“For connectivity, fibre can’t be the last mile”

Rajan Mathews, director general, Cellular Operators Association of India (COAI), explains why the industry has failed to reach the rural market with internet connectivity


Taru Bhatia | March 3, 2017 | New Delhi

#internet in villages   #TRAI   #egov   #internet connectivity   #Cellular Operators Association of India   #COAI   #NOFN   #national optical fibre network   #Reliance Jio   #telecom operators  
Rajan Mathews, director general, Cellular Operators Association of India
Rajan Mathews, director general, Cellular Operators Association of India

In conversation with Taru Bhatia, Rajan Mathews, director general, Cellular Operators Association of India (COAI), explains why the industry has failed to reach the rural market with internet connectivity, the limitation of wired network and how the entry of Reliance Jio has changed the way data is consumed.
The TRAI has been insisting on expansion of wired network to deliver broadband in rural areas. It claims that the industry is focussing majorly on wireless network and ignoring the wired network to provide internet connectivity. Why is that so?
The TRAI chairman was saying that we have to bring up the wired network. By wired network he meant cable, landline and mobility, which when combined together deliver broadband that happens globally. But unfortunately, India only has mobility and landline is very feeble. We are saying to them to take a holistic approach. Even [Rahul] Khullar, former TRAI chairman, was saying [we should] be more practical. Today, if I go to a rural area, of say 5,000 people, they don’t need fibre connectivity. For connectivity, fibre can’t be the last mile. It has to be the backbone, which is what NOFN [National Optical Fibre Network] is doing. For the last mile, I can instead use E-band or V-band mobility base, microwave or satellite and then when robustness of the demand picks up we can go forward. Today, E-band and V-band give 1 gigabit of throughput, which is pretty close to fibre. It may be cheaper than trying to dig and put in fibre.
The industry has on the whole failed to reach the rural market and has shown lukewarm response to the NOFN scheme, which is getting delayed in implementation.
If you look at the NOFN, its primary emphasis is to connect block headquarters with gram panchayats. The block headquarters have to be connected with district headquarters as that is the main point of interconnection. From gram panchayats, you still have last mile connectivity issue, along with other issues of handset, power and affordability. When we are looking at the market segment that is below poverty line, these issues will come up. So we can’t be just worried about transfer price to the government.
Where is the demand for internet? Once you get internet, then what are you going to use it for? Can you afford it? Do you have handsets to use it? Is it vernacular? All of these issues have to be looked at before we go to the rural market. And demands are not created if apps are not there. You need to teach villagers how to use these apps. Most of the content on the web is either in English or Hindi and using a smartphone’s keypad in vernacular is not easy.
What are the industry concerns regarding NOFN?
A definitive model of NOFN has not yet emerged because it has not got end-to-end connectivity in places. First of all, the intention was that NOFN will own the assets. So they are still working through this issue.
There are segments where we will take the existing fibre, incorporate it into NOFN and put incremental fibre that needs to be there and then we will manage the whole thing. But BSNL people went on strike. They are not letting us know where the closest fibre to NOFN is. Imagine! BSNL is a government institution.
The issue that we are trying to understand is that the whole focus is on laying the fibre, get the physical aspects and get it done. Now they are [asking us] to determine how much fibre you have and where you have. Then you say the NOFN is non-discriminatory, and anybody can come. But how will you do it? Is it on bid basis? Do you have enough capacity? At one point, we were told that the capacity is 100 megabits, given that the government was trying to give it for free to schools, hospitals and PCOs. 
Much of bandwidth is already used. So you are focusing on connectivity but what is the emerging business model? 
All operators have plenty of fibre to carry their own traffic, so our network is in place. When fibre is not available in urban areas like Delhi and Hyderabad it is because you can’t dig up the streets there. The issue of right of way [RoW] comes in. In rural areas, on the other hand, there is no business. So these are two critical areas where there is high demand on one end and low demand on the other.
If you see all the benefits of broadband, then maybe you help the industry to get resources into the hands of the company; make it easier because no investor is going to invest if they do not see returns on it.
So you are saying the government is not giving enough incentive to the industry to participate in NOFN.
The government is taking five percent of my earnings for the USOF [universal service obligation fund]. So why doesn’t the government give it back to us as an incentive? We see that 80 percent of the USOF has gone to support the BSNL. Has the landline services improved? No. We are saying that give us back the USOF so we can use it much more effectively and efficiently. And if you are interested in the PPP model, get the resources back into the hands of the industry and have targets in order to deliver for the industry to have these types of incentives.
The government has to incentivise the private sector because if there is no profitability they are not going to the rural areas. There ought to be a professional way to determine what is the gap funding and the means to get it into hands of operator in non-discriminatory manner. These are things the government should be looking at because the only thing that drives private enterprises is profitability. If it becomes charity, it is not sustainable.
