Backsliding Without Broadband

We are losing out on so much of our potential because of regulatory constraints.

[But of course, that is only a part of the story.  The rest of it is lack of organization, and of discipline, which is a long, long story.]

Shyam Ponappa      |    April 1, 2021

Not being permitted to use available spectrum in line with technological developments and global applications is like being deprived of access to the air around one. That our way-below-par broadband is not systematically addressed as a critically important way to provide requisite infrastructure to improve people’s lives is troubling. We lose out on the facilitation of education, healthcare, productivity, commerce, industry, government services, and entertainment. Is the government unaware of our deprivation? Surely the authorities are capable of devising ways to use spectrum for the common  good. 

Whatever other matters they are busy with, this is an area that should have priority.

The difficulty is in satisfying competing demands arising from what can best be described as our collective gnarled psyche. One preoccupation is with making corporations alone pay for public resources without allowing for profits. This apparently pervades not only the government’s thinking, but extends to many people at large, in the press and media, polity, civil administration, and judiciary. Compounded with the anxiety of decision-makers to protect themselves from overzealous future witch-hunts, this ensures there are no innovative attempts at resolving our communications infrastructure needs. One also sometimes encounters sentiments questioning whether we need 5G, or faster internet, or notions that we already have adequate broadband, and so on. We are inured to dysfunctional infrastructure support, and have become habituated to accepting deficiencies in our daily lives. Whether it is dropped calls, slow internet, or sporadic failures in electricity, water supply, or logistics, we treat this shoddy state as acceptable, despite its immense drag on effectiveness and productivity.

Meanwhile, we have just embarked on yet another 4G spectrum auction, while 5G, where we are way behind global developments, seems a lifetime away. If only our policymakers and administrators actively sought ways to improve our communications, including rural broadband, for instance, we might learn from practices elsewhere in the world of adaptations that could be implemented here. One interesting instance is that of the Federal Communications Commission (FCC) in the US. Seeking to improve broadband in underserved markets, in 2019, the FCC began the Rural Digital Opportunity Fund (RDOF) initiative, to channel universal service obligation funds collected from telecom operators to get high-speed networks built and services provided in rural areas. This replaced the prior Connect America Fund programme with its lowest-bid awards that had not worked. In 2020, the FCC conducted a reverse auction for broadband services to rural users, allowing for slower delivery in more remote locations. The tentative award for Phase I is $9.2 billion (Rs 67,000 crore) over the next 10 years in monthly instalments, with time-bound completion requirements. (India has about Rs 55,000 crore in a comparable Universal Service Obligation Fund.)

Over 400 entities, many of them consortiums including electricity distribution companies, have won RDOF contracts to build networks and provide services. Most plan fibre-optic networks, but the biggest winner for $1.3 billion, LTM Broadband, plans to also use high-speed fixed wireless. Another winner, SpaceX, plans Low Earth Orbit satellites to deliver 100 Mbps. There has been criticism from some analysts and contenders who question the feasibility of gigabit wireless networks in place of fibre. This may be uninformed, but it remains to be proven that delivery is on time and profitable.

Despite the difference in our environments, the FCC’s example has useful pointers for India. One is a practicable way to channel USO funds to develop rural broadband, with performance monitoring every six months. Second, a model and time frame to design and conduct a reverse auction, and award the 10-year contracts, with minimal hype. Third, allowing for choice of technologies, including high-speed fixed wireless, satellite, and so on. Finally, a solid foundation is provided by FCC’s supportive approach to making spectrum and infrastructure sharing a reality, including 6 GHz Wi-Fi. This is the sort of action we need in place of more rhetoric.

A complementary approach is that of Sweden and other Nordic countries. Telecom operators there have been sharing infrastructure and spectrum from 2G through 4G, which is now being extended to 5G. Note that all levels of technology (2G, 3G, 4G and 5G) coexist in their networks (1).

For India, policy-makers have to develop approaches, policies, laws, adaptations, and so on that are specific to our context, including culture, institutions, practices, and geographic and social circumstances. One element likely to be necessary for ubiquitous broadband is shared networks in rural areas as well as in dense urban environments. Mandatory provision of shared infrastructure was being considered in Sweden over a decade ago. Given that government’s initiatives and Sweden’s experience with sharing thereafter, network sharing is likely to be extended for internal use without mandatory requirements. In India, too, there is need for government initiatives and incentives. This is because extensive changes in policies, laws, and regulations must be effected, requiring inter-agency coordination and convergence in government departments, legislative agencies, institutions, and among stakeholders. The latter will include service providers, manufacturers, and user groups. Sweden’s experience shows there are compelling cost and energy saving reasons for sharing, apart from environmental impact mitigation, but that without government initiatives and facilitation, the common-good outcomes are not likely to evolve naturally in India, where passive sharing has been permitted and practised for years.

