RESPONSE TO TRAI’S CONSULTATION PAPER NO. 16/2004 ON GROWTH OF TELECOM SERVICES IN RURAL INDIA Issues for Consultation 1. This consultation paper has discussed various issues related to Growth of Telecom Services in rural areas. Please give your comments on them and suggest any additional point to achieve higher growth of telecom services in rural India. The definition of Niche operator should be enlarged to include all districts where the rural tele-density is less than 3%. The Niche operator should be allowed to provide communications only in the villages. 2. Should ‘Niche Operators’ as discussed in this Consultation Paper get a support from Universal Service Fund? Yes. Niche operator should be able to bid for Universal Service Fund. 3. Instead of subsidizing final product, should the subsidy be given on inputs like Bandwidth and spectrum charges? Yes. Subsidy of bandwidth, spectrum charges and tower is more desirable. 4. In this paper it has been proposed that telecommunication facilities capable of offering multiple services including telephony using modern wireless technologies for access offer a near self sustaining model in rural areas which can be implemented through subsidization of input costs from Universal Obligation fund. Do you agree with this proposition? Offer your comments. Yes. The services to the villages are almost sustainable. Some help from USO would make it fully sustainable. 5. For increasing the percentage population exposure to cellular mobile services, should sharing of infrastructure such as buildings, tower, etc, be mandated through regulation with appropriate commercial compensation being provided to owners through regulatory intervention? Yes. This is a good suggestion. However, the regulation needs to be done only for districts where rural tele-density is less than 3%. 6. Do you visualize any other initiative which should be taken by TRAI as to achieve the growth of telecom services in rural India? TRAI need to ensure that 2 Mbps leased lines from the district Head Quarters to the state capital be made available to ISPs and to Niche operators at a low-cost. I would suggest a charge of Rs.2.0 lakhs for a 2 Mbps link. 7. Do you think that we can sustain USO subsidy model in the long run? USO subsidy needs to be phased out gradually. 8. Locally relevant software will have to be developed. What steps could be taken to develop such software and data base and what should be government role in this? Government must make available all its services on Internet to whoever can deliver. Once the number of village kiosks pick up, the software will be developed. 9. Share your experiences within and outside the country which established the linkage between growth of telecom services and economic growth of an area with particular reference to rural area economy. The key problem in our experience has been getting the leased lines, even when fibre is available. Much tighter regulation is required. The key bottleneck is no longer electronics/wireless to provide connectivity. However, a 64 Kbps Internet leased line in a district still costs Rs.2.0 lakhs per year. Spectrum charges are high (for example Rs.2.0 lakhs per year for two corDECT frequencies). The third biggest bottleneck is tower cost ⎯ about 10.0 lakhs in a district. Further, 64 Kbps Internet at a district Head Quarter is totally inadequate. We need 512 Kbps today, growing to 2 Mbps. VSAT Services Association of India 103, Ashoka Estate, 24 Barakhamba Road, New Delhi - 110001 Tel. : 91 11 2335 0633 Fax : 91 11 2372 3909 Novembere-mail: [email protected] 30, 2004. website : www.vsatindia.org Comments on TRAI Consultation Paper on Growth of Telecom Services In Rural India. Our response to “Issues for consideration” ( Chapter-7 on Page 32 ) Issue No.1: Our comments on the captioned consultation paper may please be read in conjunction with the comments on Niche Operators submitted to TRAI on 01 September 2004. Copy attached for ready reference. Issue No. 2: Niche Operators must get support from USO Fund. Issue No.3: Subsidy should be given on inputs like bandwidth and spectrum charges. As far as VSAT services are concerned bandwidth should be read as transponder space on satellites. In fact bandwidth should be provided free of cost for first 3 years or till the time tele-density (including Broadband/Internet connections) in the area of operation reaches 5%, whichever is earlier. Issue No.4: Start-up input costs should be subsidized from USO Fund. Issue No.5: Sharing of infrastructure, wherever required by the niche operator, should be mandated thru regulation with appropriate commercial compensation provided to the owners thru regulatory intervention. Issue No.6: Wherever the operator chooses to deploy VSAT technology, the interconnection to the nearest SDCA may necessitate deployment of one extra VSAT at the SDCA end. This input cost can be avoided if the inter-connection is allowed to the TAX nearest to the Hub Station. Issue No.7: The task of developing local relevant software should be entrusted to the State and/or the Central