12 th Symposium on Development and Social Transformation

Panel 2: The Changing Face of Telecommunications and Power Sector Policies

Tuesday November 15 (10:45- 12:15)

12th Symposium on

Development and Social Transformation

Bridging the Digital Divide in India – Lessons from Egypt

Sanjeev Kumar Sharma


12th Symposium on


21 April 2023 Sanjeev K SharmaSanjeev K Sharma

Presentation OutlinePresentation Outline

TELECOM REVOLUTION IN INDIA – THE MYTH TELECOM REVOLUTION IN INDIA – THE MYTH

REASONS FOR POOR ICT PENETRATION IN RURAL INDIA REASONS FOR POOR ICT PENETRATION IN RURAL INDIA

DIGITAL DIVIDE – THE INTERNATIONAL PERSPECTIVE DIGITAL DIVIDE – THE INTERNATIONAL PERSPECTIVE

Policy Initiatives - Lessons from EgyptPolicy Initiatives - Lessons from Egypt

Suggestions on Implementation in IndiaSuggestions on Implementation in India


TELECOM REVOLUTION IN INDIA – THE MYTH

• 72% of Indian Population Lives in Villages• 741 million live in over 600 thousand Villages• Absence of basic infrastructure like Electricity, Road &

Telecom has resulted in poor socio-economic growth• Literacy rate 49.4% as compared to 70% in urban areas• Every 3 out of 4 villages do not have primary health

centers• Result – 72% of population contributes to only 24% of

GDP • The lack of policy initiatives is reflected in widening

digital divide between rural and urban India



• Source – Telecom Regulatory Authority of India’s website



• The trend of infrastructure building in rural areas is on decline and this is alarming

Year 2002-03 Year 2003-04

Villages provided with direct access to telecommunication facility.

45425 8060

Rural telephones provided 2.26 million 0.865 million

% of rural telephones to over all phones in India 20.89% 16.03%

• Immediate need for policy intervention• Digital divide is worldwide phenomenon and we can learn from other

similarly emerging economies• International perspective indicates thrust on building information

society by access to information through internet


REASONS FOR POOR ICT PENETRATION IN RURAL INDIA

• Sparsely populated• Poor purchasing power • Supporting infrastructure like electricity and

transport in poor conditions• Unavailability of technical manpower• Low business volumes

All this results in high infrastructure set-up costs, low returns and high operational costs - Typical cart and horse situation


DIGITAL DIVIDE – THE INTERNATIONAL PERSPECTIVE

• The ICT development indices report released by United Nations Conference on Trade and Development (UNCTAD) shows that during 1995-2002 countries like Egypt, Mexico, China & South Korea have shown remarkable progress in increasing the penetration of ICT amongst masses.


DIGITAL DIVIDE – THE INTERNATIONAL PERSPECTIVE

• rapid growth in telecommunications have been either demand driven like in China or state-pushed like in South Korea and Egypt.

• The growth of ICT in urban India has been mainly demand driven. BUT

• To increase the penetration of ICT in rural India will require greater policy leadership and initiative from state.

• Hence policy initiatives in Egypt are of special interest to india


Policy Initiatives - Lessons from Egypt

• Egypt rose sharply ICT diffusion index ranking from 154th to 112th position

• Since 1999 MCIT in Egypt has launched several policy initiatives to build it’s information society

• For success all policies focus on three aspects

2. Accessibility2. Accessibility

3. Affordability3. Affordability1. Awareness 1. Awareness

Policy Success



• Egypt’s overall dream of building information society and bridging the digital divide is based on three pillars of policy initiatives– Build extensive R & D capacities– Provide conducive regulatory framework– ICT capacity building in community through various e-

Access policy initiatives like • Free Internet access• IT Clubs• PC for community• ICT trust fund• Mobile ICT units• Smart school network etc.



• Started in Nov 2002 by MCIT• To achieve PC penetration of 1 for every 3 families• Aim – sale 6 million PCs in next 7 years• Easy credit facility to be paid in 40 installments• Collaboration with 22 hardware providers• Verification, sales facilitation, internet provision and installment

collection by Telecom Egypt• Tie up with National Bank of Egypt & BankeMishr and Insurance

agency• MCIT monitors program and performance of private partners• Xceed call center to built awareness • Advantages - Tremendous boost to sale of PC , employment

generation, employment generation, capacity building, export

PC for Community PC for Community


Suggestions on Implementation in India

Banks- Provide finance with 36 installments- Provide PC for connectivity with BSNL server for credential verification and installment collection- Financing the projects of enlisted PC manufacturers

