Rising digital divide due to poor penetration of broadband (BB) is a serious challenge in our country. In a world where daily life is heavily dominated by technology, BB is a double-edged sword which puts in an advantageous position those who have it and can have a crippling effect on those who do not have it. Therefore, taking BB to rural areas where 69 percent of our population lives assumes urgency. Affordable access to BB and ICTs has not become a mass phenomenon like voice mobile. 2G voice mobile remains an unfinished agenda for our country as it has not reached several thousand uncovered villages in remote parts including islands. The government is rightly addressing these gaps of digital divide through various schemes like flagship BharatNet to gram panchayats (GPs), comprehensive plan for NE states, and a recent one, submarine OFC and satellite scheme for islands.

Therefore, doing things right and timely is critical as every single day lost denies rural citizens an opportunity to better their lives.

First, we have to create BharatNet-shared network infrastructure, robust enough and operationally sound, around which partners can do their business. No business model can be built around an unsound operational model.

There is also a need to view BharatNet from the perspective of value chain of interdependent networks - a chain constituted by BharatNet and its upstream and downstream partners and a tandem arrangement of interdependent networks that is well aligned and sustainable forming end-to-end (E2E) connectivity. This is essential to make the program outcome-based to meet the challenges of rural divide.

Present Status

Presently, all resources and attention are focussed on implementation and creation of BharatNet block-downwards covering as many GPs as possible by trenching and laying. As on June 2, 2016 roll out score of active GPs with 100 Mbps available for use is 6954 out of 250,000 GPs. One lakh GPs as part Phase-I are rescheduled for completion by Dec 2016. Since trenching and laying is turning out to be cumbersome and time-consuming, the remaining 1.5 lakh GPs in Phase-II are being re-planned to lay overhead aerial cable on state electric poles of SEBs rescheduled to December, 2018.

No doubt construction of a mammoth pan-India infra called BharatNet is a challenging task but let us also not forget that utilization, maintenance, and sustainability of pan-India BharatNet on a tough rural turf is much more challenging than implementation itself.

These aspects must receive urgent attention alongside implementation since BharatNet is the foundation pillar of Digital India; otherwise, benefits of its several umbrella programs will not reach the bottom of the pyramid (BoP) with 69 percent population in mind.

Value Chain - A Foundational Aspect

Following are some foundational issues critical to fulfilment of end-purpose, i.e., empowering rural citizens by forming a value-base supply chain of investing partners.

Connectivity conundrum. Fundamentally, access to Internet requires four pieces of connectivity - international connectivity, domestic backbones, aggregation networks (aka middle mile), and access networks - last-mile connectivity.

First two pieces constitute upstream core (vertical connectivity). Many of the existing TSPs have IP-based cores available at all 640 districts of the country. A few like BSNL have it at reaching up to block level. These suppliers have to invest to do timely augmentation time to time to cater to rural traffic.

The third piece is NOFN/BharatNet itself positioned as a middle-mile portion - a B2B wholesale bandwidth network from blocks to GPs. Its role is to pick up aggregate traffic from the fourth downstream retailing piece and pass it on to upstream core(s).The government has initiated investment from USOF.

This is a shared fiber-based aggregation and backhaul infrastructure, which all the SPs could connect to in a non-discriminatory manner. It is planned to create100 Mbps bandwidth at each GP.

The fourth piece is the last-mile access network to retail/distribute the total 100 Mbps bandwidth obtained from BBNL to end-users. It is to be created by private investments using technologies best suited to local conditions.

Two more pieces - inter PoP links (stitching pieces). To be precise, there are six pieces for E2E, not four, because PoPs of partner suppliers and NOFN PoPs are not co-located; thus the need for inter-PoP links interconnection amongst them - one upstream of BharatNet POP at block to PoPs of core players, second BharatNet GP PoP to access PoPs (BTS towers, etc.). Inter-Pop distance may range 2-5 km subject to actual survey.

Apart from the government stimulus, other partner investments are essential to use BharatNet for end-objectives.

B2B relationship in supply chain formation. Middle has two sides to manage, one in upstream and the other in downstream. Licensed service operators (TSPs/ISPs/CTV) are direct customers of BBNL on both sides; those having existing core upstream and those downstream who have to use wholesale bulk bandwidth or dark fibers created by BharatNet project and form a B2B relationship with BBNL.

BBNL must proactively play a facilitation and coordination role with both sides and supervise integration of all pieces to align and prioritise BharatNet rollout in synch with investing chain partners. For this, it must regularly engage with both sides. It can initiate the process with 7000 operational GPs already in its inventory as bridging the divide is raison d'être.

Integrating and orchestrating all connectivity pieces. As seen above, E2E connectivity supply is through four partner suppliers with six interdependent pieces stitched together. Each partner makes investments in respective arena making available well dimensioned pieces of network, which are properly interconnected and aligned as per objective framework. Each link of chain is required to cope with bottom-up growing traffic expected to be generated by GPs without bottlenecking of any kind. Value chain formation will not happen by itself unless all interdependent network partners are in a state of win-win?equilibrium in the business world on a challenging rural turf. Each piece of network has its own cost structure, dynamics, lead time to implement, and augment during operations and business viability.

