A Road Map for Digital India

India's current policies for telecommunications don't serve our interests. Here's what must change

Shyam Ponappa  |  December 4, 2014

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With all the talk about Digital India, one would think it's taking off. But in reality, it isn't quite here yet - because of our confused approach to independent networks, and regulations that restrict efficient use of spectrum and radio networks. Oddly enough, we don't suffer this confusion about sharing other infrastructure, such as roads, rail, electricity networks or airports. We readily share these on payment, as is logical, but we simply haven't done this for broadband and communications. It's unlikely we'll achieve ubiquitous digital access with our current approach. There are too many problems and too few synergies, requiring radical changes in direction.

Our legacy practices have resulted in several independent, countrywide networks like arterial systems, each run by its owner/operator. These systems connect at the customer ends on their own, except when customers are outside their franchise areas. This requires massive capital investment in a multiplicity of redundant backbone and urban networks with insufficient rural coverage, for a start.

Even worse, our administrative rules are far more constraining than the technological limitations. So operators must win their own spectrum at auction as in countries with (a) not many operators and (b) more commercially available spectrum, even as technology has evolved to facilitate shared network solutions.

This creates two further obstacles for Digital India: operators must invest large sums in spectrum auctions for their exclusive-use bands, and limited bandwidth - for instance, in the 900 MHz band - must be subdivided between numerous operators at a location, resulting in suboptimal performance.

The one proposed exception to the multiplicity of uncoordinated networks is the National Optical Fibre Network (NOFN) from state-owned Bharat Broadband Network Ltd. The plan is that this will reach clusters of villages at the gram panchayat level, and be available to all service providers; but it is very far from ready.¹  The required changes must, therefore, address even basic assumptions, for example, whether operators must be restricted to circles; how to organise the infrastructure ownership, build-out and operation to facilitate countrywide access; how to compensate governments for usage rights, and network and spectrum owners for common-carrier access to their assets; how to structure incentives for content development and delivery for education, healthcare, civic services, commerce and entertainment and so on, as well as for domestic high-technology manufacturing. If this isn't done, the already high level of technology imports will rise to unsustainable levels, constraining not only this sector but the potential of most sectors of the economy.

Desirable Policies & Regulations

We need policies and regulations framed in our collective best interests on the following lines:

1. Effective and efficient communications services at reasonable costs, paying reasonable taxes and government charges.
    
2. Usage for government services, public safety and security, including the armed forces, paramilitary, governance, disaster management, and commercial and private purposes.

What Can Be Done

As explained above, our present approach is unlikely to get us there. So what can be done?

• As a first step, one sweeping change can solve part of this seemingly intractable problem: permitting spectrum sharing between primary users, such as Defence and Defence-related services who will continue to have priority rights, and authorised secondary users, as under way in the United States and the European Union (EU).²  With this approach, critical defence and security applications are not compromised for government or commercial revenues. Instead, the spectrum would be more fully used, more traffic would generate higher earnings yielding greater revenue share and tax collections, while security retains the priority it deserves.

A prerequisite for this is a collaborative, end-to-end strategy and a problem-solving approach to formulating and executing policies, regulations and processes. The participants must include the central ministries and agencies (department of telecommunications, department of electronics and information technology, information and broadcasting, Defence, finance, the armed forces, security agencies); the regulator (Telecom Regulatory Authority of India); state governments; public sector units and their associated ministries/departments; operators. The judiciary and the public must also be involved, because disruptive actions, such as those leading to the arbitrary cancellation of some 2G licences, can be as damaging as dysfunctional policies or regulations.

• The second major change required is to transition to open-access shared networks, available on payment to all licensed operators/service providers (excluding the ambit of Defence and security). It may be appropriate to have two, three or even four networks that are interconnected. This has to be worked out by the participants based on technology, economics, business interests and pragmatism in terms of what is achievable in given timeframes. The transition needs to be through consultation and negotiation, as it would not work well if imposed through government or judiciary diktat.
   
• Simultaneously, trials must be conducted with new technologies, starting with wireless broadband utilising unused spectrum reserved for TV broadcasts ("TV white space"). Other countries have done much of the pioneering work. Scientists in the EU are recommending using TV white space for "super-Wifi" at the International Telecommunication Union's next World Radiocommunication Conference, instead of auctioning it.³

Our trials must validate solutions such as for rural broadband being workable in our situation and circumstances. These trials will need to be extended in phases, both in terms of scope and of scale - for example, for the active sharing of TV and other spectrum, and of Radio Access Networks, through rural and urban field trials. These will test usage by multiple operators in a given area. Once proven, policies and procedures can be developed and implemented across the country.

