india's broadband economy_vision 2010_vision strategies recommended action_2004_executive brief

40
India’s Broadband Economy: Vision 2010   © Confederation of Indian Industry  

Upload: rohit-varma

Post on 30-May-2018

215 views

Category:

Documents


0 download

TRANSCRIPT

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 1/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry  

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 2/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry  

March 2004

Confederation of Indian Industry23, Institutional AreaLodi RoadNew Delhi 110 003, IndiaTel: 91 11 2462 9994-7Fax: 91 11 2462 6149/2463 3168

Please contact Sabyasachi Patra, email: [email protected] for anyreport related information.

 © Confederation of Indian Industry, 2004

All rights reserved. No part of this report may be reproduced, either in part or in full,without the express written consent of Confederation of Indian Industry.

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 3/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry  

FOREWORD

CII believes that digital infrastructure is as vital to the nation’s future growth, as

physical infrastructure is to its present prosperity. The absence of inexpensive non

dial-up options is already becoming a major stumbling block to the country’s growth.

Ubiquitous and cost effective public and private broadband networks are as importanttoday as voice based Telecom networks were in the previous decade. Internet based

services and connectivity for SOHOs / SME are crucial for enhanced productivity and

perhaps even survival.

Broadband networks, both wireline and wireless, provide an essential and integrated

communication highway that can deliver diverse types of data at a speed and quality

unattainable by current delivery mechanisms. They must be viewed, not as some

esoteric “technology”, but as an important vehicle to reach a new trajectory of

development. And this quantum leap need not cost the earth. Existing wireline and

wireless networks can be broadband enabled with only incremental investments byindustry, provided this is combined with suitable fiscal & regulatory regimes.

“India’s Broadband Economy: Vision 2010” is a path breaking effort to help develop a

vision and roadmap for the proliferation of a broadband economy in India. Ubiquitous

broadband services will accelerate economic growth and employment generation,

and can revolutionize the delivery of education, health and governance services. It is

one of the most exciting tools for enhancing the quality of life of our people.

This study is the outcome of a true public- private partnership between government,

regulators and industry. I would like to compliment the Committee and all those whohave contributed to this study for their effort and their ideas.

CII hopes that the recommendations of the Study will be implemented and that we

will see India emerge as a leader and role model in the field of broadband

deployment. It is my fervent hope that the India of 2010 will be a vibrant and truly

connected country in every sense of the word.

Anand Mahindra

President

Confederation of Indian Industry 

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 4/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry  

INTRODUCTION

“India’s Broadband Economy: Vision 2010” is the culmination of an initiative of July 2002

through which Department of IT (DIT) and Department of Telecom (DOT), Ministry of

Communications & IT, Government of India and stakeholders from Industry, representing theBroadband value chain, joined hands as CII National Broadband Economy Committee.

The Committee commissioned a holistic Study to help develop a Roadmap for the

development of the Broadband Ecosystem in India. IBM Business Consulting Services (BCS)

commenced the four-month Study on 15th

September 2003.

A Steering Group comprising Departments of IT and Telecom and private sector stakeholders

including BG Broadband, Hindustan Lever Limited, Hughes Network Systems, HP, Intel, Sony

group, Turner International, Tata group and UTStarcom has guided the Study.

Working groups on Access Infrastructure and Technology, Demand and Service Provisioning,

Content and Applications, Regulatory and Policy Frameworks interacted closely with IBM

BCS during the course of the study. Subject matter experts, national and international, have

also been consulted.

Based on the Interim Report of the Study, a Discussion Paper was placed in the public

domain, inviting responses from interested parties.

This Report, which is in two volumes, has an Executive Brief and Chapters in Volume 1 and

Annexures in Volume 2. Chapter One scans international experiences and draws conclusions

for India. Chapter Two documents the findings of the first ever primary research that has been

carried out by IMRB as a part of the Study to estimate demand and price elasticity for

Broadband access, content and applications. Chapter Three examines the technology options

and possible business models. Chapter Four reviews deployment of content and applications

internationally, draws pointers for and documents the Indian scenario. Chapter Five dwells on

the enabling role of Broadband in public services. Chapter Six makes the case for Broadband

for Rural India. Chapter Seven visualizes the evolving industry structure. Chapter Eight is a

seminal attempt at modeling the economic benefits of Broadband for India.

The Committee is thankful for the partial Grant in Aid from Department of IT and sponsorship

by the Incumbent Telcos as well as other Key Stakeholders in Industry and is confident that

this Report will provide vital inputs to the Government in formulating and adopting a National

Broadband Policy.

CII stands committed to making a Broadband Economy a reality.

Sujit Kumar

ChairmanCII National Broadband Economy CommitteeMarch 2004

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 5/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry  

ACKNOWLEDGEMENTS

The text of this report was prepared by a team from IBM Business Consulting Services led by

Arvind Mahajan, comprising Saravanan S, Sandeep Goyal, Biswanath Bhattacharya, SherilVaidhyan and Dushyant Singh, and Sabyasachi Patra of CII.

The report has benefited from the input and comments of many people to whom we owe our

thanks. In particular, we would like to thank Mr K K Jaswal, Secretary, Government of India,

Department of IT; Mr V Vaish, former Secretary, Government of India, Department of

Telecom; Mr P S Saran, former Secretary, Government of India; Mr V P Sinha, CMD, Bharat

Sanchar Nigam Limited (BSNL); Mr R S P Sinha, CMD, Mahanagar Telephone Nigam Limited

(MTNL); Mr N K Mangla, Director, BSNL; Mr P Agrawala, Joint Secretary, Department of IT;

Mr H K Gupta, Deputy Director General, Department of Telecom; Mr. S N Gupta, Advisor,

Telecom Regulatory Authority of India.

We would like to express our appreciation of the valuable inputs received from the keyparticipants: P Shrikhande (Asianet), A Sethuraman (Alcatel), EVS Chakravarthy (B G

Broadband), Lav Gupta (BSNL), P Roach (Hughes Network Systemts) and P Banerjee

(Hughes Escorts Communications Limited), P Ravindranath (HP), N Dhawan (HP), P Mathur

(HP), K G Mohan (Hindustan Lever Limited), A Ghosh and J Bose (Intel), T R Wadhwa

(MTNL), B Bhatia (Motorola), R Singh and A Gupta (Microsoft), S Prasad (Sony India), N P

Singh and A Garg (Sony Entertainment Television), D Appaswamy and D Maheshwari (Sify),

A Misra (Turner International), N Srinath (VSNL), S R Addepalli (Tata Industries), R Godura

and N Manaktala (UTStarcom), P Prasad (Warburg Pincus), N Taraporewalla (Yahoo! India),

Ron Victor (Homeland Networks) and Rajneesh Bhandari.

We would also like to thank IMRB for the market research segment of the study and various

subject matter experts from IBM and other organisations without whose inputs a report of this

nature would have been impossible. As a token of our appreciation of their effort, we have

enclosed a complete list of the various people who have contributed to this report.

Special mention must be made of the unstinted support from Dilip Chenoy, Deputy Director

General, CII for, and since, the formation of CII National Broadband Economy Committee in

July 2002.

The views expressed in this report are those of CII National Broadband Economy Committee

and do not necessarily reflect the opinions of CII or its membership.