DOT- Coordinate the activities of various partners- Provide finance through USO fund- Will enlist local PC manufacturers and monitor performance- Coordinate with various ministries for tax exemptions- Will negotiate rates for supply of PCs and software

PC manufacturers and software providers

- Develop local language applications- Develop component level manufacturing capabilities- Will get tax exemptions on sale of PCs- Provide at least 36 month warranty - Develop sales and service centers

BSNL- Verification of credentials of loan-seekers- Collection of monthly installments though telephone bills- Free internet access for PC buyers for one year (Claim compensation from USO fund)- Implement scheme through its teleshoppes (Sales outlets)

“Own Your PC”Responsibilities

of various partners



• Started by MCIT to provide access to technology in under-privileged areas on shared access basis

• Aim at setting up 2800 Clubs by June 2007, 1000 already operational with average 1000 users per club

• Tackles affordability and accessibility• Nominal fee of about 0.2 USD per hour• Government provide hardware and private partner provides

infrastructure• Training the trainer program provides employment• Software library, surfing, training available to users• International partnerships with Microsoft, UNDP, Korea• Software application in Arabic • Advantages – Employment, entrepreneur development, Use by

small businessmen, increased computer literacy,

IT Club PolicyIT Club Policy


Suggestions on Implementation in India

• Funds required – Appx 4,000 USD per center

• Implement in 20,000 villages in first phase (those above 5,000 population

Private sector- provide space, infrastructure, utilities, furniture and security- Charges users for service which covers operating costs

Private sector- provide space, infrastructure, utilities, furniture and security- Charges users for service which covers operating costs

DOT- Overall coordination- Assessment of performance -Provide funds through USO-NIC to develop vernacular content

DOT- Overall coordination- Assessment of performance -Provide funds through USO-NIC to develop vernacular content

BSNL- Provide hardware - Train owners to generates managers cum trainers for the telecenters- Provide connectivity

BSNL- Provide hardware - Train owners to generates managers cum trainers for the telecenters- Provide connectivity

COMMUNITY TELECENTER

MODEL

COMMUNITY TELECENTER

MODEL

• 1 Server, 3 PCs, printer, LAN & UPS in every Club

• Estimated cost of 90 million USD can be met through USO fund

ICT Policy: A Comparative Study of USA and India

Debkumar Chakrabarti


12th Symposium on


Outline of PresentationOutline of Presentation

ICT : The PotentialICT : The Potential ICT Policy: The Normative WayICT Policy: The Normative Way ICT Policy: Developed Countries (USA, ICT Policy: Developed Countries (USA,

Japan, EU)Japan, EU) ICT Policy: Developing Countries (China, ICT Policy: Developing Countries (China,

S.Korea, India)S.Korea, India) Concerns & LessonsConcerns & Lessons RecommendationsRecommendations

ICT: The PotentialsICT: The Potentials The key enablers of globalization.The key enablers of globalization.

Transformed the business, markets and Transformed the business, markets and organizations, revolutionized learning and organizations, revolutionized learning and knowledge-sharing.knowledge-sharing.

Empowered citizens to equitable and prosperous Empowered citizens to equitable and prosperous future, democratized societies and resulted in future, democratized societies and resulted in significant economic growth in many countries. significant economic growth in many countries.

Impact of their value-addition had been so Impact of their value-addition had been so rewarding. The technologies themselves became rewarding. The technologies themselves became more affordable and accessible.more affordable and accessible.

Contribution of ICT —ICT growth and ICT diffusion. Contribution of ICT —ICT growth and ICT diffusion.

ICT: The Normative PolicyICT: The Normative Policy The ICT policy of a country should focus equally The ICT policy of a country should focus equally

on the following three major endeavors:on the following three major endeavors: Targeting the ICT-producing sector as a “strategic” Targeting the ICT-producing sector as a “strategic”

industry to heighten its formation and growth; andindustry to heighten its formation and growth; and Fostering the diffusion of ICT throughout the economy.Fostering the diffusion of ICT throughout the economy. Social use of ICT.Social use of ICT.

• Targeting only one and thrust on export Targeting only one and thrust on export orientation mainly to garner rapid benefits may orientation mainly to garner rapid benefits may create a major economic mismatch. create a major economic mismatch.

• Absorptive power of its own ICT productions to Absorptive power of its own ICT productions to check susceptibility to international recession and check susceptibility to international recession and regional inequalities. regional inequalities.

ICT Policy: Developed Countries ICT Policy: Developed Countries USAUSA

Freedom and support for the ICT industry.Freedom and support for the ICT industry.

