The Telecommunications Act cements government’s power to suspend internet services, does not establish independent oversight mechanism for interception, suspension orders. The article originally published in the Indian Express can be read here.

“Is Big Brother watching you? At the press of a button a civil servant can inspect just about every detail of your life your tax, your medical record and periods of unemployment. That civil servant could be your neighbour. There is mounting concern over this powerful weapon that the computer revolution has put in the government’s hand. But no civil servant will be allowed to examine personal files from another department, without written authority from a Minister. I shall be announcing legislation enabling citizens to take action against any civil servant who gains unauthorised access to his file.” (Yes Minister). The year is 1980, the computer revolution is just about beginning and questions of surveillance have become pertinent; safeguards in the form of separation of powers between the executive and legislative are announced by the Minister for the protection of citizens.

Although theatrical, Yes Minister can yet be invoked to characterise governments in most parliamentary democracies especially India’s.

More than four decades on, the Indian Parliament witnessed the smooth passage of several pieces of legislation, including the Telecommunications Act (TA) 2023, which justifiably seeks to bury remnants of colonial-era laws. While the modern digital age creates conditions for unprecedented surveillance reflecting the Benthamite tenet of maximum monitoring at minimum cost, the question on everyone’s minds is whether the law has enough safeguards and an independent regulatory architecture to protect the rights of citizens.

Before contemplating this weighty query, let us set the narrative in context with a quick recap of the major markers in digital governance in India that have concluded, at least for the moment, in the passing of TA 2023.

The institutional regime for telecommunications dates back to the late 1990s and was created more by accident and less by design. The Telecom Regulatory Authority of India (TRAI) became necessary because private sector investment came in when the public sector operator was both player and referee. Massive litigation followed, leading to the setting up of TRAI. Within a few years, the Telecom Dispute Settlement Appellate Tribunal (TDSAT) was carved from TRAI to fast-track excessive litigation. In between, there was the dissolution of the first TRAI, only confirming who the “boss” was.

The desire to serve in regulatory regimes has surely been tainted by the goal of securing sinecures. This is not just an Indian phenomenon. For example, the Biden administrators wish they continue in office for long. It is in the nature of such positions that many of those appointed will never again be in a position of authority. There have been few instances after its dissolution that TRAI has taken on the government. The relationship between the legislature and the executive is complex but suffice it to say that such a separation in telecom is met much more in the breach.

The regulatory regime for telecom described above notifies subordinate legislation, enforces and adjudicates disputes — it performs the role of the executive and the adjudicator. One key safeguard for the protection of ordinary citizens is, therefore, already undermined. The separation of powers remains on paper and the exercise of authority through delegated rule-making ensures the government can intervene with little resistance.

In this background, TA 2023 poses challenges. Although undoing colonial-era laws is one of the stated goals, the re-purposing of some existing provisions and ambiguous drafting does little justice to that aim. For example, the definition of telecommunication services has been left open to interpretation. Internet-based services like WhatsApp and Gmail are, therefore, likely to fall under the Act’s ambit. Provisions empowering the government to notify standards and conformity measures or ask for alternatives to end-to-end encryption such as client-side scanning could undermine privacy. Further requiring messages to be disclosed in an “intelligible format” is irreconcilable with end-to-end privacy engineering. Tinkering with end-to-end encryption for compliance could create potential points of vulnerability.

The grounds on which such information may be sought, outlined in Section 20 (2) include sovereignty and integrity of India, security of the state and public order. Prima facie these appear reasonable. However, the current phrasing leaves room for expansive interpretation by overenthusiastic enforcement machinery — it could go beyond the letter of the law to please political masters. Research conducted in 2021 by Vrinda Bhandari and others found that many orders issued under the guise of public order restrictions would not qualify as legal per se. The Act cements the government’s power to suspend internet services (Section 20(2)(b)) and does not include procedural safeguards envisaged in the Supreme Court’s Anuradha Bhasin judgment such as the proportionality test, exploration of suitable alternatives and the adoption of least intrusive measures.

The Act also does not establish an independent oversight mechanism for interception and suspension orders related to telecommunications. These rules, framed in 1996 in line with the directions of the Supreme Court in PUCL v. Union of India and requiring a committee consisting exclusively of senior government officials, reflect inadequate separation. In the UK the law mandates approval of interception warrants by judicial commissioners. Separation of powers is however not a panacea; it is just a necessary condition for the effective functioning of institutions. We must also observe the counsel of John Stuart Mill for the maintenance of institutional integrity namely, not “to lay [their] liberties at the feet of even a great man, or to trust him with powers which enable him to subvert [their] institutions” — JS Mill, quoted by BR Ambedkar on November 25 1949, requoted by sitting Chief Justice of India on Constitution Day (November 26, 2018).

Kathuria is Dean, School of Humanities and Social Sciences and Professor of Economics at the Shiv Nadar Institution of Eminence and Suri is Research Lead, CIS.