Our desperate need is for revamped spectrum regulations, making the relatively straightforward changes aligned with the FCC model to the extent feasible, after due consultation with industry and other stakeholders. Extending Wi-Fi on the lines of what has already been done for 5 GHz is the first step. The target bands are 6 GHz for Wi-Fi, 60 GHz for indoor Wi-Fi and outdoor authorised shared access by licensed operators like Wi-Fi, and similar outdoor regulations for 70-80 GHz. After that [the end-to-end connectivity is enabled -- which is infeasible now], a systematic initiative is required for network sharing through consortium ownership, with similar holdings in verticals with infrastructure providers, and government participation through BSNL. All concerned government agencies will need to be involved, as must all stakeholders.

---

Shyam (no space) Ponappa at gmail dot com

1: https://www.nokia.com/blog/the-well-kept-secret-of-2g-3g-4g-5g-dynamic-spectrum-sharing/

Configuring India's Digital Ecosystem

Policies must favour consortiums of local players - for operators with a government stake, and for manufacturers/system integrators with market access conforming to WTO rules.

Shyam Ponappa    |   August 6, 2020 

Two developments highlight the need for government to sponsor consortiums to build India’s digital ecosystem:

• Facebook’s announcement in April to invest $5.7 billion in Reliance Jio was momentous. In a slowing economy, Reliance Industries raised an incredible $20 billion with a cascade of foreign investments combined with a rights issue. This “consortium” makes Reliance debt-free, besides providing the capital and capacity to dominate communications in India.
• India’s digital ecosystem’s dependence on China and on increasing imports underlines the imperative for corporate India to come together in a national endeavour that must succeed.

The Jio factor

Overwhelming dominance rarely benefits the public interest, even if the pricing starts incredibly low. Developed markets frown on monopolistic dominance, despite there being giants such as Microsoft, Google, Apple, Amazon, and Facebook.1

Discounting tall talk, India’s communications sector now has these upbeat expectations, along with a slew of old negatives, particularly the debt- and tax-burdened, fragmented other operators together with recalcitrant policies. Government-imposed charges and tax battles burden our operators, rendering them unable to compete.

How have Jio’s moves affected the public interest? With both benefits and detriments. The negative fallout from sectoral debt from auctions and crippling government levies, and a price war, has been unsustainably low tariffs. A positive effect is that data traffic increased greatly because of the low tariffs. Yet, the results are damaging: For service providers because of insufficient profits, for the market because it constrains quality and growth, and, therefore, for consumers in the short and long run. Service levels are compromised by resource constraints (dropped calls, slow speeds), and because of under-served customers — both in existing and the unserved markets in India. Data traffic may have increased simply because more people watch more rubbish in video form, whereas service providers need the wherewithal to invest, to improve and extend coverage, as well as to design constructive educational, skill-building, medical services, and other enhanced interactive services for users’ genuine benefit. In that sense, traffic as a measure of user benefits can cut both ways.

Apart from data, two other aspects merit consideration: Operator revenues, and government collections (licence fees, auction charges, and taxes). Operator revenues grew strongly from mid-2003 through FY2012, flattened for five years (FY2013-17), then declined after FY2017 (see Chart 1).

Barring additional charges, government revenues reflect this decline, leaving these lingering questions:

• Does the declining trend serve the public interest?
• What is the opportunity cost of disruption and deprivation of services?

A third issue requires action: How do we improve our digital prospects? Note that government collections from licence fees and spectrum charges rose steadily from FY2004, so that cumulative revenues far exceeded auction fees foregone (Chart 2). Corporate taxes were in addition to this.

Thereafter, government collections flattened, then declined (barring retrospective charges), as did taxes. This calls for policy intervention to enhance services, thereby increasing revenues and government collections. Straightforward adoption of global norms for wireless in 60GHz, 70-80GHz (V-band and E-band) and unused UHF (500-700MHz) restricted to operator use will help.2 So will giving up the farce of reviving BSNL/MTNL, including the hopelessly snaggled VRS, and the botched tenders (‘Most of it to Huawei?’ ‘No, Ericsson and Nokia.’ ‘Alright, 10 per cent to domestic suppliers.’ ‘No, all of it to domestic suppliers…’).

