India Divided - 'Digitally'

Telecom Revolution in India – The Myth

“Telecommunications, as a means of sharing information, is not simply a connection between people, but a link in the chain of the development process itself.”

Telecommunication, along with electricity and transport, has been identified as key infrastructure sector for building tomorrows India. The sector, better known globally as Information and Communication Technologies (ICT), is one of the prime support services needed for rapid growth and modernization of various sectors of the economy and is also vital for social development of the country. Surveys have shown that every single effect in the telecom sector has a six fold effect in the economy of India. The same has been iterated in the Telecom policies of 1994 and 1999. These policies focused on :

­ – Telecommunication for all and telecommunication within reach of all.
­ – Universal services covering all villages at affordable and reasonable price.
– Development of telecommunication facilities in remote, hilly and tribal areas of country.

In all, a conducive and enabling environment was envisaged by these policies to facilitate India’s vision of becoming an IT super power. In 2004, if we look back, we will find that many of the targets set by these policies have been achieved in totality but, a deep insight into the facts and figures will reflect a glaring disparity between rollout of ICT services in urban and rural India. The writing on the wall is clear. The implementation of new telecom policy has left India divided – digitally.

Parameter Urban Rural All India
Population (2001 Census) in Million 286.1(27.8%) 742.6 (72.2%) 1028.7
No. of house holds. in Million 71.6 (28.7%) 177.5 (71.3%) 249.1
Teledensity ~35% 1.84% 12.1%

The above figures clearly show that telecommunication revolution in India is only skin deep. In fact the telecommunication growth in rural areas is not only poor but is infact on a declining trend.

Reasons for skin deep telecom penetration in Rural India

The rural areas are characterized by sparse population having poor purchasing power. The basic infrastructure viz. electricity and transport is inadequate. In such areas the public interest in telecom facility is caught in a typical cart and horse situation where in absence of telecommunication facility the public interest has not been stimulated. It is not surprising that out of 6,07,491 village is India only 5,22,347 have direct access to telephone facility. With the advent of liberalisation in telecom sector all private and government based telecom companies have been concentrating on providing services in big cities and towns to maximize profits. Presently the provision of telecom services in rural areas is typified by high set up cost and low returns. These typical socio-economic conditions, coupled with poor geographical spread has resulted in declining growth of telecommunications infrastructure in rural India. Though investment in telecommunication infrastructure has jumped from 3.6 percent of GDP in seventh plan to 13% of GDP in Ninth Plan, half of the total telephones in India are concentrated in Metropolitan and 100 other capital/commercial cities.

