India has suddenly decided to go cashless on a war footing, so it is imperative to take internet to every village
Like millions of social media addicts, Shahnaz, who cooks in people’s homes for a living and lives in Gautampuri, Delhi, loves WhatsApp. Hopping from kitchen to kitchen, she likes to stay in touch with family and friends. Her two daughters and son, all school-going, make use of the internet connection on their mother’s phone. She also gets messages about homework and timetable changes from their teachers. Trouble is, every time she decides to go to her parents’ home in Ghawana, Aligarh district, she is completely cut off. The poor connectivity in rural Aligarh, barely 170 km from the national capital, is a problem faced by millions of people living in semi-urban and rural India, leave alone those living in difficult terrain.
This lack of connectivity is a major stumbling block to the government’s larger goal of a cashless India, which began with demonetisation. Because if Shahnaz cannot access the internet in Ghawana, it will not only bar her from checking WhatsApp but also from carrying out many financial transactions.
After all, India has to shift fast to digital payments. The figures are encouraging: information and technology minister Ravi Shankar Prasad told the media in December that digital payments increased in the range of 400-1,000 percent. And this was without counting transactions over Mastercard and Visa. In his budget speech, Arun Jaitley set a target of reaching 2,500 crore digital transactions by March 2018. In addition to digital modes of payment like unified payment interface (UPI), unstructured supplementary service data (USSD), immediate payment service (IMPS) and debit cards, the government also plans to make available an Aadhaar-based payment system to help people unfamiliar with debit cards and mobile wallets: transactions can be authorised with fingerprints. Banks have set a target of introducing 10 lakh new PoS machines by March and 20 lakh Aadhaar-based PoS machines by September. Ration shops too are to be made cashless with PoS machines. If everything goes according to plan, Niti Aayog CEO Amitabh Kant reckons, India could well be a cashless and paperless society by 2025. Non-cash transactions are 22 percent of the total right now; by 2023, he believes nearly 80 percent of the transactions will be cashless.
Whether it is for learning, banking, communicating, accessing government services, investing in the stock market or starting a social media campaign, access to the internet has gone beyond being just a need. And after demonetisation, and the movement towards a cashless economy, stalwarts of civil society and those who believe that advocates of technology have begun to recognise that equitable access to the internet should be approached as if it were a right: a new RTI, so to say. Or, as the late Devang Mehta of Nasscom had envisioned it more than two decades ago: roti, kapda, makan and bandwidth.
“I dream of a Digital India where high-speed digital highways unite the nation. I dream of a Digital India where 1.2 billion connected Indians drive innovation,” prime minister Narendra Modi had said while launching the Digital India initiative. In August 2014, shortly after he took charge, Modi’s cabinet had committed a trillion rupees to the project. A year later, there was a grand launch, with senior ministers, defence services chiefs and leading businessmen in attendance. Telcos, on their part, committed to investing Rs 4.5 trillion in their for-profit businesses connected to Digital India. A coffee-table book distributed on the occasion said the programme would ensure “internet access at every nook and corner of the country”, provide broadband access to 600 million rural citizens and 7.5 lakh panchayat-level institutions, including schools and hospitals.
The intentions were grander: the government wanted to bring about “minimum government, maximum governance” and Jan-Dhan accounts and Digital India were among the instruments to achieve that. But the sub-goals were a rehash of those of the National Telecom Policy of 2012, which envisaged net for all by 2020.
Digital India is now in its third year. But the state of connectivity has hardly improved. Most internet users are from the higher or middle income groups, mostly from cities and towns, and predominantly male. “There is not one project [under Digital India] which has yielded outcomes yet,” says Mahesh Uppal, an expert on telecom regulation and director, ComFirst India.
India ranks among the lowest in providing access to broadband: by fixed broadband per 100 people, India is 131st, and by mobile broadband per 100 people, it is 155th, according to the International Telecommunication Union (ITU), a UN body. In the overall ITU ranking of 2016, India stood 138th – sandwiched between Nigeria and Sudan. (The ranking went down by three points from 2015.) Only seven percent of Indians (about 91 million) have access to broadband; the global average is 46 percent. And as far as internet at 4 Mbps and 10 Mbps goes, India ranks 107th and 70th respectively. Uppal even disputes the Internet and Mobile Association of India (IAMAI) report of 2015, which says upward of 400 million Indians have internet access. “It would be half that figure,” he says.
Given that dismal picture of internet penetration – not to mention the skewedness in favour of the well-to-do – it’s not difficult to imagine the complexity of providing connectivity in the villages. The infrastructure is expensive, the economics unfavourable. Private players, always in a rush to win contracts for urban circles, shun rural areas, because demand is low there. This leaves the government – which generally cannot muster adequate funds or run a service efficiently – disadvantaged.
It’s not as if the government is doing nothing. The BharatNet project – the new name of the National Optical Fibre Network (NOFN), approved in 2011 – aims to take high-speed internet to 2.5 lakh village panchayats. According to the report of a high-level committee of the PMO, the success of Digital India hinges on the success of the optical fibre network. It was conceptualised in 2009, when Sam Pitroda was adviser to prime minister Manmohan Singh on information, infrastructure and innovations. The plan was to be rolled out in three years, but has missed several deadlines.
Telecom secretary JS Deepak says his department will present a revised rollout strategy to the cabinet in March. It envisages public-private partnership and sets a December 2018 deadline. Apprehensions abound.
