OECD Workshop on Coherent Policies for Inclusive Development

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1 OECD Workshop on Coherent Policies for Inclusive Development Information Access Stake for Developing Economies Amitabh Singhal Director Telxess Consulting Services Pvt Ltd Founder/Former President ISP Association of India Founder Member/Former CEO National Internet X change of India amitabh@amitabhsinghal.in

2 Key Indian ICT Attributes.1 Personal Computers 22 million Fixed Line Phones million Valid ISP Licenses 375 Nos ISPs providing Services (UASL + ISPS) 120 Nos Internet Subscribers (PC access) 9.50 million Broadband subscribers 2.67 million High Speed Internet subscribers 1.50 million Mobile Telephone Subscribers 220+ million Internet Access via Mobile 40 million Public Internet Kiosks 0.1 million Common Service Centers planned (Rural) 0.1 million

3 Key Indian ICT Attributes.2 PCs being added p.a. 7 million Mobile Subscribers being added p.m. 7.5 million + Internet users in India 50 million Internet users using public access > 50% Internet users dependent on public access 30% approx TV sets 10 million Cable TV subscribers 60 million No of Cable Service Providers 60,000+ DTH Subscribers 5 million TV channels Approx. 275 Radio Channels Software Piracy Rate 71% Internet Access Providers w/o own IP addresses >25%

4 Key Indian ICT Attributes.3 Domain Names registered under.in 0.30 million Accounts (Bank/Transaction/Trading/Card) with Internet mode activate 10 million+ Type of IP Addressing used IPv4 Internet Subscribers using dynamic / private IP addresses 90% + Unrestricted length for encryption on Internet (law) 40 bits max Contribution of IT/ITeS sector to National GDP 5.4% Contribution of Telecom to National GDP 2.8% + Potential for ICT sector contribution to National GDP by % No. of Certifying Authorities Licensed to issue Digital Signature Certificate 7 Digital Certificates issued (till 2006) 0.35 million

5 Telecom Policy Hallmarks.1 National Telecom Policy 1994 to Recognizes Telecom Development as a key ingredient of economic reforms 2. Also recognizes telecom as essential to build competitiveness and gain FDI 3. Tele density at this point is mere Sets objective of telecom for all at affordable prices and achieve universal service 5. Announces introduction of competition in various services. 2 Pvt Cellular licenses per circle. 1 PSU license allowed. Total 3 Similarly 3 Basic Telephony operators are introduced. Unlimited competition in VAS like , Video, Audio Tex, Video conferencing, Data Services ushered in Radio Paging also introduced. ISP services opened up in 1998

6 Telecom Policy Hallmarks.2 National Telecom Policy Realizes that 1994 objectives have not been met 2. Re-iterates Telecom Infra & Services as key to Economic Development 3. Emphasizes upon Geographic & Universal coverage 4. Creates greater competitive environment more than 2/3 operators for CMTS & FSP 5. Shifts CMSP/FSP to One time entry and Revenue Share License Fee 6. WiLL (limited mobility) as option opened up for FSPs 7. Does not consider opening up Internet telephony, but promises to review Opens up ILD sector International connectivity improves Bandwidth availability goes up manifold 2. Restricted Internet Telephony allowed. VOIP as technology option allowed for Telecom networks. USO Fund is established 1. 5% of Telco s License Fee goes to USO. $ 3 billion collected till Provision of Village Public Telephone. Add 2 nd community phone. 3. Provision of DEL to remote/rural households.

7 Telecom Policy Hallmarks.3 UASL Licenses in Most Cellular and FSPs migrate. 2. FSPs with WiLL allowed to migrate to full mobility with CDMA 3. As of Aug licenses across Circles. * Circle wise licenses. No pan India license. Effectively 6/7 operators per circle 4. Fiscal incentives like IT exemption, Infrastructure status, Duty relaxation, etc. were provided. Currently reviewing reduction of taxes and levies. TRAI Internet/BB Recommends Local Loop Unbundling Broadband Policy of Recognizes role of BB in societal development through tele-med, tele-edu, e- governance & entertainment 2. Sets target of 40 million Internet subscribers/20 million BB by mill by Sets up 256 Kbps as BB definition. 4. Recognizes potential of DSL, promises to review and consider LLU in One Year 5. De-Licenses GHz and moves to deli cense GHz VPN disallowed to ISPs. Allowed only with NLD/ILD additional license