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    Shyam (no space) Ponappa at gmail dot com



1. For problems with deploying the NOFN or fibre-to-the-curb, see: "Reality check on the broadband dream".

2. "Model City for demonstrating and evaluating advanced sharing technologies": fcc.gov/document/fcc-and-ntia-model-city-advanced-sharing-technologies

3. factor-tech.com/connected-world/9769-scientists-urge-governments-to-turn-old-tv-frequencies-into-free-super-wifi/

Comments

ashok

Without understanding the technology at work, have long believed spectrum should be a free flowing river that all operators can tap, getting billed for actual usage. Where the overall supply falls short, idle pockets, as with defence, should be identified and brought into use, apart from mandating a more efficient use by the telcos. Second, arbitrage should be a thing of the past. Each operator, through licence fees and usage charges, should pay the same price for the same nature of use, voice, data, etc. To complete the idyll, the government should be patient enough to receive its payments evenly rather than in lumpy, periodic bursts.

04-12-2014 07:55:54

(Fixing) India's Systemic Flaws

We need breakthroughs in tax claims and coal and spectrum allocation, but most of all, in societal accord

Shyam Ponappa  |  November 6, 2014

On the face of it, several developments augur well for the economy. But major systemic flaws persist that must be overcome.

Some gains have resulted from Prime Minister Narendra Modi's direct selling and "heavy lifting", as in eliciting Japanese investments. Others, such as the drop in petroleum and commodity prices, are attributable to extraneous factors. The positive developments that seem to be coalescing into a glow on the economic horizon include:

• The revival of stalled projects.
   
• A reduction in raw material costs, with oil prices now well under $90 a barrel.
   
• Significant investments from Japan's SoftBank in Snapdeal and Ola; other significant investments and announcements in e-commerce, for example, Flipkart and Amazon.
   
• The implementation of electronic toll collection (ETC) on our highways. Introduced between Ahmedabad and Vadodara on National Highway 8 (NH-8) in 2013, the ETC became available last week between Delhi and Mumbai on NH-8. It is expected to be available on all national highways in the next two months. Vehicles with prepaid tags can drive through without slowing down, whereas until now, all vehicles had to stop to pay tolls. The productivity gains will be enormous, with fuel savings across toll stations estimated at Rs 60,000 crore (see BS, October 30, 2014 and BS, October 31, 2014 for details).

But all is not entirely well. The fiscal deficit is at 80 per cent of what was budgeted for the full year; there was a decline in projects completed in the September quarter; and there is uncertainty about growth rates.

The real issue, though, is that major systemic flaws persist, resulting in growing economic and operating constraints. There are the problems of retrospective tax claims, of coal allocation and of spectrum allocation. In the societal dimension, there are continuing indications of disharmony, resulting in wariness and insecurity about whether we have a unifying or divisive top leadership, let alone rank and file. Proceeding with business as usual with the present ineffective ways will lead to continuing and increasingly overwhelming detrimental effects. Each of these areas needs breakthroughs to achieve convergent, synergistic results.

Coal

Over 60 per cent of stalled projects tracked by the Performance Management Group in the Cabinet secretariat are power projects, held up because coal is not available. Coal-mining rights are to be auctioned on the lines of spectrum. What are the likely outcomes?

While the government was jubilant about funds collected from the auctions, this created enormous capital and operating constraints for the communications sector. This is because the Rs 1.05 lakh crore bid for spectrum became unavailable for network construction and operations, and the limited bandwidth available to each operator adds to costs and restricts delivery capability. Growth in network capacity has deteriorated to the point where we have higher levels of dropped calls in metros, with continuing poor broadband access countrywide. The effects on productivity are ruinous.

What can we expect from mining rights auctions? If the results are as for the spectrum auctions, we'll have high treasury collections, high life-cycle project costs affecting critical inputs like electricity, steel and aluminium, and a reduction in investment in mining operations and downstream manufacturing. These are logical outcomes: the consequence of higher costs is either higher prices, or financial under-recovery leading to collapse, and capital used for auctions is unavailable for investment. Instead, what we really want from the mining allocation is inexpensive electricity and efficient production of industrial materials, such as steel and aluminium.