The government has addressed some issues under NOFN but the remaining issues need to be addressed... that you asked for this PPP model. If the industry is not participating then what are the incremental roadblocks that are stopping them from participating? Because if you are giving incentives and still the industry is not coming forward then it could be that incentives are not well enough. Nobody is arguing against laying the fibre.
Also, fibre has limited life because seven years later somebody might cut the fibre or dig it. So it is not one time and finished. This is also part of the reason why private parties do not want to use the fibre. We ask this question to the government that if there is a fibre cut, how long it will take to bring it back. They say seven days. That is too long.
TRAI recommended introduction of third-party aggregators to provide free internet in non-discriminatory manner to promote digital economy. Your views?
One thing we have asked for is clarity on aggregators. Anyone who provides last mile connectivity has to have a licence. Today there are three categories of licences. In which category would the aggregator model as suggested by TRAI fit in? If there is no clarity somebody is going to use the arbitrage for wrong purposes. For example, TRAI said they wanted to encourage the landline services, so they said all mobile calls originating and terminating on landline numbers will bear no termination charges. And the next day, Ringo started its services. They had to shut down because TRAI said it is illegal, but TRAI created arbitrage in the first place. The aggregator model is fine but they need to look at the contours of licence conditions and ensure a level-playing field.
What kind of disruption the Reliance Jio network has created in data consumption among Indians?
Reliance has done a good job in terms of having a 4G data network. They are very intelligent about marketing it. People keep on using this word ‘disruptive’. I would like to bring a little nuance to it. They are more innovative.
Its entry has accelerated the implementation of 4G network. It has increased awareness among users about data, data speed and its usage. They are giving incentives to use the data, which is a good thing. It is bringing the cost of equipment down. These are the benefits that have come with RIL’s entry. Yes, it is also causing some financial pain to the incumbents. But once the free offer period is over, then I think it will get all normal because customers will have to pay eventually.
Since the industry has become more competitive than ever, are the incumbents trying new technologies to improve quality of their services?
The industry is working on new technologies. These are software-defined technologies, WiFi, hotspots and satellite. Satellite technology has constraints because of licensing and security reasons. Technologies such as 5G, IoT [Internet of Things], mobile-to-mobile, cloud computing, LTE network, and lower power consumption are being considered. All kinds of innovative things are being done in the industry, so we are not sleeping because we know that unless we continue to drive our cost down, we can’t keep up with the affordability factor. We are pushing in all the areas like spectrum sharing, spectrum trading and active infrastructure sharing.
We are introducing all ways to improve the voice quality like virtual management of our network. It is self-healing network. For example, if there is a drop call and it is created because of the interference from other source, it will kind of adjust by itself and if it fails it will try to compensate by connecting the network with another power-boosting cell tower. This is self-healing mechanism which we are introducing to enhance the consumer experience.
But the issue of call drop is still a matter of concern...
The biggest bottleneck we are facing in addressing the issue is locating our cell towers. In Lutyen’s Delhi we have a challenge. In Hyderabad I have a challenge. I go to Bengaluru I have a challenge. People get scared, they say they don’t want towers on their buildings but then they want no call drops as well. We have put 3.5 lakh BTS [base transceiver station] so far. But I am still not allowed to put towers in areas like defence land, so how am I going to provide the network?
The government has addressed the issue but the problem is local people trying not to implement the orders. It is still a long process dealing with bureaucracy. We have got the right policies in place but it doesn’t mean anything if it is not being implemented. For example, RoW is a great policy from DoT [department of telecommunication] but its implementation is still missing. Every state wants to do it differently, every locality wants to extract maximum money. Local implementation is where the problem lies.
Do you mean to say that getting RoW permission from local authorities is still a challenge, even though the government policy is in place?
When we go to MCD [municipal corporation of Delhi] with the gazette notification, they say, ‘We run the business here, not the centre. Building is our responsibility. We have to give the permission.’ And when the supreme court recently said that cell towers are ‘buildings’, municipalities say that property tax is to be paid now. They demand more money and ask us to fill 200 more forms. The state and local governments are not in sync with the central government. They are not listening to the central government policies. They are putting all kinds of roadblocks because the states don’t feel obligated to follow the government’s policies. 

(The interview appears in the March 1-15, 2017 issue of Governance Now)





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