Government and supplied to the operator free of cost. Issue No.9: The e-Choupal experience of ITC has proved that erection & maintenance of towers for wireless services is more expensive and requires much more time & effort ( on account of cost of land, ownership issues, local clearances etc) as compared to servicing the intended area with VSATs. Yet, looking at it from another angle ITC e-Choupal initiative has proven that VSAT connections, despite the higher set-up costs, help recover investment faster than non-VSAT -Choupals. (As quoted by Mr. V V Rajasekhar, Chief Information Officer ITC) ------------------------------------------------------------------------------------------------------------------------ --------- VSAT Services Association of India 103, Ashoka Estate, 24 Barakhamba Road, New Delhi - 110001 Tel. : 91 11 2335 0633 Fax : 91 11 2372 3909 Septembere-mail: [email protected] 01, 2004. website : www.vsatindia.org Bridging the digital-divide : On ground! Need to walk the first step! 1. PREAMBLE: It is obvious that a serious “Think Tank” process is underway within the Govt. circles to bridge the urban-rural digital divide “on-ground” compared to the historical efforts made “on- paper”. There is very little to show on this account for two basic reasons:- ¾ Lack of accountability by the incumbent telco. Thousands of crores of tax payer money has been spent in the first 50 years after independence to create telecom-infrastructure in rural areas. The laid down criteria to declare a village connected has been to place one telephone in the Panchayat office (exactly in the manner a village is declared electrified with just one light connection given to the Panchayat). Thereafter, it is nobody’s concern whether or not the reliability/availability of this service is 10% or 70%. Reason: No accountability and extremely poor maintenance culture. ¾ Lack of financial viability for private telcos: Private telcos, otherwise capable of providing more reliable service than the incumbent (something which is proven without any iota of doubt in the urban areas.), have found it financially unviable to meet the rural-area roll out-obligation incorporated as a license condition. This is in spite of all efforts by the Govt., even to the extent of threatening to cancel their licenses. 2. TRAI, mandated with a clear objective to bridge the digital-divide and a task to perform, is fully seized of this ground reality. The ingenuity of TRAI in introducing an entirely new category of telecom service provider, a Niche Operator, is an honest admission of the above stated facts on part of the Govt. This type of service provider has been included in TRAI draft recommendations on Unified License Regime. 3. This may as well prove to be the first step in fulfilling this “so-far-elusive” objective, truly & effectively on-the-ground. But then, a toddler - the Niche operator - must be encouraged to walk a few steps, before running on its own! More on this in the succeeding paragraphs. 4. FOCUSED APPROACH: Public sector telco failed us because of lack of accountability. Private operators failed us because their business focus remained in revenue earning areas. 5. In comparison, the Niche operator will have no option but to focus in the designated SDCA. Once an entrepreneur decides to become a Niche operator, it will have no choice but to focus on its area and will, therefore, concentrate on making the business viable and breaking-even at the earliest. This may well prove to be the trigger to bridge the digital-divide. 6. CHOICE OF TECHNOLOGY: In the initial stages, the traffic in the area of operation of the Niche operator will be very thin. Therefore, the initial cost of infrastructure must be minimal. Laying terrestrial infrastructure to inter-connect with the nearest existing infrastructure is, therefore, ruled out. To see what other technologies this operate may choose from, it may be necessary to refer to TRAI recommendations on Broadband wherein a reference has been made to the VSAT technology and we quote:- “While satellite connections are typically more expensive than other methods of delivery, they provide a viable option to rural and remote areas that have no other real broadband options. Additionally, simplicity in network design, reliability, and rapid deployment are other examples. However, for point-to-multipoint occasional use applications where bandwidth is required on a C:\Documents and Settings\KULDEEP\Desktop\Comments backup\COMMENTS ON RURAL1 TELEPHONY 27 -10-2004\VSAT Association1.doc part-time basis, satellite consistently proves most cost effective. It is also the only technology that boasts of 99% coverage of world landmass.” Unquote 7. Rightly so, TRAI has permitted use of fixed wireless networks only. However, for the sake of clarity, we have already suggested that the following be included in the final recommendations on Unified License Regime:- “Niche Operators: These operators shall however, be permitted to use fixed wireless and / or VSAT networks in combination with the cable or fixed wireline networks.