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 6/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry  

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 7/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry  

ASSOCIATE SPONSORS

Alcatel

Motorola

Microsoft

Sony India Pvt Ltd.

Sify

Yahoo! India Web Service Pvt Ltd.

Warburg Pincus Singapore LLC

SECTORAL ASSOCIATE

Asianet Communications Ltd.

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 8/40

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 9/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   1 

INDIA’S BROADBAND ECONOMY: VISION 2010

EXECUTIVE BRIEF 

This document covers the summary of the key findings and recommendations with respect tothe following core questions posed at the beginning of this study

• What is the proposed Broadband Vision for India?

• What is the need for such a Vision?

• What is the Roadmap to achieve this Vision?

The following exhibit presents the coverage of the study.

Exhibit 1: Coverage of the Study 

India’s Broadband V ision

Benefits of Broadband to India

Targets and Milestones

Urban

Broadband

Access

Rural

Broadband

Access

Broadband

Services -

Ru ral / Urban

Prices, taxesand d uties

Technology

options / 

Business case

Industry

Structure

Evolution

Technology &Cost Model

Revenue

model

Village

Segments &

Funding model

Content &applications

Readiness

assessment &

Initiatives

Role of Industry & Government

Next Steps

Conditional

Access and

Copyright

 

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 10/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   2 

I. INDIA’S BROADBAND VISION

Why Broadband for India? – The Benefits of Broadband

High-speed access to information and web based communication / transactions have become

a competitive differentiator. Internet based services (whether it is work or learning from

homes, schools, colleges) or connectivity for SOHOs / SME is crucial for enhanced

productivity and perhaps even survival. Absence of inexpensive non dial-up options is

becoming a major stumbling block for the country’s growth. Ubiquitous and cost effective

public and private Broadband networks are as important today as Telecom networks were in

the previous decade.

Broadband networks, both wireline and wireless, are best not seen as “technologies” but as

“non dial up, always-on, integrated communication highways delivering voice, data and video

along with interactivity at speeds necessary for delivery of different services at required

quality levels and in a manner that current delivery mechanisms do not enable.

Broadband connectivity and services, if designed appropriately and innovatively and

implemented effectively, can be a key driver for several socio-economic gains including:

• Economic growth and employment generation

• Education, health, governance and citizen empowerment required to achieve these

economic goals for all citizens including the rural population that cannot be covered

effectively using traditional brick and mortar solutions.

With reference to the Planning Commission’s Vision 2020 document, this report visualises

ubiquitous Broadband as playing a strategic role. Its economic impact is given in the exhibit

below. The quantification has been done for the period 2010 to 2020 and economic data isprovided as Present Value (in 2003 prices) of the estimated benefits for the period 2010 to

2020 (Chapter 8 on Economic Benefits of Broadband). Thus, during the period 2010 – 2020,

ubiquitous broadband is estimated to contribute to direct employment of 1.8 million, indirect

employment of 59 million and yield benefits with a present value of USD 90 billion.

Exhibit 2: Economic Impact of Broadband 

 

!"

!

 #

# !"

#$%&

!"$!!!

 %&

% '%%(%

'!!!!!

()*+,-+"

".

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 11/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   3 

/!01! %(2 &%% 0!"

#+

' 03)

#4!33

!!!

( ) /$

5

, *+

/6!78

53!$7

Proposed Vision

The proposed vision for India’s Broadband Economy is presented in the exhibit below.

Exhibit 3: India’s Broadband Economy Vision 2010 

Definition of Broadband 

The CII National Broadband Economy Committee has adopted a dynamic and flexible

definition of broadband that is technology neutral and focused towards delivery of services tothe end user, rather than on speed. For the purpose of this initiative, Broadband has been

defined as “An always-on network capable of providing interactive voice, data and 

video services on public networks”.

In terms of speed, there should be at least two tiers of service – the ‘true’ broadband being

capable of providing minimum asymmetric bandwidth of 1.5 Mbps and a ‘lite’ version capable

of providing 256 kbps. Within these ranges and including the variations possible with service

offering mix, it is expected that several tiers of broadband services will be made available to

different segments to meet the market requirements.

It should also be noted that by definition, broadband (triple play of voice, data and video on

the same network) requires the convergence of services for enabling its adoption and usage.Further discussions on the need for this have been taken up in Chapter 1 on International

Experience and Chapter 7 on Industry Evolution.

!"#$#%

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 12/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   4 

Targets and Milestones

In quantitative terms, the vision can be expressed as follows:

• To achieve a minimum of 10 million subscribers by 2010 and 35 million subscribers

by 2020 in urban India across homes, enterprises and public kiosks

• To achieve broadband coverage for at least 50% of the rural population by 2010 and

100% by 2020 through rural broadband kiosks

• To make appropriate and locally relevant e-education, e-health, e-governance,

entertainment and e-commerce services and employment opportunities available

through broadband connectivity to all cities, towns and villages in India

The total investments for achieving these milestones is summarised in the exhibit below.

Exhibit 4: Projected Investments 

500250Rural Networks

20001000Content and Applications

33501600TOTAL

250100National Content Delivery Networks

500150National / International bandwidth

21001100Urban networks*

Investments required

by 2010 (USD mn)

Investments required by

2006 (USD mn)

500250Rural Networks

20001000Content and Applications

53502600TOTAL

250100National Content Delivery Networks

500150National / International bandwidth

21001100Urban networks*

Investments required

by 2010 (USD mn)

Investments required by

2006 (USD mn)

The Guiding Principles

The primary principles that have guided the formulation of the vision and the roadmap are as

follows:

• Ensure mass market usage of Broadband access and services (not just availability

but off-take)

Eliminate Digital Divide – Access to broadband either at home or through publickiosks within walking distance

• Enable viable / sustainable business models to promote private investments and

entrepreneurship and minimise the need for direct investments by Government

• Choice for the user, content / application provider, and service provider in a

potentially oligopolistic industry.

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 13/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   5 

II. BROADBAND IN URBAN INDIA

Demand – Urban residential users 

In arriving at the specific targets for the urban residential markets, the price elasticity of

demand and supply side viability has been taken into consideration. Of the three scenarios

shown in the exhibit below, Scenario 2 has been taken for the purpose of target fixation since

it provides the maximum penetration while being a viable business model. (Refer to Chapter 2 

on Demand for details on demand estimation ).

Exhibit 5: Possible Demand Scenarios for Urban residential Market 

, -./

('0,#

1%.2

0230,#4

56

%!

*%

*4

# % 29#9# #

% ( ,9#9# &+( 1!2(

!!

2 - ##9#9# 1#

!!"

#"!$"%

Demand – Commercial Users 

The estimates of demand from the commercial user category i.e. large enterprises, SMEs,

SOHO / professionals and cyber cafes (i.e. the urban broadband kiosks) have been

presented in the table below. The projections have been prepared with access pricing at Rs.

3600 per month.

Exhibit 6: Demand Projections for Urban Commercial Market 

(%(- 5!7#

:$5 ((

;5 ,&#

<$= 2,

:$> %2,

338 !9:; &'%!(#

Summary of Demand 

Based on the above projections, the demand targets for urban India are provided in the

following exhibit.

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 14/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   6 

Exhibit 7: Demand Targets for Urban Market 

56

!

