Union Minister of State for Information Technology Sachin Pilot has promised that a "twenty-first century" infrastructure would be set up for high speed broadband access; while a report that he released expresses concerns about "low internet literacy" even in the urban areas.

Pilot released the report 'Innovation in Telecom' by PriceWaterhouseCoopers (PwC) in Mumbai on Monday. He did not give any time-frame for ushering in "twenty-first century" infrastructure, nor did he comment on the report.

PwC report says that "even in the urban regions, internet literacy is quite low, and so is the usage. It will take a generation for data usage to pick up.... Non-voice services including value added services and SMS form just five to 15 per cent of total operator revenues, which goes to over 50 per cent for operators in major countries. The number for mobile data would be still lower."

Rural teledensity has still not reached the targets and the Universal Service Obligation (USO) Fund created for the telecom industry has not been utilised adequately, it says.

Most product innovations still originate from the Western economies while Indian companies seem to be content adopting them. One of the reasons is lack of proper research infrastructure, education and investment, the report adds.

"Talent is one drawback we severely face in India. While India produces twice as many engineering graduates as the United States, only less than five per cent have basic vocational skills essential for fruitful employment. Only about 25 per cent graduates in India have the skills that deem them fit to work for multinational companies. This is because most institutes in India are built with the idea of meeting the demand for graduate education, focused on enrolling as many students as possible," the report says.

The report also expresses concern about the anxiety among telecom sector investors about clarity in telecom policy. The government should invest in state-of-the-art laboratories or provide grants to research in the latest technologies in the communications domain, PwC report recommends.

"There is a lot of anxiety in the market as to how the new policy would be framed....There are a lot of questions that the policy will answer and in general, reveal the government's stand on the future of telecom. It will make or break the much-hyped telecom sector in India. Investors are waiting for the uncertainty to clear before committing to investments," the report adds.

Establishment of centres of excellence that promote research on new communication technologies would be a big boost to the industry, and government should also incentivise companies to set up R&D, it says.

"Today the great Indian telecom story stands at a crucial juncture....The Indian market is typically adding ten million customers every month, and the growth rate has become fairly stable. The next 50 million new subscribers are those who cannot afford the services even at such rock bottom call rates. Another disruptive innovation is needed to include the next billion subscribers into the telecom world."

The report expresses a worry that subscribers do not generate more voice traffic beyond a certain limit, which caps the average revenue per unit (ARPU) a telecom operator can make from voice services.

As to the rural infrastructure set-ups, it notes that most of them are off-grid deployment - they receive intermittent or no power from the electricity grid and rely on diesel generators to run. This makes the operations expensive and environmentally unfriendly.