Bottled-Up National Assets

Apply electronic toll collection systems to roads, and adapt road network concepts in organizing and managing communications networks.

Shyam Ponappa  |  February 4, 2016

The productivity bottled up in assets in this country is mind boggling. The catch is that to be unleashed, the systems in which these assets are embedded must function effectively.

Take the road network. A study of Delhi-Mumbai truck traffic by Indian Institute of Management, Calcutta (IIM-C) and Transport Corporation of India in 2012 reported an average speed of just over 21 km per hour. Of 18 stops, 16 were to pay tolls manually with average delays of 10 minutes, constituting 80 per cent of total stoppage time. The study estimated that delays cost the economy Rs 27,000 crore ($5.5 billion at the time), with the additional fuel consumption estimated at Rs 60,000 crore ($12 billion at the time).

The Indian Highways Management Company Limited, set up in 2012, was tasked with implementing electronic toll collection (ETC) systems. It began with ICICI Bank, then added Axis Bank. ETC was introduced on the Delhi-Mumbai expressway in 2014. A dedicated ETC lane across the country was to have been completed by 2014, then 2015; perhaps it will be ready in some months. But for full efficiency gains, the entire traffic flow needs ETC, not just a small segment. Also, anomalies such as the unwillingness of sections of the populace to pay tolls, or for political parties to exploit these tendencies, will need to be "sorted out". In effect, similar criteria will operate as in electricity distribution networks: Users must either pay for services - directly or with the help of subsidies, or forego infrastructure services of reasonable quality. If there is no enforcement of rules (quality service-supply and payment-collection), there will be a shoddy mess.

The underlying expressways already exist, but installing these systems require effort and investment. Imagine the productivity gains and reduced pollution if vehicles going through over 370 toll plazas in India don't have to stop, wait for 10 minutes on average to pay tolls, then accelerate back to cruising speed.

Inter-City Road Network Organisation

An important feature of the way road networks are organised and managed is the concept of common-pool resources, i.e., all public roads that do not require special tolls are part of a common pool, and are accessible to anyone who pays road taxes for the vehicle used. Another strength is that controlled-access roads with tolls connect to the rest of the road network. (There are negative aspects such as state registration, whereby states collect high fees for re-registering a vehicle on a change of domicile, but our focus here is on strengths.)

Extending Similar Concepts to Communications

Now consider the infrastructure network of the communications system. Why don't we apply these beneficial aspects of operating our roads, namely, common-pool resources with access charges, to communications? There are several reasons, since transportation and communications have evolved in different ways. While they are customarily treated differently, these legacy issues can be resolved.

In communications, spectrum bands were separated into one lot for broadcasting and another for telecommunications, which began with voice and now extends to data. Concerns about anticompetitive dominance in the US led to spectrum auctions in the 1990s, initially to prevent concentration of power in the hands of press barons-cum-broadcasters. The emphasis changed, however, to embellishing government treasuries, barring exceptions as in the public-spirited Nordic countries, Japan,1 and China. In India, events following the 2G scam and a war-of-attrition death spiral in politics have resulted in a paroxysm of righteous inability to take a long-term view, which is a prerequisite for making constructive policy choices. But, as the economy stalls and dark days loom, perhaps the political and administrative leaders will muster the courage to understand our predicament and find a way to get off the beaten track leading to a morass.

We have economic uncertainty, a burgeoning working-age population that could either contribute to supply-and-demand or to disorder, high interest rates, and a heavily over-leveraged communications sector. The indebtedness is aggravated by previous spectrum auctions and constrained reach. Inadequate connectivity limits not only opportunity, but service provision and revenue potential.

The sector's urgent need is for more spectrum at less cost. More countries are pooling communications infrastructure including spectrum. Australia, Denmark, Spain, the UK, Sweden, and latterly, Brazil, Colombia and Mexico have different levels of shared infrastructure including spectrum (see chart below).2 Mexico is deploying a countrywide wholesale network using 700 MHz (megahertz). In India, restrictive regulations hinder effective spectrum sharing.