2(

/ &+( %2%&

:? #+, &

@ ##+( %"2

3-( !,!!,< ==;

)"*+

,-.!

Impact of Taxes and Duties 

The key to achieving the above target is the pricing of the service for a residential subscriber

at an up-front fee of Rs. 5000, a monthly access pricing of Rs. 600 and a monthly rental of

Rs. 100 (for the balance cost of CPE). Payment for content and applications would be

additional. Based on the business case analysis (refer Chapter 3   on Technology and 

Business Models ), this package is viable on a medium to long-term perspective. However

these prices will be viable for the service providers only under the assumption of ZERO duties

and taxes for the broadband business.

Assuming that the broadband service provider passes on the additional costs on account of

the applicable duties and taxes to the customer, the effect on the prices is presented in the

exhibit below. To ensure mass-market penetration and a viable industry, Broadband industry

would require full waiver of all applicable duties and taxes for a period of at least 7 to 8 years.

Exhibit 8: Impact of Taxes& Duties on Prices 

 />?

&

&0 -5@ &0 A

2 & & ,,4

, #2 ,,4

## % #-%% ,,4

/0"!!1!$"%2

)3!!"!4&#5(5.

!617,%!24&#(5-(8!

Impact of National / International bandwidth costs 

The prevailing Indian prices of international and national bandwidth are among the highest in

the world, at an effective Rs 160 to 180 (USD 3.5 to 4) per Kbps per month. The business

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 15/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   7 

case analysis has been done assuming an immediate reduction by 50% in International

bandwidth prices and a further reduction of 25% over the next 3-4 years. The national

bandwidth has been assumed to drop to close to 1/3rd

of the current prices. However, if the

current high prices prevail and the difference in costs need to be passed on to the broadband

subscriber, the proposed low entry-level access pricing of Rs 600 would increase to Rs. 1950

per month (USD 42.5 p.m.) effectively placing broadband out of reach of the mass market. In

order to address this issue, some of the interventions that should be considered are

mandating cost based pricing of bandwidth, promotion of domestic internet exchange and

local hosting of content and promotion of creation of local language content.

Technology Options 

The results of evaluation of the five categories of broadband technologies for the urban

market, viz. xDSL (on copper), HFC (on upgraded cable), Fiber (+ethernet), Wireless and

Satellite, are presented in the exhibit below.

Exhibit 9: Evaluation of Technology Options for Urban market 

3% >58

().("( ."' B

C

A#+(;#%;

0B!

="CD;!

E!E%9E!E;F$;;3#;

<!!

"

A%(,*.

#%;*<.

:3

!!!

G E!

1"

8*>

'1<A:

A!)+<3$3!

E!!!!3!!3)$>

/+G:=5)

1%

A",4

2(4"

=!+<$:3!

!*;$;;.*E"A3E;F.3

%"

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 16/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   8 

3% >58

().("( ."' B

8

;!

 A''<

A$A"!!

HH!

+

+!

!+;

!!!!)

5 5 5 /;

3

'$

/

:!+!)3!

!!!<A:!!

=!3+E!3!$!+

=!

/!!"EE$:$A+>!!

:!!!

(%%D%D%

;I+>)

A3!3

!3!!

;J!30=

!

'0881'5&-13'0103&

3%EBD

&%

8D%5%&/0F1

8D%5%.

08

 

Based on the above analysis, it appears that wireless broadband connectivity services are

likely to be used in rural networks where density of usage would be much lower or for

hotspots kind of niche locations and it is unlikely that true broadband connectivity to home on

wireless would be rolled out on a city-wide basis in a major way within the next 2-3 years. .

Satellite solutions may be used in remote / niche locations where other options are not

capable of providing connectivity solutions.

There are 40 million cable homes in India and cable / HFC based broadband technologies are

fairly mature and stable. From a cost and financial viability perspective as well (refer exhibit

below) cable displays a low cost and viable model similar to the DSL over existing copper

model. However without consolidation, professionalism and improvement in technological / 

process management and customer care capability in the business, the cable industry is

unlikely to become truly broadband capable in the short term and the industry may take 3 to 4

years to achieve the same.

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 17/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   9 

Exhibit 10: Viability Assessment of Technology Options 

(>-53%

< !

&00!%#

(D*G#

(%DG#

! & (& #%4 K( K

2%2 %% %#4 K K&<A:"

2- 2%% %#4 K K&

A95! &2( (( #4 K K&

!$"%

 

While DSL over fresh copper is clearly not a viable business model, DSL over existing

copper, HFC over upgraded cable and Fiber based options considered in the analysis prove

to be very close to each other in terms of business viability as can be seen from the

comparison of IRR, cash breakeven and cash payback period. However the assumptions

relating to revenue share (between the ILEC and the broadband service provider) have a

significant impact on the financials for DSL over existing copper and HFC over upgradedcable. If for instance, the revenue share (currently assumed at 20% for the analysis) is

reduced to 15% for the last mile copper owner, the business viability for the broadband

service provider could improve significantly. In the case of DSL over existing copper

(hereafter also called the DSL case), it should be noted that if the service were provided by

the incumbent telco itself, the viability of the model would improve significantly since the 20%

revenue share would accrue to the incumbent in any case.

In the case of Fiber + ethernet model, although it appears to be very similar in terms of basic

viability vis-a-vis DSL model, this business model is inherently riskier than the DSL model, for

the following reasons:

Higher capex per subscriber and higher initial fixed cost components in the capex

• Significantly higher capex per subscriber also means that initial investments for this

model would be over twice the investments required for DSL

• A full nationwide rollout of fiber to the curb / home in all 250 to 300 cities and towns

may require significant time given the need to physically connect up all the targeted

homes / commercial users, whereas the owners of existing wireline telephony

subscribers are capable of moving to DSL right away.

Infrastructure Investments Required 

To achieve the targeted goals of cities covered and subscriber base an investment of USD

1.4 bn is required by 2006 and USD 2.8 bn by 2010(based on the DSL on existing copper

model). As can be seen in the exhibit below, the fibre-based model requires twice the

investment of the DSL over existing copper model.

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 18/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   10 

Exhibit 11: Investments required for Urban Broadband Infrastructure 

&*$-5#@

%< %!

58*>

(( #%,

:! #&(

::G 2% %

GL0! #, ((

G:G # %(

.2'

)0

Options for Short-term rollout – DSL

In the case of DSL, roughly 95% of the existing copper is owned by the incumbent telcos(BSNL / MTNL), who have three options for roll ing out broadband services on this copper:

• Go alone by themselves: Given their dominance of existing copper and the

advantages of their business models, there are issues regarding whether they would

be focused in achieving the national broadband coverage and penetration targets

discussed in this report.

• A mandated Open Access regime with Local Loop Unbundling (LLUB) could be

imposed on the incumbents, that will throw open the existing copper to any new

player. If the scheme succeeds, this would lead to entry of a large number of players

for city / town level markets. Such a large influx of entrepreneurs at a micro-market

level will adversely affect their ability to generate adequate scale their operations atthe city / town level, thereby affecting the business viability of most of such entrants.

This option has not met much success internationally.

• Lastly, the two national telcos could opt for (on their own) or be mandated to provide

‘Managed Access’, that will allow the incumbents to share the existing copper with a

limited number of new service providers and also share the revenue generated, in a

pre-determined manner.