Competition for Services

A way to nurture balanced competition in services is for the government to create a consortium with a minority anchor, bringing financial, technological, and delivery capability to compete with Jio’s dominant platform.

Reliance Industries Chairman Mukesh Ambani calls for doing away with 2G; Airtel Chairman Sunil Mittal calls for supportive policies, and repudiating old battles such as contention over the adjusted gross revenue (a 15-year battle won in lower courts, lost in the Supreme Court), and reducing exorbitant charges. The government can change policies to achieve these. It can stop predatory practices, and facilitate this consortium. BSNL/MTNL can be genuinely supported to be the government anchor in the consortium with a minority stake, with golden-share national security, public- and minority-interest responsibilities through appropriate legislation. Airtel could be the lead, with others participating, including foreign players.

Equipment Consortium

Fragmented suppliers and system integrators also need a consortium for collaboration. While multinational vendors dominate, dependence on imports and China is untenable for our increasing and strategic requirements. Absent enabling policies, Indian manufacturers have to succeed offshore to sell within the country. Why do such things happen? Many reasons, starting with the holdover of colonial mindsets even of those who want to rewrite history, which treat the government — whoever is in power — as the colonial/feudal overlord, and the people as serfs with a vote, whose weaknesses can be pandered to for electoral victory. This imposes a zero-sum framework—the government versus the rest (Us versus Them).

In reality, the situation need not be zero-sum, as evidenced by past service growth and government collections through revenue sharing, compared with what might have been if auction fees were enforced: Bankruptcies and no services.

The prerequisites are (a) policies framed to provide access to local manufacturers and service providers conforming to WTO requirements; (b) their market access through continuing orders; (c) their collaboration to supply, install, and facilitate operations and maintenance of requisite equipment.

If these were made possible, domestic suppliers could meet a significant share of India’s communications needs. This requires emulating the Huawei model — easier said than done!3

The Union and state governments need to understand these components, and execute them from a national perspective, without bombastic rhetoric, politicking, fund-raising for elections, and so on. Policies must incentivise coordinated action; orders have to be winnable by including criteria for development of domestic capacity to conform to the World Trade Organization rules; and execution has to be first rate (on time, high quality). Digital communications will drive many aspects of all sectors. Our policy-makers must stop dithering and help us prepare effectively.

---

Shyam (no space) Ponappa at gmail dot com

1. For issues about competition laws in India, see: Amber Sinha & Arindrajit Basu, April 30, 2020:
"Analysis: Reliance Jio-Facebook deal highlights India’s need to revisit competition regulations"

https://scroll.in/article/960676/analysis-reliance-jio-facebook-deal-highlights-indias-need-to-revisit-competition-regulations

2. https://organizing-india.blogspot.com/2020/03/indias-self-goal-in-telecom.html

3. http://organizing-india.blogspot.com/2018/05/the-huawei-­­pointer.html

India's 'Self-Goal' in Telecom

And urgent steps to avert a cascading crisis.

Shyam Ponappa   |   March 5, 2020

The government apparently cannot resolve the problems in telecommunications. Why? Because the authorities are trying to balance the Supreme Court order on Adjusted Gross Revenue  (AGR), with keeping the telecom sector healthy, while safeguarding consumer interest. These irreconcilable differences have arisen because both the United Progressive Alliance and the National Democratic Alliance governments prosecuted unreasonable claims for 15 years, despite adverse rulings! This imagined “impossible trinity” is an entirely self-created conflation.

If only the authorities focused on what they can do for India’s real needs instead of tilting at windmills, we’d fare better. Now, we are close to a collapse in communications that would impede many sectors, compound the problem of non-performing assets (NPAs), demoralise bankers, increase unemployment, and reduce investment, adding to our economic and social problems.

Is resolving the telecom crisis central to the public interest? Yes, because people need good infrastructure to use time, money, material, and mindshare effectively and efficiently, with minimal degradation of their environment, whether for productive purposes or for leisure. Systems that deliver water, sanitation, energy, transport and communications support all these activities. Nothing matches the transformation brought about by communications in India from 2004 to 2011 in our complex socio-economic terrain and demography. Its potential is still vast, limited only by our imagination and capacity for convergent action. Yet, the government’s dysfunctional approach to communications is in stark contrast to the constructive approach to make rail operations viable for private operators.