Stimulation of high-tech entrepreneurial culture, creating a Stimulation of high-tech entrepreneurial culture, creating a homogeneous and flexible labour market while acting as a homogeneous and flexible labour market while acting as a launch customer for new technologies. launch customer for new technologies.

The industry is characterized by a high-tech attitude and a The industry is characterized by a high-tech attitude and a close cooperation with universities. close cooperation with universities.

Globally the biggest purchaser of ICT goods and services Globally the biggest purchaser of ICT goods and services (45% of world’s total spending). (45% of world’s total spending).

Some of the largest firms in the field of ICT originated in the Some of the largest firms in the field of ICT originated in the USA (Microsoft, Hewlett-Packard, Intel, IBM, to name only a USA (Microsoft, Hewlett-Packard, Intel, IBM, to name only a few).few).

Sheer size of the home market. Support from the government Sheer size of the home market. Support from the government sector, DoD, NASA, and through "Homeland Security sector, DoD, NASA, and through "Homeland Security Initiative". Initiative".

ICT Policy: Developed Countries ICT Policy: Developed Countries JAPANJAPAN

A techno-cultural fit.A techno-cultural fit.

Broadband access is a major topic on the government's ICT Broadband access is a major topic on the government's ICT policy policy agenda, private sector taking the lead.agenda, private sector taking the lead.

Japan has an excellent telecommunications infrastructure. High Japan has an excellent telecommunications infrastructure. High potential in educational standards and technological capability.potential in educational standards and technological capability.

IT accounted for 11.6% of GDP in 2000.IT accounted for 11.6% of GDP in 2000.

Reliance on mainframes has meant that Japanese businesses Reliance on mainframes has meant that Japanese businesses favored custom software made by domestic software firms.favored custom software made by domestic software firms.

Japan is spending more than $30 billion a year on Japan is spending more than $30 billion a year on telecommunication infrastructure improvement.telecommunication infrastructure improvement.

New IT legislation in 2001 ('IT Basic Law') and the 'e-Japan New IT legislation in 2001 ('IT Basic Law') and the 'e-Japan strategy' program.strategy' program.

ICT Policy: Developed Countries ICT Policy: Developed Countries EUEU

European ICT policy: mildly regulating and stimulating aimed at a European ICT policy: mildly regulating and stimulating aimed at a strong social cohesion. It contains the following elements:strong social cohesion. It contains the following elements:

RegulationRegulation e-Europee-Europe R&DR&D European ICT policy is aimed at developing an 'Information Society European ICT policy is aimed at developing an 'Information Society

for all'.for all'.

The EU is strong in Telecommunications, Sustainable development The EU is strong in Telecommunications, Sustainable development and Social protectionand Social protection

Regulation initiatives: adoption of harmonized standards such as Regulation initiatives: adoption of harmonized standards such as GSM, the liberalization of the telecommunications sector and the GSM, the liberalization of the telecommunications sector and the creation of the Single Market.creation of the Single Market.

The central policy initiative is the e-Europe 2005 Action Plan. The central policy initiative is the e-Europe 2005 Action Plan.

By the end of 2005, Europe aims to have modern, on-line public By the end of 2005, Europe aims to have modern, on-line public services (e-Government, e-Learning, e-Health) and a dynamic e-services (e-Government, e-Learning, e-Health) and a dynamic e-Business environment, based on a widespread availability of Business environment, based on a widespread availability of broadband access at competitive prices and a secured information broadband access at competitive prices and a secured information infrastructure. infrastructure.

Concerns: Developed Concerns: Developed CountriesCountries

Off-shoring of jobs, manufacturing bases Off-shoring of jobs, manufacturing bases are gaining considerable momentum.are gaining considerable momentum.

Intellectual property right, privacy, digital Intellectual property right, privacy, digital

divide, misuse of ICT (terrorism, money divide, misuse of ICT (terrorism, money laundering, etc.), affordable universal laundering, etc.), affordable universal access. access.

The EU is relatively weak in Innovation and The EU is relatively weak in Innovation and R&D, Information society and Enterprise R&D, Information society and Enterprise ecosystem.ecosystem.

ICT Policy: Developing Countries ICT Policy: Developing Countries ChinaChina

The The success success of the ICT industry in China is a result of: of the ICT industry in China is a result of: Deliberate government policies to use Joint Ventures as Deliberate government policies to use Joint Ventures as

vehicle for FDIs and Technology Transfer; vehicle for FDIs and Technology Transfer; A very competitive manufacturing industry aimed at A very competitive manufacturing industry aimed at

export, which can now also serve the gigantic domestic export, which can now also serve the gigantic domestic market.market.

