The telecom sector has one paramount objective and that is growth of broadband, both in geographical terms and in terms of numbers. For geographical growth, broadband access in rural areas has to become all-pervading whereas growth in numbers has to come more from the urban areas. These require a well-developed backbone network, suitable last-mile technology for rural areas, and enough bandwidth to handle resulting data traffic.

For backbone network, the NOFN project had been taken up but its implementation has been a failure. Recently, TRAI has come up with recommendations for the involvement of private sector also as against the present approach of involving only some public sector companies, through a PPP model. The proposals are interesting inasmuch as they offer incentives in the form of coverage of capital as well as operational costs. There are, however, questions about whether private operators will be sufficiently enthused with these incentives alone to go to the rural areas in view of the not-yet-proven rural data market. It is unlikely that present data tariffs will attract many rural customers. Besides, it is likely that the applications of interest in rural areas may be quite different from those in urban areas. In view of these uncertainties, the way forward could be that besides the incentives proposed by TRAI, further incentives are offered to operators in the form of reduced USO levy based on rural coverage of data networks and the number of rural broadband customers.

Another advantage that will accrue out of the above-suggested incentive will be that with the broadband subscriber-based incentive, operators will have more reason to set up 3G and 4G networks as the last-mile connectivity in rural areas. The present thinking of using Wi-Fi for last-mile connectivity has its limitations as a very large number of Wi-Fi hot spots will be needed to cover even a single village.

In urban areas, broadband growth is hampered by limited bandwidth with operators, which results in unsatisfactory experience of broadband. To mitigate this situation, more spectrum has to be made available. Fortunately, government has come up with a proposal to auction nearly 1400 MHz of spectrum. It is a different matter that for once, more is on offer than what the sector is capable of handling considering the base price for various bands of spectrum and the heavy debt burden that the sector carries. In particular, of concern is the base price of the attractive 700 MHz band. The 800, 900, 1800, 2100 and 2300 MHz bands are likely to be picked up due to the well-established ecosystem and existing installations in this band. However, it is unlikely that the sector can afford the luxury of a spectrum (700 MHz band) that they will hold for considerable time before the ecosystem develops and also that the debt-ridden sector can find funds to buy this spectrum. Of course, one possible solution can be that deferred-payment arrangement is offered, which is linked to commissioning of the network and start of revenue accrual. Immediate non-availability of 700 MHz band in service is not likely to have much impact on broadband growth in the near future.

Another area that needs attention for the growth of broadband is the development of applications specific to rural area customers. This may require, at least for some time, for service providers to be able to offer discriminatory tariffs. This is directly in conflict with the recent TRAI order on net neutrality. While net neutrality is desirable, we may not be ready for it as yet. A relook at the timing of this order is, therefore, desirable.


 

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