India’s interests are best served if people get the services they need for productivity and wellbeing with ease, at reasonable prices. This is why it is important for government and people to understand and work towards establishing good infrastructure.

What the Government Can Do

An absolute prerequisite is for all branches of government (legislative, executive, and judicial), the press and media, and society, to recognise that all of us must strive together to conceptualise and achieve good infrastructure. It is not “somebody else’s job”, and certainly not just the Department of Telecommunications’ (DoT’s). The latter cannot do it alone, or even take the lead, because the steps required far exceed its ambit.

Act Quickly

These actions are needed immediately:

• First, annul the AGR demand using whatever legal means are available. For instance, the operators could file an appeal, and the government could settle out of court, renouncing the suit, accepting the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) ruling of 2015 on AGR.

• Second, issue an appropriate ordinance that rescinds all extended claims. Follow up with the requisite legislation, working across political lines for consensus in the national interest.

• Third, take action to organise and deliver communications services effectively and efficiently to as many people as possible. The following steps will help build and maintain more extensive networks with good services, reasonable prices, and more government revenues.

1. Enable Spectrum Usage on Feasible Terms

1. Wireless regulations

It is infeasible for fibre or cable to reach most people in India, compared with wireless alternatives. Realistically, the extension of connectivity beyond the nearest fibre termination point is through wireless middle-mile connections, and Wi-Fi for most last-mile links. The technology is available, and administrative decisions together with appropriate legislation can enable the use of spectrum immediately in 60GHz, 70-80GHz, and below 700MHz bands to be used by authorised operators for wireless connectivity. The first two bands are useful for high-capacity short and medium distance hops, while the third is for up to 10 km hops. The DoT can follow its own precedent set in October 2018 for 5GHz for Wi-Fi, i.e., use the US Federal Communications Commission regulations as a model.1 The one change needed is an adaptation to our circumstances that restricts their use to authorised operators for the middle-mile instead of open access, because of the spectrum payments made by operators. Policies in the public interest allowing spectrum use without auctions do not contravene Supreme Court orders.

2. Policies: Revenue sharing for spectrum

A second requirement is for all licensed spectrum to be paid for as a share of revenues based on usage as for licence fees, in lieu of auction payments. Legislation to this effect can ensure that spectrum for communications is either paid through revenue sharing for actual use, or is open access for all Wi-Fi bands. The restricted middle-mile use mentioned above can be charged at minimal administrative costs for management through geo-location databases to avoid interference. In the past, revenue-sharing has earned much more than up-front fees in India, and rejuvenated communications.2 There are two additional reasons for revenue sharing. One is the need to manufacture a significant proportion of equipment with Indian IPR or value-added, to not have to rely as much as we do on imports. This is critical for achieving a better balance-of-payments, and for strategic considerations. The second is to enable local talent to design and develop solutions for devices for local as well as global markets, which is denied because it is virtually impossible for them to access spectrum, no matter what the stated policies might claim.

2. Policies and Organisation for Infrastructure Sharing

Further, the government needs to actively facilitate shared infrastructure with policies and legislation. One way is through consortiums for network development and management, charging for usage by authorised operators. At least two consortiums that provide access for a fee, with government’s minority participation in both for security and the public interest, can ensure competition for quality and pricing. Authorised service providers could pay according to usage.

Press reports of a consortium approach to 5G where operators pay as before and the government “contributes” spectrum reflect seriously flawed thinking.3 Such extractive payments with no funds left for network development and service provision only support an illusion that genuine efforts are being made to the ill-informed, who simultaneously rejoice in the idea of free services while acclaiming high government charges (the two are obviously not compatible).

Instead of tilting at windmills that do not serve people’s needs while beggaring their prospects, commitment to our collective interests requires implementing what can be done with competence and integrity.