The financial insolvency of our state electricity boards reflects the magnitude of the problem. Even the story of Gujarat's electricity distribution raises questions for the rest: Gujarat's average farm tariff is under Rs 1 a unit, compared with a non-farm tariff of Rs 4-5 (see "Farmers pay 56 paise per unit of electricity"*). The high cost of providing these connections is unviable with the low revenue of 56 paise a unit. This is why there is a backlog of about 400,000 farmers waiting for connections despite Gujarat's "surplus" of over 2,000 megawatts. Distributing electricity at such low rates is simply unsustainable, and the situation is much worse in states providing free electricity.

A possible way to approach this is to appoint two or three individuals with the integrity and competence to work with the government, industry and experts to develop an allocation plan. If this "beauty-parade" approach seems too utopian or academic for India, please be aware that this is precisely how land acquisition was actually done for the Calcutta Metro around 1982 after years of delay, and for part of the Bangalore Metro in 2006.

Spectrum

The spectrum constraints, meanwhile, show in the high levels of dropped calls because of congested lines, and the slow rollout of networks into rural areas. This slowness is because of the unfavourable economics: of high cost and difficult execution, with lower revenue potential. What we want from spectrum allocation is access to broadband networks at prices that will result in productivity gains. Instead, we have neither adequate broadband networks, nor sufficiently widespread access for productivity. A better solution is pooled networks with mandatory shared access on payment, with the government getting a share of revenues.

Ecosystems

Apart from inadequate infrastructure, logistics, finance and regulations, all of which must be well-orchestrated to achieve supportive ecosystems for investment and operations, the tax-claims fallout continues to undermine growth prospects. While the Vodafone problem may be finally resolved, the closure of Nokia's manufacturing facility in Chennai because of tax claims undercuts all the sales talk. Each sector needs a supportive ecosystem, integrated with the rest.

Social Disharmony

Above all, social disharmony seriously affects our capacity for collective action. Social coherence is essential for constructive development. The leadership's effectiveness in reaching out and inspiring constructive aspirations can help to harmonise and channel citizens towards desirable common goals. Such collective initiatives would reduce our fractiousness and infighting, making win-win outcomes more possible.

The solutions in all these areas need to be path-breaking, based on integrity, trust and bold, collaborative action. We have to learn these ways.

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                                                                              Shyam (nospace) Ponappa at gmail dot com

*http://indianexpress.com/article/cities/ahmedabad/farmers-pay-56-paise-per-unit-of-electricity/

Comments (2):

• karthikeyan
  Tax Havens can be created , for NOKIA alikes ?? :)
  06-11-2014 08:22:27 
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  ashok
  The state of the power sector can make or break Make In India. Worthy of attention at the highest levels of government. 2. Whether spectrum or coal, the government can meet the industry half way by taking its entitlement as a revenue stream rather than an initial lump of capital.
  05-11-2014 22:45:12

Super WiFi & Shared Spectrum

A Time to Start Sharing Look into sharing spectrum and 'Super Wi-Fi', instead of auctions, refarming and exclusive allocation.

Shyam Ponappa / Nov 01, 2012

Amidst our preoccupation with internal problems of misgovernance, we’re losing track of long-term technical developments elsewhere.  For instance, there’s a buzz about “Super Wi-Fi” technology in other countries that's missing in India. Yet this could make spectrum abundant, while avoiding the problems of private allocation.  Here’s why India with its floundering, beleaguered telecommunications sector should stay abreast.

Super Wi-Fi using TVWS

The technology for unused TV spectrum bands, or TV White Spaces (TVWS), is referred to as “Super Wi-Fi”, although it doesn’t conform to earlier Wi-Fi standards, nor does it use the 2.4 GHz or 5 GHz licence-exempt spectrum. Super Wi-Fi has its own standards (IEEE 802.22, and 802.11 af in draft form) using 470-810 MHz, the “digital dividend” after conversion from analogue broadcast TV. It can be used for long-range rural broadband, and to improve short-range coverage. In the US, where it was pioneered, access is available without a licence to devices registered with a proximate geolocational database. Like regular Wi-Fi, Super Wi-Fi expands the use of available spectrum by sharing access.

The US is also permitting exploration of shared use in defence and security bands from 1755-1850 MHz, extending the potential for sharing spectrum.1

TVWS trials

Earlier this month, Singapore’s Infocomm Development Authority organised a workshop on TVWS with government and private entities. Organisers included the Institute for Infocomm Research (I²R) and other local participants, with presentations from companies from the US, Europe, Asia, and Africa, including Microsoft, Google, Spectrum Bridge, Adaptrum, Ericsson subsidiary Telcordia, Neul, Japan’s NCIT, and so on.2 Completed or ongoing trials are shown in the diagram below.