The last option appears to be the more practical option and is briefly discussed below.

Comparison of the above three options has also been presented subsequently.

Managed Access Model 

There are three critical aspects of the Managed Access model:

• Any one city / town to have a limited number of players (two to four players based on

the market potential) who will be allowed to provide broadband services on

incumbents’ copper. Such service providers would be selected for their ability to

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 19/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   11 

create and run a viable and growing Broadband service at a high QoS and at the

targeted mass market price ranges. To the extent that the selection criteria will look

for prior track record to prove capability, even non-wireline telcos and internet service

providers may opt to provide such services on the incumbent copper. (Refer Chapter 

7 on Industry Evolution for details / discussions of the issues involved ).

• The national Telcos will provide shared access only for the data frequency range. But

once total convergence of services is in place, and VoIP solutions can be offered by

the service providers even through shared access, the retention of the voice stream

business by the incumbent will be of less significance.

• The Service Providers would pay a percentage share of their revenues (both

revenues from access and content) to the national Telcos who have provided them

access. This revenue share could be pre-determined and would not be based on cost

sharing principles.

Optional Regulatory Regimes for the Short term Urban Access Industry 

The Regulator may opt for one of three different models to promote competition. The exhibit

below gives the pros and cons of all three options.

Exhibit 12: Comparison of Regulatory Regimes for Last Mile Access in Urban markets 

0%0'* ." .88- 1

01D*,0

;!!

/!

/!!!!3!!

5!!!3!!!0

<!!)

E!3!

!

E!!3

3&*$

0)!!!

0!!!!)!!+!!

0!!+<!!

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 20/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   12 

0%0'* ." .88- 1

0D%**

'!!

'!!!3!!

 !!

!"D

G!!7B)

!!!3!!B!"

E!;3!!!!B

0$D%D

A0&,4)G""++<A:

!!)!!=!

:!3"3+)'!)3!!

+

G$)

'088-110G

1D

!= <! <!

15D ;/!0)

B

0G'!=

 

Review of international cases has shown that full open access with LLUB has not succeeded

and may not be suitable in the medium and long term. On the other hand, depending on

facilities based competition for achieving the coverage and penetration targets in the short

and medium term may be a risky option, since under this model, there would be only two

national telcos (on DSL) and one or two Fiber based national players.

Therefore it is recommended that India needs to look at Managed Access option for DSL in

order to achieve the quick growth required, while simultaneously promoting inter-modal

competition over the longer term to bring in newer technologies.

Other Critical Gaps in Industry Readiness 

One critical capability gap in the Indian broadband value chain is related to Content Delivery

Network, Application and Content aggregation and Digital Media factory (i.e. content creation

and content management). In the absence of existing equivalent infrastructure, the gap is

significant in terms of the investment (approximately 25 to 30% of the projected broadband

infrastructure investment) required for this. It is also critical to attend to gaps on the skills / 

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 21/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   13 

human capital side in the technical and management aspects of the business. These skills

require to be inducted into the country over the next one to two years if local content services

are to be made available to the subscribers.

Till the time locally hosted content becomes significant, there will be a need for high

international bandwidth to enable the subscribers to access content that is hosted overseas.The investment needed in national and international bandwidth range between 10 to 15% of

the total capex. However this assumes that existing dark fiber that is already in place may be

lighted for this purpose. Otherwise, the cost estimates can be higher.

In this context, strategies that include domestic storage for local hosting, mirroring and

caching of popular international content, and development of local content will be important

for reducing the requirement of expensive international bandwidth.

There are a also number of back office and support systems including user services such as

e-billing and payments, authentication / verification services, electronic cash, micro-payment

systems, etc. that are required to be put in place. Similarly, the existing OSS / BSS systems

need to be upgraded to allow for a multiplicity of tracking, billing, payment mechanisms (asmay be required by a variety of content and application service providers) as well as the

complex interconnection related settlement requirements in a broadband network.

Recommendations for Long Term Development of the Urban Access Industry 

While in the short term, given the need to quickly roll out broadband services in the country

and create a customer base, it may be necessary to focus on leveraging existing copper, in

the long term (beyond 2010), India needs to look at creating communication infrastructure that

is able to leapfrog to newer technologies.

From a long-term perspective, therefore, India needs to promote multiple technologies and

inter-modal competition from DSL, HFC, fiber, wireless and satellite technologies, as andwhen they become relevant and cost effective. To this purpose, the Government / Regulator

needs to:

• Promote consolidation, professionalisation and upgradation of network / technological

capability of the cable industry through determined and focused regulatory

interventions to make the industry Broadband capable

• Open up relevant bandwidth in the wireless spectrum (2 to 6 GHz range) to enable

City wide and Hot spot wireless Broadband solutions to be rolled out

• Simplify and speed up the processes and reduce the costs involved in providing Right

of Way (ROW) to Fibre and HFC based service providers (through promotion of

innovative mechanisms such as the “ROW for Bandwidth” barter schemes in

Karnataka, etc.)

• Promote local R&D and manufacture of new Broadband technologies / solutions

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 22/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   14 

III. BROADBAND IN RURAL INDIA

The Indian Rural Market 

The Indian rural market segmented by the size of the village, i.e. population of the village, is

presented in the exhibit below

Exhibit 13: Segmentation of Rural India 

(%%+

7#

#

*&*0,#

(*

*H#

(*A

(*A0

%

7!( # #% %-+- # #-4 %%4

%J( ,& %2 +& -# -4 (,4

#J% #%% #&( %+, %2 &4 &24

!# #& #&- #+% ,% #4 #4

&'35995:!!!".(;:;;;!(;;5

Demand Projections 

To achieve the target of 50% population coverage by 2010 and 100% of the population

coverage by 2020, the specific targets in terms of rural broadband kiosks and the rural

coverage is provided in the following exhibit.

Exhibit 14: Targets for Broadband in Rural India 

3

!

/>D #3 ,%3

  !% #4/:!

-4 #4

 

Business Model 

The rural broadband business model (detailed in Chapter 6 on Rural Broadband) would

consist of the following partners:

• The agri-commodity corporates, who stand to gain from savings on procurement and

hence would be willing to invest in the broadband network as part of their supply

chain process.

• The local entrepreneur, who becomes the agent / franchisee kiosk operator, creates

the market for the kiosk and acts as the system operator for villagers

• The rural broadband solution provider, who will construct and operate the network

and allied services for a fee

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 23/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   15 

• The State and Central Government and their agencies, who would need to act as

anchor tenants using the communication facilities, provide e-governance services and

proactively assist / promote network development in the villages

• The banks, which would need to provide low cost financing to the rural kiosk operator

under any of the various policies for promotion of self employment andentrepreneurship among the rural educated unemployed youth

• The Central Government and the USO fund, which will provide direct subsidy / 

funding for very small villages with population less than 1000 or for very remote

villages.

Financial Model 

At the core of any rural broadband / connectivity model in India is the Kiosk as an aggregator

of demand and a central infrastructure for the entire village. This is the only proven system by

which the rural population will be able to take advantage of broadband or any form of

connectivity services on a cost-effective basis.