In 2009, an Indian Telecom Services (ITS) official wrote a paper assessing the cost-benefits of using WiMax (wireless), ADSL (copper wire) and VSAT (satellite). He concluded that optical fibre, which could provide speeds up to 100 Mbps, had advantages over all the other technologies. The official did not want to be named for this piece, but experts, including his seniors, agree with his assessment. Pitroda and AN Rai, who was then BSNL director (enterprise), had been impressed with his calculation. “For high speeds, optical fibre technology is a must,” says Rai, with a sharp and realistic codicil: “Yet, laying optical fibre is the costliest mode of providing connectivity in rural areas, with the most uncertain returns.”
Pitroda formulated a plan and presented it to the government, and the cabinet approved it in October 2011. The government appointed a high-level committee, headed by Pitroda and Nandan Nilekani, to work out an implementation framework and network architecture. In 2012, a special purpose vehicle (SPV) called Bharat Broadband Networks Ltd (BBNL) was set up to lay optical fibre and install equipment to connect blocks and gram panchayats. This was to be shared with private service providers on a non-discriminatory basis so that they could establish mobile, internet and cable TV networks.
The idea was that, since private players would not wish to invest the high inputs that go into laying optical lines because rural areas would not provide quick returns, the government would create the large framework at a national level and leave the last mile work to private players. The money deployed came from the Universal Services Obligation Fund, created by pooling the five percent share of annual gross revenue that telcos contribute towards improving rural connectivity. At present, the fund has Rs 47,163 crore in balance.
But work has been slow. Of the 2.5 lakh gram panchayats in India, the network had reached only 5,000 in 2014. By March 2015, the figure touched around 20,000. The PMO (now under Modi) then set up another committee, with nine members, to work out a new strategy and implementation framework. This time, a “multiple model approach” – a state government-led model, a PSU-led model and a private-sector model – was suggested to distribute risk among stakeholders. Also, it pushed for ‘reliability’ and ‘redundancy’.
“These aren’t mere words,” says Rai. “To make a network reliable, you need high-end, quality equipment. In place of a linear network of optical fibre, you will require a ring of optical fibre between two points, doubling the entire project cost.” Indeed, the committee upped the initial estimate of Rs 27,000 crore to Rs 72,778 crore. It also promised affordable broadband of 2-20 Mbps for all households and institutions – by 2017.
The results so far: over Rs 6,000 crore spent over seven years, with optical fibre reaching 65,000 gram panchayats. But only 16,000 gram panchayats actually have broadband internet.
Change of plan
Deepak and his team are now implementing the new strategy, handing over parts of the execution to state governments and the private sector. “We have adopted a modified strategy of implementation, wherein the private sector will be involved through engineering procurement construction [EPC] mode, a turnkey project implementation. Connecting panchayats will entail procurement of optical fibre, the associated electronics, digging, trenching, cable pulling and so on,” says Sanjay Singh, USOF administrator and chairman & managing director, BBNL. The major change, he says, is that the private sector will be involved in laying the network and providing services at the last-mile level. Another update on the plan is to go for a hybrid network – not just optical fibre, but also radio, satellite, overhead, underground cable.
IIT Bombay has also been roped in to expedite the second phase so that 1.5 lakh villages are connected soon. The institute has identified 30,000 panchayats to be connected to block level by radio, another 2,000 panchayats via satellite and the rest by optical fibre. Says Singh, “We’ve given all freedom in implementation to the state. The bottom-line is that 100 Mbps connectivity should reach all panchayats. That’s all.”
How then would people get connected, that is, from panchayat level to households? The original plans did not elaborate on this. The PMO’s committee had observed from pilot projects and interactions with service providers that “there was no compelling business case for broadband provision in rural areas”. Industry could hire the fibre cable available till panchayat level (optical node terminals or ONTs), but the architecture is such that their servers will have to be linked to the block level points (optical line terminals or OLTs). Also, they will have to invest to take the internet from the panchayat-level ONTs to homes via Wi-Fi, base station towers, etc.
The industry is not enthusiastic about this.
In fact, the public sector too has fought shy. Says a senior BSNL official, “That’s precisely why BSNL hasn’t gone ahead in providing last mile services at the 16,000 village panchayats where active connectivity is already operational.” He explains that given the high capital expenditure, private players seem unwilling to go rural despite optic fibre connectivity being available.
According to Sanjay Singh, of BBNL, viability gap funding (VGF) may encourage private players to move to the villages. This has been conveyed to the cabinet in a note. “Somebody has to come to us and tell us that this is the model of delivery, that it requires this much hardware, investment,” he says.
At present, BSNL, Railtel and IIT Bombay are carrying out pilot projects, but don’t have a business model yet. One pilot, being conducted by IIT Bombay in Khandwa, Madhya Pradesh, uses unlicensed radio spectrum (5.8 and 2.4 Gigahertz) and achieved connectivity across 5 km. The throughput was an impressive 180 Mbps, according to the BBNL chief. BSNL has made some headway, with central and state backing, in Maharashtra. It has been contracted to provide the service to 500 villages in Nagpur district. The state government pays BSNL Rs 7 lakh per year (over three years) for providing three access points per panchayat. It has set up Wi-Fi towers for the purpose and users are allowed 4 Gb data usage per month. BSNL has also been approached by the centre (200 panchayats) and by Karnataka (for 1,700 panchayats), Haryana (100 panchayats), Kerala (1,000 panchayats) and Rajasthan (10,000 panchayats). These are all at the pilot stage.
Andhra Pradesh and Telangana are racing ahead. They have formed SPVs to take optical fibre to the panchayats. Andhra Pradesh uses electricity poles to carry the optical fibres, and hence the rollout is faster, at a lower cost.
But all such plans will have to be self-sustaining – and there lies the hitch.
(The story appears in the March 1-15, 2016 issue of Governance Now)