8 Telecom Policy Hallmarks Access Providers allowed Unrestricted Internet Telephony 2. TRAI re-iterates to Government, the need for ULL USO - Indian Telegraph Act amended to include Mobile Services & Broadband Tower sites in 22 states being subsidized 1. Expansion of OFC network being considered. Call for Technology Pilot projects on in rural areas. 2. Mandates BB connectivity to all CSC connecting to primary schools, health centers & village HO. ISP License Review New norms incorporated. Entry Fee and 6% revenue share imposed 2. TRAI disallows but Govt allows IPTV to ISPs if Co net worth is $25 million 3. Internet to Domestic PSTN telephony still disallowed 4. Encryption limit retained at 40 bits. 5. FDI downgraded from 100% to 74% 6. More stringent security and management structure norms introduced 7. Improvement Moves from SIP/H323 devices to Adaptor, device for restricted IP telephony

9 TELECOM INDUSTRY STRUCTURE: Converged/Unified at the Top: Branches Out at the Bottom Apex Law Making Body Parliament ( Parliamentary Committee on IT & Communications ) Amendments, New laws!! Ministry of Communications & Information Technology Decision Making on Policies & Plans!! Telecom Commission Mostly DoT, Part timers from DiT, MoF, Planning Commission, DIPP etc. Department of Telecommunications TC/DoT Policy, Licensing, Spectrum Mgnt, Equip. validation, PSUs. Telecom Regulatory Authority of India (Amended 2000) Regulator of Telecom Services & Broadcasting and Cable (carriage and not content). Recommends New services introduction, License Terms, Interconnection terms. Powers of Tariff. Telecom Disputes Settlement & Appellate Tribunal Industry Associations & Lobby Groups. Consumer Groups (weak). Poor forum for individual complaints. Various Service oriented licenses Technology Neutrality Yes but Service Neutrality - No Communication Convergence Bill 2001 Never passed

10 Implementation Status Telecom Source TRAI 10th Year Report (Tech Neutrality at the Core of Telecom Growth)

11 Implementation Status - Telecom Success Marks Telco s in each area.158 Licenses, 476 waiting.13 ILD, 9 NLD. 11 VSAT Licenses, 95 Paging, 14 PMRTS, 1800 OSP registrations. 2. Mobile the fastest growing segment million subs addition per month million 4. 2g GSM & CDMA 5. Wimax Trials and Pilot Projects on 6. Tele density As of October % 7. Ahead of Targets. By million 8. Reason Low entry, low call costs, expected to go down further 9. Movement Towards 3G and BWA has begun TRAI Recommendations in 10. Very High Valuations, attractive ROIs, 70% of India still remains un-served Shortcomings & Failures 1. Wire line subscribers declining month to month 39 million odd 2. Broadband/Internet /Data Services flat. Hardly growing. Area of Concern 3. Lack of Business Model, Poor ROIs, Hosting services not competitive 4. Connectivity, reach and penetration poor. Poor PC penetration & use. 5. Issues of Language, locally relevant content are often cited as prime problem areas 6. Lack of Optimal use of technologies and services e.g. VSAT (30K base), DTH, etc.

12 IT Policy Frameworks.1 Department of IT with various Autonomous Societies Envisions IT led Economic Growth. Aims to provide BB connectivity to all, promote internet use, promote PC penetration, Promote E-governance, Language Software Information Technology Act IT Act created the legal framework for adoption of electronic signatures 2. Provided legality to documents in electronic form 3. Provided penalties for certain forms of Computer crimes Review 2005 till date 1. Aligning to UNCITRAL Model Law on E-Commerce, OECD Privacy Guidelines, CoE Cyber crime 2. To Replace Digital Signatures with Electronic Signatures (to ensure technology neutrality) 3. Revisiting Data protection and Privacy clauses 4. Proposal to identify different forms of Cyber Crimes and prescribe rigorous penalties