“In Latin America passive sharing has been the preferred approach, with Tower Cos. playing a key role…”

Source: Daniel Leza-TMGTelecom-12 March 2014: https://www.itu.int/en/ITU-D/Regulatory-Market/Documents/CostaRica/Presentations/Session8_Daniel%20Leza%20-%20Mobile%20Infrastructure%20Sharing%20-%2012%20March%202014.pdf

Studies by Columbia University and the Indian Institute of Science affirm that pooling infrastructure can maximise total returns as well as for individual operators, while users gain enormous benefits.3,4 The studies' apprehensions, regarding trust, willingness to cooperate, and transparency, would not arise if there were mandated pooling through consortiums of operators and the government, and charges based on metering.

A change in regulations alone could mandate that all existing spectrum and networks be freely shared for roaming, depending on capacity and efficiency. Second, unused spectrum, for example, in the 500-800 MHz band, could be made available for secondary sharing to operators paying for metered use. Shared control in consortiums, including the government, would ensure transparency. Similarly, government spectrum could be secondarily shared. Tax collections would increase with additional revenues, as they did dramatically after 2003, when reasonable revenue-sharing rates were introduced for licence fees. USO funds could subsidise rural delivery where necessary for ubiquitous access.

Instead, if we continue with auctions, the 700 MHz band where range and penetration could reduce costs by 70 per cent may remain untouched, because a countrywide five MHz block could cost Rs 55,000 crore, almost a third of industry revenues.

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Shyam (no-space) Ponappa at gmail dot com

1: "Spectrum Auction Strategy - Canada vs Japan", Lars Cosh-Ishii, August 7, 2013: http://wirelesswatch.jp/2013/08/07/spectrum-auction-strategy-canada-vs-japan/

[Added later: Japan telecommunications market, February 2016
http://www.eurotechnology.com/insights/telecom/]
2: "Mobile Infrastructure Sharing": https://www.itu.int/en /ITU-D/Regulatory-Market/Documents/CostaRica/ Presentations/Session8_Daniel Leza - Mobile Infrastructure Sharing - 12 March 2014.pdf

3: "A coalitional game model for spectrum pooling in wireless data access networks", Saswati Sarkar, Chandramani Singh, Anurag Kumar, 2008: http://repository.upenn.edu/ese _papers /490

4: "Cooperative Profit Sharing in Coalition Based Resource Allocation in Wireless Networks", Chandramani Singh, Saswati Sarkar, Alireza Aram, Anurag Kumar, 2012: http://www.ece.iisc.ernet.in/Rs anurag/papers/anurag/singh-etal11cooperative-resource-allocation.pdf

What's Needed Is User-Centric Design, Not Good Intentions

Designing goal-oriented, end-to-end integrated systems is critical to delivering what Indians need.

Shyam Ponappa / Jan 03, 2013

The inadequacy of essentials and conveniences around us results from a slack approach to both design and execution. We know we are deficient in execution, but we need to be more aware of deficiencies in approach and design. Good intentions, while important, cannot substitute for good systems design and execution.

Things That Work…

Simple aspects of everyday living that actually work in India can leave one wonderstruck. Like the daily newspapers, organised and delivered seamlessly, reasonably early in the day, almost regardless of where one lives provided it’s a city or town. Or the availability of milk, eggs, bread, vegetables, fruit, and whatever else for daily provisions. And this despite the supposed shortcomings of our logistics and organisation in the context of wholesale and retail markets. Some of the revolutions that we’ve lived through in the last two decades include the manifestation of such wonders, like the phenomenal and ubiquitous growth in the supply of dairy and poultry products.

On a different plane, as it were, are the changes in the quality of automobiles and the improvements in India’s roads, although patchy and considerably lagging. Likewise, there have been revolutions in mobile communications and in air travel, disregarding anomalies such as the horror of Mumbai airport on private airlines, with its incompetent cab mafia on arrival, and a disorganised and demeaning crush on departure, squeezing past crowded boarding gates. (This is the state of the commercial capital? Woe betide us — but I digress...) Another source of wonder is the performance of the Indian Railways. Much abused by exploitative politicians, given short shrift on everything from cleanliness and toilets to much else, overloaded by hapless passengers in desperate need of transportation. One can only marvel at these services.