The availability of a huge pool of low-cost labour;The availability of a huge pool of low-cost labour;

Hardware production is booming. Chinese companies are Hardware production is booming. Chinese companies are rapidly increasing their market share; from 2% in 1999 to 30% rapidly increasing their market share; from 2% in 1999 to 30% by 2002.by 2002.

The Chinese Government announced in 2002 its support for the The Chinese Government announced in 2002 its support for the domestically developed 3G standard TD-SCDMA.domestically developed 3G standard TD-SCDMA.

The Chinese software industry is small and underdeveloped.The Chinese software industry is small and underdeveloped.

China's Government places strong emphasis on promoting China's Government places strong emphasis on promoting domestic production capabilities and using local products in domestic production capabilities and using local products in preference to imported foreign technology. preference to imported foreign technology.

ICT Policy: Developing Countries ICT Policy: Developing Countries IndiaIndia

India: building a huge software industry aimed at export.India: building a huge software industry aimed at export.

Focused Focused policy policy set by India's Government, aiming at liberalization and set by India's Government, aiming at liberalization and stimulating the software industry by creating favorable conditions for stimulating the software industry by creating favorable conditions for investments. investments.

The Indian software industry grew from a mere USD 150 million in 1991-The Indian software industry grew from a mere USD 150 million in 1991-1992 to a staggering USD 9.5 billion in 2002-03.1992 to a staggering USD 9.5 billion in 2002-03.

India's India's success success in software is rooted in a combination of factors:in software is rooted in a combination of factors: The availability of a large low-cost and highly educated, English The availability of a large low-cost and highly educated, English

speaking labor force;speaking labor force; Low entry requirements in terms of investments;Low entry requirements in terms of investments; Favorable treatment of the sector by the government, for example Favorable treatment of the sector by the government, for example

through tax exemptions and;through tax exemptions and; Strong connectivity with the U.S. computer industry.Strong connectivity with the U.S. computer industry.

There remain however There remain however challengeschallenges, including the perception of an , including the perception of an unfavorable regulatory climate, an overloaded judicial system, poor unfavorable regulatory climate, an overloaded judicial system, poor infrastructure and costly access, and limited use of ICT in the domestic infrastructure and costly access, and limited use of ICT in the domestic market.market.

Concerns: Developing Concerns: Developing CountriesCountries

• The linear projection of future growth would create a new set The linear projection of future growth would create a new set of macro-economic problems. ICT-related exports alone can of macro-economic problems. ICT-related exports alone can exceed all current accounts payment by 2010, completely exceed all current accounts payment by 2010, completely dominating all other parts of the economy. This may put dominating all other parts of the economy. This may put upward pressure on the currency, with inimical consequences upward pressure on the currency, with inimical consequences on other sectors of the economy, especially manufacturing.on other sectors of the economy, especially manufacturing.

• The inordinate focus on ICT sector is gradually and constantly The inordinate focus on ICT sector is gradually and constantly amplifying inequalities, particularly in the rural Asia, where amplifying inequalities, particularly in the rural Asia, where majority of population resides. The benefits of ICT have been majority of population resides. The benefits of ICT have been confined to urban elites, till now.confined to urban elites, till now.

• The export oriented thrust on ICT is propelling to focus on The export oriented thrust on ICT is propelling to focus on cost advantage in these countries, rather than deeper cost advantage in these countries, rather than deeper technological capabilities, making the continuation of growth technological capabilities, making the continuation of growth doubtful. doubtful.

Lessons to be learned from the Lessons to be learned from the Developing countriesDeveloping countries

The countries referred show a strong preparedness to make The countries referred show a strong preparedness to make choices and shape the future. choices and shape the future.

The Indian Government focused on software development The Indian Government focused on software development for export and far-reaching measures: the government for export and far-reaching measures: the government permitted foreign equity of up to 100% and duty free import permitted foreign equity of up to 100% and duty free import on all inputs, created technology parks and offered on all inputs, created technology parks and offered professional labor services to clients.professional labor services to clients.

Korea, like Japan, has shown an early commitment for Korea, like Japan, has shown an early commitment for broadband and has created the financial incentives for broadband and has created the financial incentives for them. them.

These choices have paid off: the countries now avail of ICT These choices have paid off: the countries now avail of ICT sectors that are highly dynamic and have the best sectors that are highly dynamic and have the best prospects for the future.prospects for the future.