Bridging the divide – Suggested measures

Information & communication technology sector is in a very dynamic stage today. In such a scenario, reform in policies is a continuous process necessitated by dynamics of change & technology innovations. To fill up the huge digital divide present in India immediate policy changes are required so as to make the sector truly liberal. Until and unless 72% of population living in rural India is provided greater access to telephone, it will be difficult to have appreciable impact on projected social and economic growth.
Out of present equipped capacity of 15.44 million lines in India, only 11.73 million connections have been provided. This means that with little efforts and almost negligible expenditure 37.1 lakh connections can be provided. The first step should be on designing a suitable tariff for rural India so as to target these 37.1 lakh connection at the outset. The tariff can be subsidized for basic use (say for first 200 calls per month) through levies collected by means of Access deficit charges or Universal Service Obligation (USO) fund.
The next step is the use of right technology for expansion of services in rural areas. High set-up cost and lower rate of return are the main reasons why private operators are hesitant in rolling out their services in these areas. But choice of appropriate technology can help reduction of initial capital cost as well as subsequent operation and maintenance cost. It is estimated that to achieve a tele-density of 3 by 2007 in rural India, investment required to be pumped will be to the tune of Rs. 20,000 crores. If cost effective technologies are not inducted, one can imagine the investment required if this tele-density is to touch the current teledensity in urban areas i.e. 20. Research has shown that deployment of CDMA based WLL systems and Cordect based system will be most cost effective in rural areas, whereas use of traditional wireline or satellite based systems will not be a profitable approach.
Under New Telecom Policy, the private sector participation had a commitment to provide 98000 village public telephones (VPTs) by 2001 itself, against which only 12665 VPTs have been provided by them till March 2004. The reason for this circumvention was that they preferred to pay fines than fulfilling their obligations. To counter such situation, either the penalty imposed should be so significant or the statuary levy on gross revenue (called USO fund) may be increased from 5 to 10 percent.
While it is easy for operators to rollout wireless network in rural areas, it will be difficult for people there to opt for these services due to heavy initial cost involved in handsets (say to the tune of Rs. 3000 to Rs 4000). Tax holidays and exemptions to telecom equipment manufacturers can bring down the cost of equipment for committed rural use. The instruments of Gram Sanchar Sevak Youjna (Joint scheme of BSNL & Depart. of Post where postman carries mobile PCO with him to village) can be fully subsidized and provided to every postman who is operating in rural area. This way at least indirect access to telecom services can be ensured in all inhabited villages of India. Till date, only Panjab, Kerala, Haryana & Tamilnadu have the distinction of providing telecom coverage to 100% villages.
Efforts of Non Government Organizations in this sector have never been in vanguard. Projects like Gramphone taken up in Ardhra Pradesh & Rural Kiosk set up taken up by n-logue communications in 1000 villages of Maharashtra, Tamilnadu and Gujarat should be encouraged and funded by the Government. NGOs who are committed to connect rural phones and other rural service providers should not only be excepted from license fee and other guarantees but should also be provided subsidised infrastructure in form of land and electricity. For such operations the electricity generation cess, service tax etc. can be waived off for a certain period to boost the all-important ICT infrastructure required to even out the skewed economic growth in India. Both central and state government should come out with joint plans and incentives for rural telecom operators and users to make sure that 72% of the people living in world’s largest democracy are not left behind.
Last but most important aspect is of Human Resources development coupled with encouraged R & D on technologies suited for rural sector. Had it not been for the C-DOT, the 90% of present exchanges in rural India would not have been there. HRD for supporting sales, service, and maintenance along with awareness development can further expand rural telecom sector. Area specific policies like the Tribal sub plan of 1989 will help in improvement of awareness level of utilization of communications systems for various sectors like Health (telemedicine), education (distance learning) and agrarian business (market & price information). Projects like Gyandoot (Madhya Pradesh Government's Project) can not only help in adaptations of communication technologies by villages but can also increase transparency, accountability and efficiency in government operations through information dissipation in rural areas.

The silver lining - Bridged road ahead

The most stimulating change in telecom is that apart from PSUs, the private operators are waking up to their rural responsibilities. The saturated urban market is also forcing the players to move towards the untapped rural hinterland. Research shows that socio-economic interests of villages are confined to near by villages or big towns. As the telephone services are made available in all villages the telecom traffic will increase automatically. As the penetrating level goes on increasing, more and more player will automatically step into the rural telecom sector to make it self-sustainable. This can probably be achieved by 2010, when, it is envisaged that a rural teledensity of 4 will be achieved. Till then, the sector has to be supported by the Government through funding, incentives, institutions, infrastructure support and favorable policies to integrate all these. It is the formation and successful implementation of the policy matters that will ultimately matter.
A delicate blend of appropriate technological choice in combination with management and financing mechanism supported by Government policies can help penetration of communication services in Rural India. It should be clearly understood that once the rural telecommunication amplifies, overall social and economic development of country will automatically permeate. Then and only then, India can consolidate its positions as a leading hub of communication systems and IT enabled services and can establish itself as a leader in new disciplines such as bioinformatics and biotechnology. Only then, the current change in Information and Communication Technology can become a saga of vanishing myths. Only then, ongoing IT process in India can transform into a “True Revolution”.