On the revenue model side, there are two key aspects that require to be taken note of for

ensuring a viable business model

• Any rural broadband network must have a revenue model, based on e-commerce in

agro-commodities. This is the single largest revenue stream accounting for anywhere

between 50 to 60% of the total potential revenues for the service provider and the

kiosk operator

• The rural Broadband network must necessarily be designed to capture all possible

revenue streams. Triple play and convergence are a basic necessity for survival in

the rural market

On the cost side, capital expenditure is a critical component affecting the viability. A key point

to be understood is the high proportion of non-connectivity related assets in the capital cost

structure, e.g. kiosk equipment, back end support infrastructure, NOC, etc. The viable capex

limit on a per kiosk basis should not exceed Rs. 250,000 (USD 5500) for villages with

population of 2000 to 5000. For villages with smaller population sizes between 2000 and

1000, this capex limit may need to be lower, i.e. closer to Rs. 100,000 (USD 2200). It may not

be possible to reduce the capital cost below this given the minimum cost of provisioning the

kiosk, network and NOC. Therefore villages with population of less than 1000 may not be able

to support a sustainable broadband kiosk.

Such small villages could combine with other nearby villages of similar or larger size so that

the cluster has one broadband kiosk that may be based in any one village, but supports the

needs of all villages in the cluster. Villages that are both too small and are unable to cluster

with others would require mandatory Government / NGO funding for capital cost, and possibly

even running costs, to operate a broadband kiosk.

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 24/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   16 

Business Models and Funding options 

As can be seen in the exhibit below, almost 74% of the rural population could be covered

through broadband kiosk networks that are driven by industry capital.

Exhibit 15: Funding options for Rural Broadband Coverage  (%

%+(*

*7#

(*A

%

0&%

0*

# M( # #-4 = 0 A@

% %J( -# -4 0 A@

2 #J% %2 &4 /)

0 A@$

N# ,# #4 /)

$ 0

!!"1<<=-2

Impact of Duties and Taxes 

Even after the recent reduction in duties, the remaining effective duties impact capital

expenditure by 20 to 25%, thereby making the village kiosks unviable for a large proportion of

the rural population. Similarly taxes (such as entertainment tax, service tax) also affect the

total operating costs to the extent of over 35 to 40% of normal revenues. Again this distorts

the sustainability and breakeven points for the rural markets that could otherwise be served

by corporates. It is therefore recommended that the Government should waive all duties and

taxes for all rural broadband investments and thereby promote investments by corporates.

IV. BROADBAND SERVICES – CONTENT / APPLICATIONS

Content & Applications 

The digital content that can be delivered through broadband covers a wide range of

applications including:

• Societal Applications

o E-Education

o E-Health / Telemedicine

o E-Governance

• Commercial Applications

o Entertainment on demand

o E-Commerce, Tele working

o Business applications / data store on demand

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 25/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   17 

Readiness Assessment and Initiatives 

e-Education 

Providing equitable and affordable access to ICT resources would be the key to meeting the

educational needs of India and broadband can play a significant role in enabling the potential

of distance education / e-learning. Introducing high-speed broadband access in schools and

other educational institutions is one of the easiest and fastest ways to address the

educational requirements.

The detailed review and recommendations for promotion of e-education on the broadband

network has been taken up in the relevant section in Chapter 5 on Broadband in Public

Services. The critical recommendations are summarised below for reference:

• Setting up of a Central Nodal e-Education agency that would coordinate and ensure

coherence of all the initiatives and programs taken up for e-education

o This agency would be specially responsible for finalising the e-education

content standards for India

o They would design and execute programs for content creation and

aggregation / dissemination, training of faculty in ICT and in use of e-

education content and monitor and manage all programs undertaken in this

area

o They would play a critical role in providing certification of e-educational

content to the target population in collaboration with the various Institutions / 

Academic Boards so as to align such content to the educational system and

to create a demand for such content

• It is estimated that creation and maintenance of e-education content and applicationswould involve initial investment of around USD 550 to 650 million (i.e. Rs. 25-30

billion) and annual ongoing investment of USD 110-150 million (i.e. Rs. 5-7 billion) for

updation / maintenance / upgradation of content.

o Although the Private / NGO sector may play some role in creating content for

the commercially viable segments and even some select niche users, much

of the e-education content related investments (such as vernacular content,

primary / vocational school related content) may not be commercially viable.

The Government has a critical role here with regard to direct investment,

design of certified e-education materials, etc

The Government needs to train the existing faculty, employed in the Governmentowned / operated schools and educational institutes, in the use of ICT and e-

education tools / content. While technical / financial assistance for dissemination of

such training may be undertaken by industry, NGOs and external aid agencies, the

delivery of the training and effective use of the same by the faculty is the

responsibility of the Government.

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 26/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   18 

e-Health 

The key steps that need to be taken on a public–private platform to enable the full fruition of

the broadband aided tele-medicine promise in India have been detailed in Chapter 5 on

Broadband in Public services and are summarised below:

• Chart a national e-health strategy and roadmap

• Link up all Government health establishments to public broadband networks as they

are rolled out

• Promote investment from all private sector participants in the medical / health value

chain

• Put in place a viable commercial model involving all beneficiaries including insurance

businesses, pharmaceutical industries, etc. for tele-medicine solutions

• Develop standards and put in place mechanisms for resolution of all medico-legal

issues

• Promote awareness and acceptance through media campaigns of successful pilot

programs

e-Governance 

Broadband networks can not only enable faster and wider rollout of e-governance services,

but also allow enhanced delivery of services to citizens through use of complex applications

that would not have been possible in the narrowband environment. A key benefit for the

Government would be that a large part of the resources that are currently being spent or

planned to be spent for providing connectivity for delivery of e-governance services would no

longer be required. The planned e-governance services can be delivered using the public

broadband network and the resources thus freed up can be made available for alternate

developmental needs of the country. While a detailed review of the need for e-governance

and the issues involved in effectively providing it through a broadband network can be found

in Chapter 5 on Broadband in Public Services, the key findings have been summarised below:

• The starting point of a public e-governance system should be the computerisation of

all relevant operations within the Government so as to provide a seamless online

experience to citizens once the operations are e-enabled. This will require that all

Central and State Governments need to put together a comprehensive plan for:

o Re-engineering of internal Government processes and the interface points of

these processes with the public

o Implementing systems for automation and IT enabling of the re-engineered

processes

o E-enabling the applications and content so that the public may be able to

access them and commence transactions at kiosks

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 27/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   19 

o Replicating best processes / policies across the country at all locations

o Training of Government personnel at all levels on ICT usage and how they

can use e-governance tools and content

• Given the high level of illiteracy in India, there is a need to maintain video – audio

services that do not require the user to interact with only text based content / 

applications.

• Encourage public – private participation in funding of such initiatives including user

payments helping in funding the initiative (e.g. Bhoomi).

• Maintain a portfolio of potential funding agencies / sources and ensure that they are

periodically tapped for fresh funds as required.

• Set up an e-Governance policy for security and privacy protection and ensure

implementation in the e-Governance system.