Lessons to be learned from the Lessons to be learned from the Developed countriesDeveloped countries

• liberalize further into market-based operation and competition and liberalize further into market-based operation and competition and limit the role of the Government to regulation, arbitration and limit the role of the Government to regulation, arbitration and negotiation only.negotiation only.

• induce large-scale social use of ICT, eg. in education, primary induce large-scale social use of ICT, eg. in education, primary health, e-governance, etc.health, e-governance, etc.

• promote private sector research and development, and promote private sector research and development, and innovations.innovations.

• promote massive cross-sectoral ICT diffusion, both to gain promote massive cross-sectoral ICT diffusion, both to gain competitive efficiency on %cost saving as well as to generate competitive efficiency on %cost saving as well as to generate absorptive power of ICT within the country.absorptive power of ICT within the country.

• pursue policies both domestically as well as regionally to ensure pursue policies both domestically as well as regionally to ensure greater application of ICT within Asian economies. Given that greater application of ICT within Asian economies. Given that different countries of the region have expertise in different parts of different countries of the region have expertise in different parts of this new technology, greater application of ICT provides an this new technology, greater application of ICT provides an opportunity for greater economic cooperation within Asia. opportunity for greater economic cooperation within Asia.

Roads to Convergence – Regulatory Response

Deepali Sharma


12th Symposium on


DEEPALI SHARMADEEPALI SHARMA

Presentation OutlinePresentation Outline

What is convergence?What is convergence?

Possibilities created by Convergence.Possibilities created by Convergence.

Outcomes of convergence .Outcomes of convergence .

Normative policies to reap the Normative policies to reap the potential of convergence.potential of convergence.

Regulatory response to Regulatory response to convergence .convergence .


What is Convergence?What is Convergence?Convergence refers to the process by Convergence refers to the process by which communications networks and which communications networks and services, which were previously considered services, which were previously considered separate, are being transformed such that:separate, are being transformed such that: Any one network platform can carry all types of Any one network platform can carry all types of

services .services . One integrated consumer appliance can One integrated consumer appliance can

receive all types of services, and receive all types of services, and New services are being created. Examples of New services are being created. Examples of

new products and services being delivered new products and services being delivered include: include:

Web casting of any audiovisual data, Web casting of any audiovisual data, Home-banking and home-shopping over the Internet, Home-banking and home-shopping over the Internet,

Voice over the Internet;Voice over the Internet; etc etc


Service Provider

Telecom Service

Cable

Service

Broadcast Service

Power/Utility Service

Customer Premises Equipment

TV Mobile handset

ComputerFixed phone handset

Modes of delivery of Service

Fiber/twisted pair- telecom operator

Fiber/Coaxial cable Power/Utility operator

RF Spectrum without satellite

Satellite

Market Related Developments

Bundling of Service

Flat rate price package

Integrated operations due to mergers/ condolidation/ linking

Power/Utility Service

One Service Provider

Common Delivery Medium

Common CPE

One Stop purchase


Outcomes of ConvergenceOutcomes of Convergence

Services provided by any- whether Services provided by any- whether telecom operator/Broadcaster/ ISP are telecom operator/Broadcaster/ ISP are encroaching over those provided by othersencroaching over those provided by othersAuthority and work span of individual Authority and work span of individual regulators-Telecom /Broadcasting /IT are regulators-Telecom /Broadcasting /IT are overlapping, resulting in duplication of overlapping, resulting in duplication of resources and effortsresources and effortsResults in Results in confusion among operators, confusion among operators, renders government policies ineffective, renders government policies ineffective, Hinders development of technology and Hinders development of technology and

marketmarket


Issues for reforms in RegulationsIssues for reforms in Regulations

Reforms do not simply involve extension of Reforms do not simply involve extension of present policies over new servicespresent policies over new services Complete overview of legal and policy Complete overview of legal and policy

frameworkframework Commercial success of technology and market Commercial success of technology and market

determine direction of convergence and area of determine direction of convergence and area of policy reformpolicy reform

Policy reforms decide on the future of Policy reforms decide on the future of technology and marketstechnology and markets

Ideal solution is to have a single policy Ideal solution is to have a single policy and regulator governing the three sectors and regulator governing the three sectors


New Policy FrameworkNew Policy Framework

Single regulatory policy framework based on law Single regulatory policy framework based on law of competitionof competitionLess of enforced regulation but more of self Less of enforced regulation but more of self regulationregulationEnsure optimum utilization of SpectrumEnsure optimum utilization of SpectrumHorizontal structure in Broadcasting separated Horizontal structure in Broadcasting separated across carriage and contentacross carriage and content

Common regulator across three sectors for carriageCommon regulator across three sectors for carriage Content regulation determined by social and cultural Content regulation determined by social and cultural

objectives of the countryobjectives of the country


Response across the worldResponse across the world

Singapore , UK, Malaysia, India have Singapore , UK, Malaysia, India have introduced an integrated and independent introduced an integrated and independent Regulator.Regulator.