…And Things That Don’t

And yet, there are debilitating areas that seem utterly intractable, like sanitation, water, power supply and communications services for data (apart from voice).

Comparing the state of sanitation or power with the railways, one might say the latter had the benefit of being set up as an integrated system since the 1850s, although deprived in recent times of systematic development and investment, and so reduced to decrepitude. By contrast, sanitation has been playing catch-up on our old, established society, behind the curve for hundreds of years, never having had the advantage of installation as ab initio systems. Open drains are an Indian feature, even in Delhi. A similar situation obtains in power supply, where the contradictions and inequities of piecemeal, encapsulated interventions that tried to address power generation first were followed by sporadic efforts to address transmission and distribution, with realpolitik all the while playing to the users’ self-indulgence of having it all without paying for it. This sense of entitlement without accountability has resulted in the vicious circle of “free power” that leads to no power, annihilating possibilities for improvement.

In communications services for data (broadband), we have a different kind of problem. For one, governments, citizens and activists don’t seem to get it that these services are as essential to infrastructure as energy and transportation. There is no logic to their exclusion, but it has taken the National Telecom Policy of 2012 (NTP-2012) to announce the objective that telecom is part of infrastructure, although the associated benefits, such as lower interest rates, are yet to follow.

User-Centric Systems

The malady with sectors such as power, communications and transport is that solutions seem to be designed without an integrated, end-to-end, goal-oriented perspective favouring users. For instance, otherwise successful initiatives like the Delhi Metro provide services from an islanded “product perspective” that is simply not user-centric in its orientation. This results in insufficient feeder buses, inadequate parking at the Metro stations, a gaggle of disorganised cycle-rickshaws at stations like Mayur Vihar, and so on. Instead of being an unadulterated blessing, a Metro station in the neighbourhood becomes a curse, because user needs are not treated as being central to the delivery of the service. Passengers are left floundering while people in the environs (like the denizens of Mayur Vihar) are left to fend for themselves. There is also the question of capacity and demand. Again, the “product perspective” results in overcrowding and other inconveniences. On the flip side, well-meaning though misguided critics attack attempts to build capacity in anticipation of demand, as was the Metro by proponents of a Bus Rapid Transit system pushing for the latter as a silver bullet instead of as an adjunct.

What Could Have Been, But Isn’t Yet

The Unique Identification Authority of India’s Aadhaar augured a potentially revolutionary electronic enabler. In practice, however, its design has been baffling. A brilliant concept – abstracting a smart identification number from a smart card – has been reduced to an identifier for cash transfers to bank accounts. The question is, why to bank accounts and not to transactions, whether for retail or for services, activated by a mobile phone? Kenya’s M-Pesa was the pioneer for mobile money transfer, subsequently enhanced to include interest earned on virtual accounts.* Introduced in India by ICICI Bank with Vodafone in November 2012 and State Bank of India in January 2013, not only would this be much more practicable as the majority of our population doesn’t have bank accounts, it would cost far less, while being much more convenient for users. It would obviate setting up millions of physical micro-accounts at relatively high cost at banks, as well as giving users proximate access to products and services.

Another puzzling aspect is the contradictory, sometimes changing signals about Aadhaar. It is supposedly voluntary, yet reportedly mandatory now for marriage registrations, yet not accepted by banks for account opening, nor by some mobile phone operators, nor for passport applications, nor for driver’s licences. And inexplicably, except as a ruse to garner votes from non-citizens, it is for all residents (who choose to apply?), and although it could include citizenship information, it doesn’t.

It is best to start out right, recognising that we need user-centric, end-to-end systems design and execution, and apply this approach across the board going forward.

shyam ponappa at gmail dot com

* http://blogs.ft.com/beyond-brics/2011/11/11/kenya-to-india-exporting-the-mobile-money-model   

http://www.indiainfoline.com/Markets/News/ICICI-Bank-and-Vodafone-India-announces-strategic-alliance-to-launch-m-pesa/5539284905