Private telecom operators renege on rural commitment

The government's plan of one telephone in each village still remains a distant dream, with rural telephony, so far, being only all talk and very little of walking-the-talk!

Even private basic service operators who have to offer a specified number of rural connections as per their licence conditions are yet to fulfil them. It seems that contravening the licence conditions has now become the hallmark of all telecom operators, be it mobile or basic services.

The parliamentary estimates committee has commented upon this sorry state of affairs in its recent report.

The committee has also pulled up the government for lack of decisive action taken against private telecom operators reneging on the licence commitments relating to rural connections. Expressing its concern over steady decline in budgetary allocations for rural sectors, the committee has highlighted the absence of a separate organisation to look after rural telephony.

This brings us to the question, if the existing private basic services operators are not able to offer the much-promised rural connectivity, then why not have a separate set of service providers called Rural Service Providers (RSP) exclusively for rural areas at all?

Interestingly, favouring such a policy direction, the Tamil Nadu government has written to the Centre some time back but it is yet to get a reply.

Remarks Dr. Ashok Jhunjhunwala, head, department of electrical engineering, IIT-Madras, and head of corDECT Wireless in Local Loop (WLL) technology, "The technology and the equipment being used by basic services operators now is expensive. To see a return on their investment, they will be focussing only on the high revenue generating urban centres."

While opening up the telecom segment is a step in the right direction, policy directions there after are not conducive for expanding the telecom network to rural areas. According to him, India has less than 30 million telephone and less than 2 million internet connections. "India needs a minimum of 150-200 million telephone and internet connections if it has to become a knowledge-based economy," he asserts.

Contrast the number of telephone connections with that of cable TV connections in the country. "We have more than 40 million cable TV connections, all in a matter of eight years," remarks Dr. Jhunjhunwala. This, according to him, was possible only because the cable TV industry is predominantly run by small operators and services are affordable to most sections of the population.

"But it’s not so in the case of telephones," he argues. For instance, a private basic services operator has to invest around Rs. 500 crore to roll out his services in a state circle. The high
investment and operational costs would force the player to target only the urban centres, often totally neglecting the rural areas.

According to Dr. Jhunjhunwala, "The cost per line is not less than Rs.32,000 and the revenue required should be at least 35 per cent of the investment for the operations to breakeven." He says that in developed countries, it costs much less and requires just $350 per line per year to service. Hence, it is affordable to 90 per cent of the population.

In order to maintain their earning levels, western telecom equipment companies started their research and development (R&D) focus to provide add-on benefits to subscribers but not on reducing the capital equipment cost, he opines.

On the other hand, the Indian conditions are entirely different. The vast majority of the population needs a telephone and internet connection at an investment of Rs.10,000 per line. "If that happens, the total number of telephone connections would jump to 150 to 200 million and will be affordable to many," Dr. Jhunjhunwala argues.

corDECT WLL that Dr. Jhunjhunwala propogates costs around Rs.20,000 per line now. This will come down if the technology is deployed on a mass scale, he asserts. The attractive feature of this technology, having a coverage radius of 25 km and catering to 1,000 lines, is that it allows simultaneous access to voice and internet traffic at 35/70 kbps.

"Telecom operators can earn higher revenue as it is virtually two lines with a capital cost of one. The system has all the features of a modern exchange like call waiting, hotline, follow me, call transfer, call conference, etc.

Given this technology that has been proven elsewhere in the world and which is being used by the Mahanagar Telephone Nigam Limited (MTNL) and the Bharat Sanchar Nigam Limited (BSNL), he recommends having a new category of service provider called Rural Service Provider (RSP).

As per his scheme of things, the RSPs will operate in all areas of the country except in towns with a population of one lakh or more. The RSP would be eligible to connect to a state-wide telecom operator (BSNL/private basic service operator) at the nearest point, paying connectivity charges as per the applicable norms.

"As rural connectivity is the core focus of RSP, there should not be any licence fee or revenue sharing with the government, at least for the first 15 years. Further, there should be no frequency charges an RSP for the first ten years," suggests Dr. Jhunjhunwala.

The RSP should be made to pay the other charges that a basic operator now pays, including physical connectivity to the nearest BSNL exchange; 40 per cent of the STD call charges for all STD calls routed through BSNL network and 55 per cent of international call charges for international calls routed through BSNL/VSNL networks.