The new regulators are forThe new regulators are for regulating and promoting ICT industry regulating and promoting ICT industry regulations are based on competition laws regulations are based on competition laws they promote self regulation by industriesthey promote self regulation by industries the procedure devised for framing regulations the procedure devised for framing regulations

is more transparent having increased public is more transparent having increased public participation.participation.


Reforms in UK, Malaysia and SingaporeReforms in UK, Malaysia and Singapore

United Kingdom created OFCOM by merging five United Kingdom created OFCOM by merging five regulatory bodiesregulatory bodies

OFTELOFTELRadio Communications AgencyRadio Communications AgencyIndependent Television Commission Independent Television Commission Radio AuthorityRadio AuthorityBroadcasting Standards Commission, which were merged to Broadcasting Standards Commission, which were merged to form an Integrated body OFCOMform an Integrated body OFCOM

Singapore formed Infocomm Development Singapore formed Infocomm Development Authority by mergingAuthority by merging

Telecommunications Authority of SingaporeTelecommunications Authority of Singapore National Computer Board to form National Computer Board to form

Malaysia formed single regulator –The Malaysia formed single regulator –The Communications and Multimedia CommissionCommunications and Multimedia Commission


Case of IndiaCase of India

India is moving towards a converged India is moving towards a converged regulator heading for Unified licensing regulator heading for Unified licensing policy - issues regarding content policy - issues regarding content regulations yet to be resolvedregulations yet to be resolved

The countries that have reformed The countries that have reformed earlier are reaping the benefits of earlier are reaping the benefits of developments in technology and developments in technology and market for their economic growth market for their economic growth better.better.

Increase in Broadband Penetration in India: Policies for Unbundling the Local Loop

Neeraj Kumar


12th Symposium on


15/11/2005 Maxwell, School, SU, USA

IntroductionIntroduction

What is Local loop ?What is Local loop ?

What is Broadband ?What is Broadband ?

What is Digital Subscriber Loop (DSL ) ? What is Digital Subscriber Loop (DSL ) ?

Relationship between DSL & BroadbandRelationship between DSL & Broadband


Unbundling ?Unbundling ?

Incumbent operator is forced to make its Incumbent operator is forced to make its local loop available to other companies local loop available to other companies (competitors) to provide broadband through (competitors) to provide broadband through DSL in competition to incumbent itself. DSL in competition to incumbent itself.


Problem facedProblem faced

Low Broadband PenetrationLow Broadband Penetration


Possible Solution - UnbundlingPossible Solution - Unbundling

Brings competition in provisioning of Brings competition in provisioning of BroadbandBroadband

Breaks monopoly of incumbent Telecom Breaks monopoly of incumbent Telecom operatoroperator


Why not to Unbunde ?Why not to Unbunde ?

Forces incumbents to provide competitors Forces incumbents to provide competitors with essential business inputs with essential business inputs

New entrants 'parasite' the incumbent's New entrants 'parasite' the incumbent's network - stifles infrastructure based network - stifles infrastructure based competition and technical innovation competition and technical innovation

More regulation required- detrimental to the More regulation required- detrimental to the market.market.


Why to Un-bundle ?Why to Un-bundle ?

Local loop infrastructure can not be Local loop infrastructure can not be duplicated – thus leaving incumbent’s duplicated – thus leaving incumbent’s monopolymonopoly

Incumbent created local loop infrastructure Incumbent created local loop infrastructure under state monopoly protection and using under state monopoly protection and using taxpayer money.taxpayer money.

Incumbents seen to be less efficient and Incumbents seen to be less efficient and lethargiclethargic


International scenario - Telephone lines & No. of International scenario - Telephone lines & No. of Broadband ConnectionsBroadband Connections

Table 1– Broadband EU (1) USA (2) Norway

(3) India

Main telephone lines (4)

209 million

190 million

3.26 million

45 million

Broadband 8.3 million (4%)

16.2 million (8.5%)

0.17 million (5%)

Just crossed 0.1 million (Mid 2005)

DSLs in total

of which unbundled

6 million

4%

5.1 million

4.4%

0.1 million

40%

Not applicable

Other 0.2 million

1.7 million

0.025 million

-----


Status of Unbundling - InternationalStatus of Unbundling - International

U.K. – Unbundling started in 2000. 31,000 local U.K. – Unbundling started in 2000. 31,000 local loop connections have been 'unbundled' short of a loop connections have been 'unbundled' short of a target of 50,000. (31 January 2005) target of 50,000. (31 January 2005)

ULL DSL as % of total DSL - ULL DSL as % of total DSL - UK - 0.39%, UK - 0.39%, U.S. – LLU working since 1996. Unbundled U.S. – LLU working since 1996. Unbundled

loops more than half of CLECs’ lines (December loops more than half of CLECs’ lines (December 2001). 2001).

