low PC penetration and low Internet connections, the launch of 3G offers the opportunity to bring those services to the masses that are currently the reserve of those with Internet connections, he reasons, during the course of a recent email interview with Business Line.

“3G will enable effective delivery of applications like mobile commerce, information-related applications, weather and farm updates, e-governance modules etc. which have the potential to substantially raise the empowerment of the masses.”

Given the immense positive impact 3G would have on the mobile telephony ecosystem, the Government should create a conducive environment for the launch of 3G, argues Jain.

“With the expected focus of the operators on rollout of 3G services in a few urban pockets at best to begin with, the Government should think of ways how 3G can be quickly rolled out in rural areas – efficient usage of the USO (Universal Service Obligation) fund to create telecom infrastructure may be one such step.”

Excerpts from the interview

Free broadband throughout the country – will that greatly mitigate the social inequalities and help in development?

It is an acknowledged fact in the developed world that citizens need broadband access to get on with their lives. This is because Internet is essential to deliver professional work, communicate with families and friends, and access information and content.

A study done over thirty countries on correlation of broadband penetration increase and impact on GDP suggested that 10 per cent increase in broadband penetration leads to about $15,000 increase in per capita GDP. Whilst I am not for one bit suggesting that we can achieve the same magnitude of uplift in India, certainly the conclusion is that increased penetration has a beneficial impact on GDP growth.

Perhaps realising this Finland has become the first country in the world to sign a law that provides every citizen with a legal right to broadband access. From July 2010, every person will have access to a 1 MBPS broadband rising to 100 MBPS by end 2015. We compare poorly with 256KBPS (0.256MBPS) being the minimum threshold for broadband services in India! We certainly have a long way to catch up with the western world.

Any happenings in the standards domain you’d like to talk about?

One of the things that I would like to mention is the change being ushered in by ICANN with respect to the move to allow local script top level domain names (TLD). This will eventually enable entire website address names to be written in language scripts apart from English.

With this, to access Gujarati news (in Gujarati script), for example, one would be able to type the website address in Gujarati itself. This, in my opinion, will allow easier access to local script content for ‘English illiterate’ people. There is already an ongoing trend to make content available in local scripts in India. In my opinion, if leveraged effectively, this change together with increased penetration of Internet connections/ mobile can lead to tremendous growth in the reach of the power of the Internet and vastly improve the lives of the masses.

What is your outlook for the industry, in terms of consolidation?

Today, each of the circles has between 12-13 operators with licence to provide 2G services with about 7-8 players providing services and others expected to follow suit. Nowhere in the world do we have such competitive landscape – most of the European countries have less than 5 operators, the US has 6-8 large country-wide operators, China has 2 large operators, Indonesia has 3 large operators etc.

Certainly the thinking in the industry and the analyst community is that the current state is unsustainable in the medium term. The scale and volume of the Indian telecom market and low operator capex/ opex model can support more operators than seen globally but certainly not 12-13. In my view, consolidation is likely to reduce the number of operators to between 7-8 by 2012 or 2013.


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Printable version | Jul 9, 2020 5:11:00 PM |

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