Super WiFi Trials

Source: http://www.microsoft.com/en-us/download/details.aspx?id=29678

TVWS and shared spectrum vs refarming

These developments should be of vital interest in India to policy makers, operators and users — not only for TVWS as a shared resource, but as an approach that could be extended to other bands, so that limited spectrum availability doesn’t constrain reasonably priced, high-speed data services. This is a serious limitation in India, unlike in other countries where a few operators have sufficient spectrum; in this sense, the need to share spectrum is much greater in India. For example, sharing could provide a better alternative to refarming of the 900 MHz band, allowing for both 4G and legacy uses.

One difficulty is that dominant operators may oppose sharing because their spectrum holdings provide a competitive advantage: possibly Bharti, Reliance, or an aspirant like Vodafone with access to inexpensive offshore funding. Our collective interests here, however, are likely to be best served not by constraining access through limited, exclusive spectrum, but by making spectrum abundant through sharing, allowing for wide bands (2x20 MHz or 2x40 MHz) that can be aggregated for much higher throughput for data, not just for voice.

For this to happen, (a) the government has to explore spectrum sharing in TVWS as well as in other bands, and (b) stakeholders must be receptive, to co-operate effectively on a workable plan on the lines of revenue sharing after NTP-99, extending to broadband delivery. Everyone will gain: users will get better access, operators can thrive, and the government will collect much more revenue over time. However, dominant operators will need to give up their spectrum for the greater common interest including their own, and for this, they will need compensation — as in production-sharing agreements in the oil sector.

The advantages of spectrum sharing

There are a number of advantages of sharing spectrum. First, and important, it can be non-discriminatory. Second, it avoids private allocation; shared spectrum can be accessed without allocation to private parties. Then there is the fact that capital cost is reduced. There is no deadweight loss from capital tied up in auctions, freeing it all for network development and service delivery. Finally, there’s the general misinformation about auctions, which become academic if spectrum is shared. If spectrum is instead auctioned, the public interest – of users, operators and producers – will be adversely affected. (On producers, while local manufacturing is currently insignificant, there is considerable scope if it is set up right, as telecommunications equipment imports are expected to exceed energy imports in a few years.)

The Supreme Court was misinformed about auction fees exceeding revenue-sharing collections, and not informed of its detriments. As evidenced after NTP-99, networks and services proliferated, resulting in much higher collections than auction fees foregone. The Supreme Court’s opinion on the Presidential Reference clarified that auctions were not mandatory for other resources, but not for spectrum, although the reasoning is the same. This needs rectification if spectrum is not shared, because revenue-share collections and tax revenues on profits from more extensive networks and services are likely to far exceed the estimated auction fees of Rs 40,000 crore over three years, quite apart from the major public benefits of access.

Space for constructive decisions

Another requirement for constructive resolution is that policy makers be given the requisite space to frame solutions that are genuinely in the public interest. These solutions can be premised on abundance if it is possible, rather than artificial scarcity and rationing. At present, the Telecom Regulatory Authority of India, the Department of Telecommunications, and other authorities including the Empowered Group of Ministers are under immense pressure to favour aggressive government collections, instead of what might be genuinely beneficial. This is an odd consequence of the government’s increasing loss of credibility, resulting in the rise of populists, “profit haters”, and ignorant-yet-opinionated sceptics. Uninformed attacks on constructive approaches and alternatives need to be presented and seen in a more balanced way by an informed media, press and public, instead of being fuelled by indiscriminate hype.

Also, we have to learn to distinguish between problems of ideological conviction – those that can be solved through political accommodation – and engineering problems, like network design and service delivery at least cost. Resorting to political accommodation for engineering requirements results in malfunction and/or collapse.

A good way to proceed is to ensure sharing solutions are worked out without incurring exorbitant cost — not only for TVWS but also for legacy operations, such as in the 900 MHz band. These can induce new network build-outs for data services in urban as well as underserved rural areas, and broadband service delivery across the country.

shyamponappa at gmail dot com 


1: Other bands being considered for sharing in the US are:
1695-1710 MHz & 3550-3650 MHz; Unlicensed: 5350-5470 MHz & 5850-5925 MHz.  For details, see: http://news.cnet.com/8301-1035_3-57529959-94/defense-department-pushes-spectrum-sharing-as-solution-to-wireless-crunch/

2: http://whitespace.i2r.a-star.edu.sg/TVWS_Workshop/Programme.html

Details on the UK (Cambridge) trials at: http://www.cambridgewireless.co.uk/docs/Cambridge White Spaces Trial - technical findings-with higher res pics.pdf