European Union (EU) – 0.02% European European Union (EU) – 0.02% European incumbent’s lines were unbundled 27 months after incumbent’s lines were unbundled 27 months after unbundling starting in December 2000unbundling starting in December 2000


Unbundling – a failure or a success in other Unbundling – a failure or a success in other countriescountries

““There seems to be no correlation betweenThere seems to be no correlation between unbundling unbundling and DSL penetration and no effect of unbundling on and DSL penetration and no effect of unbundling on competition resulting in DSL penetration. EU regulator’s competition resulting in DSL penetration. EU regulator’s competition hypothesis is not true - Cullen International competition hypothesis is not true - Cullen International analysis”analysis”

“ “ Local loop unbundling (LLU) is not working “(ECTA Local loop unbundling (LLU) is not working “(ECTA 2002)” - Phil Elvis, ECTA Managing Director2002)” - Phil Elvis, ECTA Managing Director

Is it an early phase & result may not be conclusiveIs it an early phase & result may not be conclusive Source: European competitive Telecom. Association Source: European competitive Telecom. Association

(ECTA), DSL Scorecard, end of March, 2003(ECTA), DSL Scorecard, end of March, 2003


Unbundling – International experienceUnbundling – International experience

Operational coordination problems between the incumbent Operational coordination problems between the incumbent and new entrants regarding processes such as ordering, and new entrants regarding processes such as ordering, provisioning, billing, fault handling and service level provisioning, billing, fault handling and service level agreement, pricing, co-location, space availability, agreement, pricing, co-location, space availability, spectrum management on local loops. spectrum management on local loops.

Arranging power supply for additional equipment, Air-Arranging power supply for additional equipment, Air-conditioning, fire control, security at premises etc.conditioning, fire control, security at premises etc.

Lot of litigationLot of litigation


Indian ScenarioIndian Scenario

95% local loop (45 million) is with 95% local loop (45 million) is with incumbents viz. BSNL & MTNLincumbents viz. BSNL & MTNL

Broadband penetration in India 0.1 million Broadband penetration in India 0.1 million in mid 2005.in mid 2005.


Broadband Targets In IndiaBroadband Targets In India

Year Ending Internet Subscribers Broadband Subscribers

2005 6 million 3 million




Unbundling – Issues in IndiaUnbundling – Issues in India

Private operators support it – to make quick Private operators support it – to make quick moneymoney

Incumbents – out of 41 million copper loops 14 Incumbents – out of 41 million copper loops 14 million are in rural areas. Out of balance 27 million are in rural areas. Out of balance 27 million, around 25-30 per cent can be leveraged million, around 25-30 per cent can be leveraged for broadband – which is just 7 million for broadband – which is just 7 million

Incumbents oppose it – don’t want to give Incumbents oppose it – don’t want to give infrastructure to competitors on platterinfrastructure to competitors on platter

Regulatory body – recommended itRegulatory body – recommended it


Indian Government decision on UnbundlingIndian Government decision on Unbundling

Not to un-bundleNot to un-bundle

But stiff targets for incumbentsBut stiff targets for incumbents

If targets not met – threat of unbundlingIf targets not met – threat of unbundling


My view on Unbundling in IndiaMy view on Unbundling in India

Low number of local loops to begin with Low number of local loops to begin with compared to developed countriescompared to developed countries

Gains expected appear to be less compared Gains expected appear to be less compared to the problems/ cost expected in to the problems/ cost expected in unbundlingunbundling

High targets of broadband connections - High targets of broadband connections - Unbundling will not solve problem, new Unbundling will not solve problem, new technologies required technologies required

Power Sector Reform Under Socio-political Constraint & Economic Compulsion:

Learning From Brazil

Susanta Kumar Das


12th Symposium on


EVOLUTION OF POWER SECTOR IN BRAZIL

Start-up of electrical Industry- Through Private initiative in Late Nineteenth Century.