• Where ever possible, leverage the State Government / their agencies to enable local

language translation of content so that all users can benefit from the provision of e-governance

Entertainment on demand 

The role of Entertainment on demand as a ‘driver’ in helping achieve the Broadband Vision

and goals has been discussed in Chapter 4 on Content and Applications. The key issues that

emerge are as follows:

• There are no consistent global trends in specific types of content and services in the

form of a killer application in the broadband space. But generally, broadband

generates higher usage and revenues from multimedia and video-audio services and

online shopping / e-shopping. Specific usage would depend on availability of content,

bandwidth available for use, charges, etc.

• The study of international trends indicates that content needs to meet the four

parameters of differentiation, interactivity, quality and variety

o Existing content that is being used in other traditional media may be re-

purposed and used in the initial period providing some degree of choice,

limited interactivity and improved (digital) quality.

o However beyond the first 12 to 18 months, availability of local language and

locally developed broadband specific content will become an imperative.

o Even the existing traditional media content, will need to be re-purposed andsignificantly improved in terms of quality of delivery to make an impact

o Lastly, usage of content would depend to a large extent on the bandwidth

availability and QoS on various parameters to ensure customer demand for

content. There is a need to ensure that the Broadband Industry gets together

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 28/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   20 

to set standards on this through mutual agreement between the access and

backhaul / CDN players and the content creator / aggregators.

• There are several gaps in the content value chain. The primary areas of concern

include non-movie / music content creators, digital factories (to prepare content for

use on broadband type of delivery systems) and content aggregators. From aperspective of all investment, new business formation and technical and management

skills, there is a need to upgrade the capability of the Industry within the next 2-3

years.

• The entire CDN capability needs to be put in place at the national and the city level

involving significant investment and development of human capital.

• The proprietary nature of systems in the broadcasting industry traditionally has had

an impact on the broadband space entertainment CPEs. Although the Industry is now

moving towards developing a set of common standards to ensure interoperability

across content stores, central office equipment and CPE, this is expected to take 2 to

3 years. India needs to ensure that global standards are adopted by the Indiancontent / CDN / CPE players and the standards are implemented as early as possible

once they are developed.

o Given the above two points viz. the gap in CDN capabilities, the investment

involved and the lack of common standards in the content creation and

delivery systems, it is worth considering, whether India should try to promote

a small group of interoperable CDN players and their systems / infrastructure

during the initial years of broadband rollout, so that customer mobility and

CPE interoperability is made possible.

o Also in the light of this, it is proposed that the CPE be provided on a rental

rather than on ownership basis to the subscribers by the service providers sothat it is possible to allow a financial basis for customer mobility and choice,

during the period till such mobility, choice and interoperability is made

possible through technological means.

It is relevant to highlight here that the last few points mentioned above apply not only to

entertainment, but would also affect any multimedia educational / commerce / health / 

governance related content as well.

Application services 

Primarily three applications services are expected to generate demand over broadband. They

are:

• Online retail

• Online finance

• Video conferencing

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 29/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   21 

While most of these services are available in India in narrowband formats, there exist

significant issues or gaps in generating high demand and usage for them. In the case of

online retailing, the key issues include:

• In a broadband environment, online retailers will need to integrate merchandising and

marketing by introducing advanced website tools that take advantage of high-speedconnectivity and assist product buyers in comparing and selecting products, for

instance, through live video chats with customer service representatives. However, as

several online retailers in India are yet to break even and are short of investible funds,

it is unlikely that they will make the investments necessary for broadband upgrades to

their sites in the next 1-2 years

• Online payment systems through payment gateways linked to user bank accounts are

not established yet, and many users are apprehensive of using their credit cards

online due to fears around security and misuse.

• The unorganised and fragmented structure of the retailing industry in India also acts

as a barrier to online retailing – since unsophisticated customers of low costunorganised retail shops are unlikely to demand the variety, choice and convenience

that departmental stores customers do, which prompt them to value e-tailing as an

option.

• There exist barriers also to increased penetration of online financial services in India.

• Low connectivity prevents introduction of bandwidth-intensive product

demonstrations. Poor connectivity also creates uncertainty in the mind of customers,

as there is the fear of transaction failures due to timeouts.

• Online banking websites are not integrated with the CRM and other systems of the

bank; banks do not therefore get a unified view of their customers. However, Internet

banking helps banks in reducing their transaction processing costs.

• There are no inter-bank payment gateways – this prevents seamless transfer of funds

and is a barrier to growth in online transactions.

• A key barrier to growth of online stock trading in India has been the absence of a fail-

safe method to close a transaction when the connection fails.

Conditional Access and Copyright Protection 

The lack of an effective and enforceable regulatory framework for protection of copyright

conditional access is a critical inhibitor to the creation / provisioning / distribution of all forms

of content and application services on the broadband network. It is therefore necessary thatIndia should create a framework in the immediate term that addresses protection of digital

content and copyright and limits or prohibits the use of circumvention tools for copying of

copyrighted digital content.

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 30/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   22 

V. KEY RECOMMENDATIONS FOR THE INDUSTRY

The following exhibits provide the summary of the key recommendations and action points for

the Industry.

Exhibit 16: Key recommendations for the Industry 

Key Recommendations for the Industry

Demand Stimulation

Keep access prices between Rs. 450 to 600 ($ 10-13) for ensuring mass marketpenetration and subscriber offtake / usage

Provide range of services / content including entertainment, education, health, communityparticipation, tele-working, etc. differentiated and tiered bouquets to maximize revenues

Provide Value-added content and services as early as possible

Strengthen revenue models

Multi-segment focus and multi-tiered solutions for different price ranges to maximise valuecapture from the market

Adopt / promote Kiosk / community solutions for rural, urban lower classes and small townpopulations

Rural solutions have to be linked to participation in village economy / agri-commodity tradeand commerce starting at the farmer’s gate

Manage costs effectively

Keep capital costs low through scaling either individually or through procurement poolingand other alliances among industry members to gain economies of scale

Lower operating costs through outsourcing and sharing of resources with alliance partners

Key Recommendations for the Industry

Access side

Support convergence of services at the earliest regardless of physical layer or priorclassification of industry

Support and assist early implementation of an effective Managed Access policy that allowsfor rapid capital formation and rollout of services to the market

Move towards alliances / partnerships that leverage existing capabilities and assets whilebridging gaps in own capabilities using alliance partner’s capabilities / resources. Work outfinancial / risk sharing arrangements among alliance / partnerships that support merger ofinterests rather than create conflict of interests.

Incumbents should consider innovative structuring options to achieve quick rollout withoutnecessarily losing control

Invest in human capital creation / skills development in existing areas of gaps (CDN,billing,payment, content aggregation, OSS/BSS) for broadband space

Cable industry should initiate a range of programs to create a consolidated, technologysavvy, customer oriented industry that is broadband capable

Work out specific spectrum requirements with the government and work out a way forsharing of spectrum among players

For rural broadband, Industry and associations need to come together and foster theinvestor-operator alliances / arrangements that will ensure true broadband rural initiatives

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 31/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   23 

Exhibit 17: Key Recommendations for the Industry 

Key Recommendations for the Industry

Content side

Industry should jointly set up ‘Experience Centers’ to study broadband usage

behaviour and test market content / applications; results can be made available to

participating members

Participate through investments in developmental content creation such as

education, health etc.