13 IT Policy Frameworks.2 Semiconductor Integrated Circuit Design Layout Act To provide IPR Protection 2. Set up a National Registry for the purpose securing Design layouts and confer commercial rights. National e-governance Plan of Result of Government s National Common Minimum Program 2. To bring about change in the way Govt interacts with Citizens, Business and with itself. 3. to harness ICT capabilities to increase efficiency, enhance effectiveness and improve quality of the government service 4. $5.5 billion+ layout with 28 Mission Mode Projects 5. Capacity Building & Institutional Framework of e-gov given to states to address capacity building Electronics/IT Hardware Manufacturing Policies 1. Aim to promote globally competitive manufacturing of ICE Hardware/components 2. Identify disability factors ie. Taxation, logistics, Infrastructure, etc and address them

14 Implementation Status - IT Success Marks: Source Nasscom Reports 1. IT Industry $ 47.6 billion (5.4% of India s GDP) 2. On track to achieve $ 60 billion by Domestic ITeS & BPO industry grew 33.5% - $8.4 billion 4. Reasons cited are Liberalization, Minimal Government intervention and Regulation, improving Infrastructure e g international connectivity and growing global integration, amongst others. Shortcomings & Failures 1. Underinvested in Domestic IT 3.6% of capital only. India fares poorly. Contributes less than 1.6% to GDP growth 2. Domestic IT capital investment should reach 10% for it to contribute 3.5% to GDP. 3. Low Income Levels, High Software Piracy rates, low PC and Internet penetration, continuing issues of urban rural divide are some factors to address 4. Successful NeGP program implementation seen as a driver to sustained growth of Domestic IT services and consumption So Whats this NeGP program? Lt s look =

15 NeGP Status - IT National e-governance Plan framed by Department of Information Technology. Harness capabilities of ICT, to improve basic governance and deliver services transparently, reliably and efficiently to the locality at affordable costs. Implementation Programs: Enhancing Infrastructure 1. SWANS 29 states/6 UTs to set up state networks with 2 Mbps $0.85 billion State Data Centers to become e-gov application and service repositories, connected to CSCs 3. CSCs 100k BB enabled rural outlets to deliver services at doorstep. Total outlay $1.4 billion 4. E-District Pilot Projects to deliver web based services birth/death certificates, land records, e-filing police complaints, inclusion in electoral rolls, etc.

16 e-government Projects Bhoomi Project Karnataka govt project launched 2001, completed Computerized 20 million rural land records involving 8.5 million farmers. Records upto 100+ year old Right Tenancy & Crop records with finger print authenticated IDs. 800 delivery centers. Getting sporadically emulated in other states. Fraud entries, Gender issues and Rich Poor gap issues remain. E-SEWA AP Govt project to set up community delivery points to provide 30+ online G2C services, including online bill payments. Good Governance initiative in 2 nd phase with financial & technical support from DFID, UK Gyandoot Gyandoot, in the Dhar district of Madhya Pradesh, creates rural cyber cafes and offers over thirty five different e-governance, e-commerce and e-learning services. E-Panchayat Village HO level on-line services, providing information on Rural Technologies, Certificates and other services online.

17 e Government Projects Agrisnet Government of India has launched a Central Sector Scheme titled, Strengthening / Promoting Agricultural Informatics & Communications of which one component is AGRISNET. The objective of AGRISNET is to provide improved services to the farming community through use of ICT. E-Choupal (Corporate) ITC initiative with farmers community managing internet kiosks. Information in local language on weather, scientific farming practices, market prices, doorstep sale of inputs and produce.

18 Selective OECD Principles Source: OECD paper BB Driving Growth, Oct 2003 Success of e-governance plans will be enabled by increased disbursement, consumption of ICT to improve efficiencies, transparency to masses which will hinge on incremental availability of Broadband. AREAS WHERE WE FARE WELL ON PRINCIPLES: 1. Effective competition and continued liberalization in infrastructure, network services, applications in the face of convergence across different technological platforms whilst maintaining transparency. 2. Policies are encouraging for new investment in new technological infrastructure. Technologically neutral policy. Continued reassessment and consistency of regulatory frameworks 3. Liberalization of telecommunications markets 4. Private sector investment with complimentary govt initiatives 5. USO initiatives and NeGP plans are examples of pro-active government plans 6. Provision of e-government and general information & services, health and education to drive demand - is being attempted 7. SUM = Liberalization, Pro-competition policies, Technology Neutrality, Open Market Access mostly in place. Last mile lap remains.