No fixed Code, Rule or Regulation- up to 1930. Rate of growth of industry @ 7.7% per Annum.

Great Depression of 1929- Change of Industrial policy and impact on Power Sector.

In 1934, the Water Code Act – abolition of all old contract, Introduction of Cost Plus Tariff Regime.

Drop in Investment compare to Growing consumption Demand- Growth dropped to 4.9% during 1930-40.

Post Word War II, Political Consensus for Development of Power Industry –Lead Role of Public Sector company- 8.8% Growth During 1945 to 1970.

EVOLUTION OF POWER SECTOR IN BRAZIL- Continue

Scarce fossil Fuel reserve- Plenty of Hydro-power potential. Thus 82% of generation capacity is Hydro.

1960 Interconnection of Isolated System through long Transmission Line. Thermal power plant for Peak load.

Creation of Ministry of Mines and Energy- 1960.Holding company Electrobras- 1962. National Electrification Fund.

National Department of Waters and Power – DNAE, 1965.Transformed to National Department of Waters and Electric Energy –DNAEE in 1968. 8.8% Growth- 1945-70.

Oil shock of 1970 Made Competitive even with High initial Capital cost. Complementary Role of Thermal plant.

EVOLUTION OF POWER SECTOR IN BRAZIL- Continue

High political interference-management of Eletrobras and its subsidiaries were politically appointed.

No Response by Electricity company to coordinating role of Expansion Plan of Power Industry by Electrobras.

1970- Oil crisis, Recession and high inflation. Control of Tariff to fight inflation. Deterioration of Financial health.

Delay in progress of New Power Projects- Severe economic and social consequences.

conflict of interest between Eletrobras and the state electricity companies- Construction of 12,000 MW HPP

Itaipu and single tariff system for the entire country.

REFORM PROCESS Subsidies, inefficiency, political interference, corruption

lead to financial problem and shortage of capacity. MME constituted Working Group for Institutional Revision

of the Electricity Sector (REVISE)- Report in 1988.– The conflict regarding exploitation hydropower potential. – Poor management of industry by state-owned companies. – Excessive interference of politicians in decision Process.– Non-accountability to consumers & no regulatory mechanism.– Formulation of fossil fuels and electricity policies in isolation.– Adoption of policies oriented to reduce the existing large

social and economic differences through easy access to electricity.

– Control of electricity tariffs to fight inflation and Single tariff policy of federal government.

REFORM PROCESS conti… Federal Government initiated Power sector Reform

Process in 1993.Pre-reform Post- reform

A few state-owned companies Privatization and a large number of agents

Vertically bundled industry Vertical unbundling of the industry

Regional/state monopolies for generation, transmission and distribution

Competitive generation and distribution regulated monopolies on transmission systems and shared distribution

Ban on foreign investors Restrictions on foreign investors lifted

Centralized planning Indicative planning

Equalization of tariffs Regulated prices and tariffs

Captive market Gradual easing of restrictions on consumers

REFORM PROCESS conti… Coopers & Lybrand hired by Electrobras to suggest

Policy for Electricity Sector Refom-1996. ANEEL (Agência Nacional de Energia Elétrica - Brazilian

Electricity Regulatory Agency) formed. Thus National Council for Energy Policy (CNPE )

established – Power supply to remote area. By 1997 Reformed Brazilian electric system was large

and complex. Till 2000 Generation and transmission vastly remained

in the hand of Public Sector. In 2001 Power Crisis Lead to Rethinking Reform Policy. In 2002 Law for General Agreement For Electricity-

Reform.

EXPERIENCE OF THE REFORM PROCESS:

Smooth up to 1998. Problem in Rural Connectivity. Social Obligation and Equity. Tariff Structure And Affordability. Lack of interest in Remote Location. Political Interference and Management

issue. Sustainability. Fuel and Power market Link.

Conclusion

• Power sector liberation as social strategy• Electrical industry being meta technology

most operated within institutional collective evaluation

• Sector subjected to public benefit “blackouts”• Destined to ill or under serve the aims of

equity, sustainability and democratic participation.

• Failed from the stand point of public benefit


Tuesday, November 15 (10:45- 12:15)

Sanjeev Kumar Sharma Bridging the Digital Divide in India

Debkumar Chakrabarti ICT Policy: Comparing USA and India

Deepali Sharma Roads to Convergence: Regulatory Response

Neeraj Kumar Increase in Broadband in India

Susanta Kumar Das Power Sector Reform and Brazil

12th Symposium on


12 th Symposium on Development and Social Transformation

Documents

Transcript of 12 th Symposium on Development and Social Transformation