Re-purposing of existing content to meet broadband needs must ensure conversion

of existing content to high digital quality levels

By medium term, significant investment and effort to create broadband oriented and

broadband specific content

Create an industry association to track and adopt global trends in content standards

to ensure alignment

Consumer Protection / Support systems Industry members across the value chain need to come together and develop a set

of QoS based agreements that ensure quality of experience for the user

Access / CDN industry and the financing industry need to come together to put

together viable financing schemes to enable availability of rental / EMI options for

CPEs to the retail subscriber 

Key Recommendations for the Industry

Backhaul / NLD / ILD / IP transport

Promote local hosting of internet content - first for locally owned internet sites and

also for high traffic international site’s local replica Invest in creation of international bandwidth to support the expected growth of

usage of international content with rollout of broadband

Promote / develop IDCs, ASPs and other online service facilities to enable users tobenefit from the rapid access to the internet

 

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 32/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   24 

VI. ROLE OF THE GOVERNMENT / REGULATOR

The following exhibits summarise the key action points for the Government and the Regulator.

Exhibit 18: Role of the Government / Regulator 

Regulatory measures

Progressive reduction upto 75% of prevailing prices of international / domestic

bandwidth prices by 2006

Mandate interconnection for all broadband services (on any media / technology

platform) with the national backbone

Enable regulation for managed open access on incumbent copper network;

Release of unlicensed and licensed spectrum in the 2.5 GHz, 3.5 GHz and 5 GHz range

at low costs

Promote state level agreements for free Right Of Way in exchange for free bandwidth

for government requirements

Mandate standards for cable networks to make them Broadband capable

Mandate and enforce QoS standards for broadband service providers for each tier / 

type of broadband service; Regulator to conduct periodic audits, publish results and

penalise violators

Bring in Digital Copyright and Conditional Access Protection / Enforcement Law based

on proactive prevention (along the lines of the EU Digital Copyright Directive 2001)

Extend cyber laws on privacy and fraud to cover all media for broadband services

Industry structuring measures

Determine timing for full convergence of services, i.e. allowing triple play regardless oftechnology / underlying media

Allow for sharing, leasing, trading, sale and transfer of licenses, spectrum, bandwidth

and other assets/ resources among all industry players

Ensure adoption of global standards in technology / services so as to ensure

interoperability and standardisation

Extend FDI limits to all parts of the broadband industry value chain to attract overseas

investments

Explore options for establishment of national level repositories to kickstart the content

aggregation

Establish mechanisms for secure micro payments

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 33/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   25 

Exhibit 19: Role of the Government / Regulator 

Fiscal Measures

All broadband infrastructure / service providers, regardless of underlying technology ormedia, to be provided with a 10 year income tax waiver (as provided for the IT companies)

Exempt CO equipment and CPEs (including STBs and PCs) from all customs and excise

duties including countervailing duties, special duties and Sales Tax

Exempt broadband services for the next 10 years from payment of Service tax

Tax exempt broadband allowance for users, the same being tax deductible for paying

organisations

Treat investments in Broadband Experience Centers as R&D expenses - i.e. Tax free

status

Digital content (education, health, governance, local language, web content, interactive

entertainment) to be accorded soft infrastructure status with enabling incentives and

interventions

Provide Educated Unemployed youth who wish to set up BB Kiosks with easy financingoptions / support from the various self employment / entrepreneurship development funds

available

Rural

Full Triple Play to be allowed on all Rural broadband services

Deregulate rural broadband service players from licensing requirements. Mandate onlyregistration requirements

Subject to ensuring auditable open and transparent price discovery by the farmers

Remove all restrictions on direct corporate e-procurement of agriculture

commodities from the farmers through appropriate modification of the APMC

Provide exemption from Mandi Tax for all direct corporate e-procurement from

farmers

Promote educated unemployed rural youth to set up rural Broadband kiosks by providing

them matching funds from the USO funds and by assuring all authorised Rural Kiosk

operators low / nil (<2%) interest bank financing for setting up broadband kiosk facilities

Provide matching funds from the USO funds for all Rural Broadband Networks

connecting small (population below 2000) and / or remote villages

Mandate full screen video capable broadband connectivity to all schools and government

PHCs in the village from the kiosk within 5 years of setting up of the kiosk for all rural

broadband network providers / kiosk operators who use USO funding.

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 34/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   26 

Exhibit 20: Role of the Government / Regulator 

VII. ROADMAP & RESPONSIBILITIES

The definition of Broadband is stated as below:

“An always-on network capable of providing interactive voice, data and video services 

on public networks” 

In terms of speed, there should be at least two tiers of service – the ‘true’ broadband being

capable of providing minimum asymmetric bandwidth of 1.5 Mbps and a ‘lite’ version capable

of providing 256 kbps.

To achieve the under mentioned Broadband deployment and uptake objectives,

(i) 3 mn subscribers by 2006 and 10 mn subscribers / 1-1.5 m kiosks by 2010 in

urban India (figures exclude narrow and wide band access at speeds below 256

kbps),

(ii) 100,000 kiosks covering 50 % of rural India by 2010, (with coverage at speeds

below 256kbps, 100% coverage is expected)

(iii) Threshold access pricing of Rs. 450-600 for mass adoption by residential and

access pricing of Rs. 3600 for the commercial segment,

Public Services

Create Certification program for e-Education courses / content Firm up standards, systems and processes to certify e-educational content

creators / service providers and provide means for affiliation with relevant state / 

central boards and the UGC

Develop time bound action plan for incorporating ICT in school level teaching

curriculum and methodology

Review of the medico-legal laws to incorporate impact of e-Health and Tele-

medicine

Central / State governments and their agencies to stop all direct funding / 

investments in communication infrastructure for implementation of their individual

programs and instead promote adoption / use of public / private networks where

ever available and act as anchor tenants.

Detailed e-Governance and e-Health plans and their annual review to be made

available in public domain

PC proliferation strategies- Government guaranteed high volume based low price

PC procurement (like Thailand)

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 35/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   27 

the following Roadmap needs to be adopted and implemented.

CLOSURE IN FISCAL 2004-05

• Adoption of a National Broadband Policy by the Government (Ministry ofCommunications & Information Technology)

• Formalisation of Fiscal Support, mainly: (Ministry of Communications & Information

Technology, Ministry of Finance)

(i) Immediate Infrastructure Status and waiver of Corporate Income Tax for 10

years for Broadband Infrastructure and Service Providers

(ii) Immediate waiver of Custom & Excise duties and Service Tax

(iii) Introduction of tax free Broadband Allowance for users (equivalent to the

threshold access pricing, i.e., around Rs. 6000 p.a.), and making the same

tax deductible for paying organisations till 2006-07

• Additional interventions necessary for growing the PC base exponentially by 2006

including Government guaranteed high volume low price procurement system for the

public which could enable users, both individual and enterprise, to buy upwards of

perhaps 20-30m PCs over the next 2-3 years at an aggregate level (instead of the

normal 3-4m per annum). (Ministry of Communications & Information Technology;

Ministry of Finance)

• Suitable amendments to the Copyright Act including an evaluation and adoption of

technology based proactive protection measures (Ministry of Human Resource

Development; Ministry of Communications & Information Technology; Ministry ofInformation & Broadcasting; taskforce comprising CII National Broadband Economy

Committee, select legal experts, relevant Government departments and other

Industry bodies)

• Early implementation of Incumbent Telecom Operator’s plans for National Internet

Backbone Phase-II, Core Network, and deployment of upto 1m DSL lines

(Department of Telecommunications, Bharat Sanchar Nigam Limited, Mahanagar

Telephone Nigam Limited)

• The Industry should progressively bring down international and domestic bandwidth

prices by about 75% of current levels by 2006 and introduce the concept of wholesale

& retail pricing of domestic bandwidth

• TRAI, in consultation with the industry to (i) study and formulate the details of a

Managed Access Policy on Incumbent Telecom Operator; (ii) set down Quality of

Standards and definitions of service for broadband services; (iii) mandate

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 36/40

India’s Broadband Economy: Vision 2010 

 © Confederation of Indian Industry   28 

interconnection wherever required, (iv) lay down bandwidth pricing benchmarks / 

ceilings to enable viable broadband services at threshold access price levels (v)

enable domestic peering among all ISPs and examine issues associated with

inadequate / partial use of NIXI.