19 Selective OECD Principles Source: OECD paper BB Driving Growth, Oct 2003 Success of e-governance plans will be enabled by increased disbursement, consumption of ICT to improve efficiencies, transparency to masses will hinge on incremental availability of Broadband. AREAS WHERE WE FARE LOW ON PRINCIPLES: 1. Competition exists but considerably skewed esp. in the Broadband/Internet space. 2. Few ISPs mainly Telco s hold over 80% market. Evidently a Regulatory failure and not Just a case of market failure 3. Regulatory reviews on Pricing and Tariffs under Question 4. Technology Neutrality Yes, Services Neutrality (VPN / IP Telephony). Allowed Legally but available illegally! IP Telephony open House being planned 5. Useful domestic content still an elusive factor. Ample Funding in Infra, but not visible in Content and Applications Development 6. Internet/BB availability and diffusion extremely poor subscriber base under 1%, user base 5%. Mobile internet claim under 5% 7. Telecom penetration geographically limited to 30% currently 8. Nasscom report India lags behind in R & D (indicated by no of tech publications) 9. Trust & Security in ICT based transactions not up to mark. Consumer confidence in QoS very low. Consumer redressal a painful issue 10. IPR & Digital Rights Management a grey area still (increasing no of complaints against ISPs) * Indian BB to Internet ratio is nearly 25%. OECD ratio is just 18%

20 Challenges Faced Geographic: 1. Large area, extremely varied topography, Huge tracts inaccessible and inhospitable. Appropriate Technologies often a challenge to adapt to. Makes implementation expensive Social & Cultural: billion - 1/6 th of earth s population. GDP $ 1.09 trillion. Under 61% literacy rate (iwatch). 90% dropout rate between KG to 12 th (iwatch). Quality Vocational training virtually non-existent. (Silver lining majority age bracket 16-45) Languages, 22 scripts. Extremely heterogeneous, with cultural barriers to modernity adoption 3. Low Income Levels, Low Purchasing Power (Per Capita Income is $964) 4. High costs of CPE and bandwidth ownership 5. Perceived Need for Data limited. Sectoral: 1. Policy & Regulatory unpredictability. Bureaucracy dependent 2. NFAP not reviewed since Norm is to do so every 2 years 3. Regulatory independence and dependability maybe an issue 4. Transparency in Decision making (eg 2g vs 3g) often questioned 5. Often slow to change from monopolistic legacy.

21 Possible Roadmap India needs to speed up ICT consumption to sustain 9%+ growth rate and improve its Global Competitiveness Index rankings. National level Scaling up and commercialization of e-government and other pilot projects Also scale upwards from 2Mbps. Not enough to adopt, run, maintain useful applications. PC penetration related to costs is an issue too Some technologies have interconnect issues. Hence limited exploitation Voice services successful. So will Video/animation applications. Biometrics a traditional application, in ICT form, can become most common security/trust application Investments in Renewable/Alternate Energy sources for telco infrastructure Bringing down current levels of trade and tariff barriers Internal/External 1. Need to review bandwidth prices constantly 2. Need to open up, Full Throttle ULL/PPC issues. VOIP. Telco Pan India licenses. 3. Regulation needs to be service neutral and SP neutral. Need not be business umpires in the name of Level playing field. Blind to market failure in the Internet/BB area

22 Possible Roadmap 4. Regulation needs teeth /independence spectrum, standardization, decision making (absolute only for tariffs). Often is pro-gov or anti-gov 5. Duty structures are still a hindrance to spur local manufacture 6. Import tariffs need to keep coming down, for better global assimilation of trade & industry 7. Need comprehensive study to track Annual Average Contribution by Internet/BB to National GDP 8. Satisfactory Resolution of Spectrum issues for 2G, 3G and WBA 9. Incremental input by Donor agencies, International Investors in Indian Community e-projects. Govt can disburse funds with RoR guarantee. Could be part of $ 250 billion Forex reserve plan. Projects need to be built ground up rather than hand-me-down. Local community s financial stake holding will be essential. Successful example of rural road expansion projects exists. (World bank. IFC, UNDP involved to an extent)

23 Thank You

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