Thus there are clear dependencies crucial to utilization and success of middle mile. Standalone NOFN is akin to a hollow pipe with no bits and bytes to flow from either end and cannot result in BB penetration.

This is just to say that creation of E2E connectivity has its own challenges and, therefore, constitutes a conundrum. This requires urgent action alongside BharatNet implementation as part of the supply side is already delayed. Investments in dependencies and their implementation cannot be viewed sequentially in series but a parallel simultaneous engagement with partners. We have to begin with the end in mind.

Investments in data centers - part of value chain. To take care of commercial services at BoP, timely investments are also required in data centers located upstream where services and apps could reside in servers.

Uncertainties about rollout, robustness commitments of middle mile. First uncertainty is due to frequent shifting of rollout targets and announcement of unrealistic time frames every time - stake holders have lost confidence. Another is lack of showcasing and sharing of details about middle mile, i.e., its robustness, QoS, performance commitments, and operational model deployed. Sharing above details will clear uncertainties and doubts in minds of investors, allow them to do their due diligence, and take an informed decision to participate in value chain.

Nature of rural data traffic versus urban. Rural turf is more challenging. BB supply is a challenge even in some urban and semi-urban areas. Data markets are to be seeded in rural domain through coordination of both supply side and demand side measures. Affordable BB will obviously require some price regulation in last mile for end-users.

If all pieces in E2E connectivity chain function well, aligned operationally assuming E2E availability of 95 percent in rural arena (a tall assumption), the affordable BB at BoP will generate large volume of data traffic bottom-up but its earning potential will not be there. This price-sensitive high-volume rural traffic may not fetch sufficient earnings for upstream core partners compared to earnings from same volume of urban traffic. Upstream operators will hesitate to timely augment their piece of value chain in synch as international Internet bandwidth is still costly, raising viability gap funding (VGF)issues. Inaction on their part will create bottleneck in traffic flow. Despite subsidised NOFN backhaul bandwidth, the last-mile operators in supply chain will certainly have VGF issue for affordable tariff. Each of the above four pieces has its own dynamics, cost structure, and sub-ecosystem around it.

Role of Small Players

As we all expect, small players like Internet service provider (ISP) with type C license can play big role in BB proliferation at BoP. Question is how will the small player fit into the chain and sustain?

Actual use case analysis/calculation is required to know how much ISP with type C license will have to invest in CapEx/OpEx, what level of VGF is necessary to sustain and similarly for different case scenarios of other operators like TSP/ISPs A & B type/CTV, etc., to attract investors at BoP. Picture may vary from state to state, maybe even districts. Accordingly, action to sustain parts of chain can be calibrated. Ignoring these serious studies, sustainability of BharatNet itself is a question mark, which will only consume CapEx/OpEx. No project can be funded in perpetuity.

Institutional Framework for Sustainable Arrangement

As BharatNet implementation needs a rollout lead time, so do upstream and downstream partners. Any mismatch in any of the six segments will not only act as a bottleneck in seeding new data markets in rural areas but also impinge on subsequent growth. Mismatch could be of any kind - capacity, technical, commercial, legal, and coordinational, or investment viability. This also gives a clue as to why there are hardly any takers at already 6954 GPs with 100 Mbps ready for use of B2B partners.

For sustainable arrangement and synchronised roll out of the value chain, there is need for a formal integrating framework for formation of a value chain, viz., upstream-middle-mile-downstream players around BharatNet with formulation of interconnect policy which interconnecting stakeholders can sign with BBNL. In its absence, holistic arrangement partner investors view their investments as risk and are not enthused.

Learning from Power Sector Chain Shows the Way

To appreciate the need and relevance for a well-aligned value chain, let us look at the power sector partner chain, viz., fuel-generation-transmission-distribution. On one hand, about 300 million people do not have access to power and about one-third population undergoes power cuts, yet about 25,000 MW of installed capacity is unable to find buyers, both a paradox and contradiction. The reason for this is that state discoms have been supplying electricity at tariffs far below cost, crippling their financial health. Most of the discoms are unable to buy enough power to cater to their end-customers' needs and even if they can, there are not enough transmission lines to transfer excess power from pockets of plenty to the needy geographies. A pointer to lack of holistic planning across the sector - a growth with fits and starts.

Noteworthy here is that problems of downstream low-earning distribution network send disturbing ripples upstream right up to generation plants leading them to idle capacity. It is another matter that the government then bails out such deficiencies in parts of supply chain like UDAY scheme in distribution part. This is the third-time bail out in power sector.

Value chain misalignment in a relatively simple ecosystem of power sector with huge pent up demand is a learning to reckon with.

In contrast, there is a complex BB ecosystem where demand is to be generated through concerted efforts toward affordable devices, relevant content, and apps and digital literacy. Sustaining a value chain around BharatNet is a challenge without attending the above issues. It calls for immediate attention for holistic review from value chain perspective.

Sustainable value chain around BharatNet is a must. No business model can be built around an unsound operational model and unsustainable chain. Power sector shows the light and learning without repeating similar history in telecom sector. Left unaddressed, mass penetration of BB would occur in fits and starts. Digital India will become a distant dream. The divide is too serious to ignore.




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