• Industry should create at least one National Content Delivery Network which would

enable multiple operators / service providers to provide complete suite of Broadband

services quickly along with benefits of scale and standards.

• A joint Government - Industry - Educational Institutions study for deployment of ICT in

education with special emphasis on Government schools - physical infrastructure,

Information Technology & communications infrastructure, teaching resources etc

(Department of Information Technology, Ministry of Human Resource Development,

CII National Broadband Economy Committee)

• A joint Government-Industry study for development of Digital Content (education,

health, governance, language web content and original interactive entertainment) &

Applications (DIT, MHRD, Ministry of Health, CII National Broadband Economy

Committee) and catalysing implementation of online “driver” services like public

utilities, acceptance of digitally signed invoices for audit, entrance tests etc which will

promote mass use of Broadband. The “soft infrastructure” status of digital content and

application and policy implication thereof will flow from the study.

• A joint Government –Industry study for modification of existing legal frameworks and

development of necessary enabling legislations for a robust Broadband economy

(Ministry of Communications & Information Technology, Law Ministry, Telecom

Regulatory Authority of India, CII National Broadband Economy Committee, other

relevant bodies).

• A study to chart out a roadmap for utilisation of domestic data centres, deployment of

international and domestic content and reduction in the use of international bandwidth

(CII National Broadband Economy Committee, TRAI).

• A collaborative industry initiative should be taken up to promote broadband to the

public through familiarisation and experience sessions at demo kiosks open to the

public and through generic promotion (CII National Broadband Economy Committee,

other relevant bodies)

• A joint Government - Industry work group should study and propose spectrum release

for urban and rural wireless rollouts and satellite usage policies including bandwidth

cost lowering, competition enhancing “open skies” policy (Department of

Telecommunications, Telecom Regulatory Authority of India, other relevant bodies)

• Adoption of policies for rural broadband: (i) registration instead of licensing, (ii)

convergent services, (iii) others (Ministry of Communications & Information

Technology, Telecom Regulatory Authority of India)

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 37/40

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 38/40

India’s Broadband Economy: Vision 2010

 © Confederation of Indian Industry  

Contributors

This report would not have been possible without the invaluable contribution of the following.

We thank them for sharing their perspectives and experiences with us.

Working Group MemberBharti Broadband

Kailash Choudhari

Aksh Broadband

Rajesh Madan

Alcatel

Rajesh Narang

Alcatel

Dr. Geetha 

Anna University

P Rambabu Asian Paints

Vivekanad Heble

Aventis Pharma

Gautam Thakar

Baazee.Com

Talnekar

Bajaj Auto

Rajesh Pavitran

Balaji Telefilms

Ashok Juneja

Bharti

S K Dattar

Bombay Dyeing

Anil Kaushik

BPCL

Ravindran

Broadband Pacenet Ltd.

Arvind Chawla

BSNL

Parag Kasture

CISCO

Arvind Kumar

Department of IT

B S Bedi

Department of IT

Dr Govind

Department of IT

Dr J S Sehra

Department of IT

K B Narayanan

Department of IT

Tushar Sighat

D-Link

Jayant Kumar

Department of Telecom

Shantanu Prakash

Educomp Datamatics Limited

Gulshan Rai

ERNET

R S Krishna

Galileo India Limited.

Dr. Pradeep Chowbey

Ganga Ram Hospital

Sridhar

Gems & Jewellery Export PromotionCouncil (GJEPC)

S Suresh

Glaxo SKB

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 39/40

India’s Broadband Economy: Vision 2010

 © Confederation of Indian Industry  

Kanti Haria

Haria Exports

Neeraj Bhatia

Hathway

Rajeev Tandon

Hero Honda

Aneesh Chaudhary

Hindustan Lever Limited

Avijeet Mukherjee

HP

Kallol Hazra

HP

B N Singh

Hughes Escorts Communications Limited

K Krishna

Hughes Escorts Communications Limited

Kunal Bhattacharya

ICI-Uniqema

Brig. Sreedharan

Incable

Jyotin GoelIndian Movie Producers Association

Julio Ribero

Indian Performing Rights Society

Sanjay Tandon

Indian Performing Rights Society

Manjunath Jagirdar

I-Spatial

Sivakumar S

ITC

V V Rajshekhar

ITC

Abhishek Rao

Marico

Jas Gulati

Microsoft Corporation (India) Pvt Limited

Major Vijay Kapur

Microsoft Corporation (India) Pvt Limited

Chandramohan Pupala

Mid Day Multimedia

Jayant Sharma

Milestone Interactive

Vivek Bharadwaj

Ministry of HRD

B K Mittal MTNL

Chirag UnadkatNarsee Monjee Institute of ManagementStudies

Sangeeta Gupta

NASSCOM

Diggy Barman

NIC, Department of IT

Dr Y K Sharma

NIC, Department of IT

PG Ponnapa

nLogue

C Chakravorty

Office of the Registrar General & CensusCommissioner

Satish Shetty

PAFEX

Arun Gupta

Pfizer

Vipul Pradhan

Phonographic Performances Limited

Dhaval Agarwal

Qualtime exports Corporation

8/14/2019 India's Broadband Economy_Vision 2010_Vision Strategies Recommended Action_2004_Executive Brief

http://slidepdf.com/reader/full/indias-broadband-economyvision-2010vision-strategies-recommended-action2004executive 40/40

India’s Broadband Economy: Vision 2010

Prakash Jhaveri

River Diamond & Jewels Company

Abhik Mitra

RPG Group

Ronak Rughani

Rughani Brothers

Dr. Pednekar

Ruia College

Jyoti Sagar

Sagar Arts

Gowri Ishwaran

Sanskriti School 

Kavita Punjala

Sanskriti School

Pradeep Kumar

SBI

Shrikant Joshi

Sify

V V Kannan

Sify

M Venugopal

Software Technology Park of India

S N Zindal

Software Technology Park of India

Rajiv Mehta

Surat Diamonds & Jewellery

Noel O' Connor

The Technology Mission

Sam George

Traveljini.com

N C Gupta

Tulip

Pradeep Hejmadi

Turner International India Private Limited

Prof. J.B.Joshi

UDCT Mumbai

Ashwani Kumar

UTStarcomm

Dhruv Anand

UTStarcomm

Yogesh Bijlani

UTStarcomm

P K Garg

Wireless Planning & Coordination Wing,MOCIT