---

Shyam (no space) Ponappa at gmail dot com
1. https://dot.gov.in/sites/default/files/2018_10_29%20DCC.pdf
2. http://organizing-india.blogspot.in/2016/04/ breakthroughs- needed-for-digital-india.html
3. https://www.business-standard.com/article/economy-policy/govt-considering-spv-with-5g-sweetener-as-solution-to-telecom-crisis-120012300302_1.html

Comments & Responses-2020-03-06

ASIT

Facilitate - that's anathema. Technology has moved too fast and will continue to outpace the convolutions of the bureaucracy. First, they need find who wrote the Rule related to AGR, who signed off on it - it must all be on the record - and let the country know who thought Revenue was all that was important, nothing else. Rescind the definition retrospectively, we love doing that , why not here where it significantly impacts the aam admi ? That may be tantamount to admitting guilt in some form in bad rule writing, but then as the world loves to say, we can all move on - where to, no one knows.

Response re Facilitation:

Two instances where our governments have done well are in IT enabled services pre-2000, and in the automotive sector: “the Automotive Mission Plan (AMP) 2006-2016 was a programme across government agencies, industry participants, and academics, to make India a global hub for the automotive industry. It was successful despite the slumps of 2008 and 2013-14, and employment increased from 10 million to 32 million by 2016. The next phase is under way through AMP 2016-2026(http://www.siamindia.­com/cpage.aspx), aiming to more than double exports to 35-40 per cent of output, and increase employment by 65 million. Momentum has declined in the last year[this was written in Augsut 2019, therefore now two years, and facilitation has faltered], however, because of a number of adverse factors. These include confusion and uncertainty regarding policies on diesel and electric vehicles, trade tensions, slowing gross domestic product (GDP) growth here and abroad, higher costs from mitigation strategies and taxes, and funding constraints arising from problems in the financial sector.”

From: https://organizing-india.blogspot.com/2019/08/the-automotive-slump-industrial-policy.html

NARENDRA M.APTE

1. This is an interesting view on the current scenario in the telecom services sector. 2. I am a very small customer of telecom services, one among the millions. I say that so long as quality of service provided to me is good and so long as service is provided at a reasonable price, I have no reason to favour this or that provider of telecom services. 3. Question is this: should I be really concerned about financial health of telecom companies? 4. It is desirable that there are proper discussions between the telecom companies and the Department of Telecommunications (DoT) as regards final liability of telecomm companies towards AGR dues. These discussions should be held with a simple objective- to end the uncertainty about AGR dues. 5. One wonders what kind of relief our Central government can grant to three telecom companies, particularly to Vodafone Idea, the merged venture of Vodafone and Idea Cellular. In case the govt. grants such relief, who would be the beneficiary? Would we, as telecom services customers, benefit in the long run? Once an amicable solution is found to current problems of telecom companies, DoT should advise the telecom companies to pay the dues as per the solution. If this does not happen, then customer like will face many a problem and there may be unintended ramifications.

Response to #2-4: Should citizens be concerned about the state / health of industry sectors (and telecom in particular)? 

Answer: If the product or service is in the category of Fast Moving Consumer Goods, competition among many providers is generally sufficient to ensure quality and price, provided the market can support a reasonable/realistic price that allows maintaining certain levels of standards.  What’s a reasonable/realistic price?  One that yields a reasonable profit.  What are adequate levels of standards?  Safe, healthy, hygienic and aesthetically pleasing, for instance, for inexpensive biscuits or food items, or soap, in terms of ingredients, cleanliness, attractive presentation or packaging, and waste management.  For infrastructure services, scale of organisation, production and delivery determine the market structure.  Sectors such as electricity, water, telecom, railways, airlines, and fossil fuels are network industries driven by scale.  The structure tends to have no more than a few large players, and these industries usually require regulation to prevent monopolistic exploitation, or are managed as regulated utilities.  For such products and services, the state of the industry determines the availability, quality and price.  This is why it behoves citizens to take an informed view that supports sustainable models for the long term, in order to have stable supply of services or products of good quality at reasonable prices.  Otherwise, they are likely to get shoddy, overpriced, or unreliable services, or as in rural broadband for many people, it may not be available at all.

[e.g., see https://www.sciencedirect.com/topics/social-sciences/network-industry]

#5:

We in India often expect governments or enterprises to provide for our needs without having to think about them.  Whereas as citizens in a democracy, self-government implies the obligation – the flip side of citizens’ rights – to contribute to the maintenance of standards and governance in our communities, including through exercising consumer choice and advocacy.  The objective of any problem resolution should be the sustained common good or public interest, although we have typically not applied such clarity and forethought in our approach.  But having had a democratic franchise thrust upon us without having learned the duties of citizens, we haven’t got there yet.