The comments were reviewed by Tanveer Hasan. Click to download the PDF

Key concerns

Definition of Telecommunication Service

The definition of the terms telecommunication (section 2(p) and telecommunication service (section 2(t)) is extremely broad and would effectively include transmission of any signal by any electromagnetic systems. This wide definition increases the scope of the Bill  to include almost all kinds of means of communication used in modern times including messaging services, email, OTT services, among others. Even if one were to accept the argument that the scope of the Bill has been deliberately kept wide so that the government has the power to regulate all means of telecommunication in order to prevent mischief and illegal activities, the problem arises with the onerous language of section 3(1) which makes it compulsory to obtain an authorisation from the Central Government for any and all telecommunication services, unless specifically exempted under section 3(3).

In simpler words the Bill not only seeks to regulate all communication services, but requires government permission to provide such services in the first place. Such an approach has the very likely potential to hamper future telecom innovation especially in light of the fact that the penalty for not obtaining permission is imprisonment upto 3 years as well as fine of upto Rs. 2 crores.

Such a wide definition leads to ambiguity and lack of regulatory certainty to businesses as well as users participating in the ecosystem. This proposal triggers immediate concerns, particularly a confusing definition of telecommunication services which may also incorporate the provision of a broad range of digital and online services. Such a wide definition could lead to confusion and arbitrary implementation on one hand, and if made applicable to the content layer of the internet architecture stifle innovation in the digital ecosystem due to onerous licensing/registration requirements on the other hand. It is also pertinent to note that some of the internet-based services listed in the definition in 2(21) are already regulated under the Information Technology (IT) Act 2000. For example, the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 regulates intermediaries, including the significant social media intermediaries (SSMI) such as Facebook and Twitter. Putting an additional regulatory burden on these service layer companies will hamper innovation and competitiveness of the sector and also amount to regulatory overreach.

Power of authorisation and assignment

Section 3 (7) - Any authorised entity which provides such telecommunication services as may be notified by the Central Government, shall identify the person to whom it provides telecommunication services through use of any verifiable biometric based identification as may be prescribed.

All services do not require a biometric based identification of the person. While  there is a legitimate need to verify a person in the case of financial transactions, however a similar level of scrutiny is not warranted for applications that a person might use once, or applications that do not pose a threat. For example the need to verify a person through Know Your Customer (KYC) or otherwise for an application to order food, or an application which is meant for communication can be excessive regulation. In addition to the enhanced burden of collecting and storing this data that will come on the telecommunication service, there will also be the added requirement to maintain strict data protection and security measures under the Digital Personal Data Protection Act 2023. Furthermore, as has been seen in multiple instances of data breaches and cyber security attacks such as the one at AIIMS^[1], Justpay^[2] demonstrate that both public and private organisations can be affected by cyber attacks. It is therefore  advisable to reduce the number of entities that store and collect sensitive personal data such as biometric information in the interest of privacy as well as national security.

The Supreme Court while looking at the constitutionality of the Aadhaar Act upheld the need for banking and financial institutions to require an individual’s Aadhaar number stating the legitimate aim of preventing money laundering; however, the Court struck down the provision that required any private entity to collect Aadhaar details. Justice Bhushan held that the collection by private entities violated the right to privacy, by failing the first prong of the test laid down in Puttaswamy judgement, the test of legality.^[3]

More importantly, through the requirement of ‘verifiable biometric based identification’, the Bill is likely to nudge telecom service providers to incorporate Aadhar Based identification, even though the Indian Supreme Court in 2018 held that  the mandatory linking of mobile connections with biometric identification is unlawful.

Standards, Public Safety, National Security and Protection of Telecommunication Networks

Power to notify standards

Section 19 (f) The power to notify standards and conformity measures on encryption is a sweeping power that allows the central government to potentially request for backdoors on encryption, or ask for alternatives to end to end encryption such as client side scanning, which have been critiqued^[4] as measures that undermine privacy for all users. If the objective is to provide recommendations for certain encryption techniques when dealing with sensitive government data, a more specific compliance certification can be issued to such firms. For example, the United States government mandates certain government agencies to comply with the Federal Information Processing Standards (FIPS)^[5] which also apply to non-government firms holding government contracts. Standards like FIPS recommend specific cryptographic modules to ensure secure communication of sensitive data. Such conditions and cases must be explicitly scoped in defining the standard setting powers of government with regard to encryption, in consultation with the industry and civil society organisations.

Provisions for public emergency or public safety

Section 20(2) (a) - Messaging apps such as WhatsApp and Signal enable end to end encryption, where messages are encrypted on endpoints such as user devices. Service providers and intermediaries cannot decrypt messages. Requiring messages to be amenable to disclosure in an 'intelligible format' is technically impossible within the end to end paradigm of privacy engineering^[6]. Technical means of disclosing the contents of messages can either reside on a user’s device, in a middle-box that mediates communication, or on servers where some computation can occur. Restructuring end-to-end encrypted communication networks to facilitate these technical means of disclosure would result in the creation of potential points of vulnerability and encryption backdoors. These vulnerabilities can be exploited by malicious actors and backdoors act as ‘intentional vulnerabilities’^[7] that can be used for excessive surveillance of communication that users believe to be private.

Section 20 (2) states the grounds for which such information may be sought. These include sovereignty and integrity of India, defence and security of the State, friendly relations with foreign States, and public order. Prima facie, these may appear to be reasonable grounds for facilitating government access, however, the current phrasing is too wide and leaves room for an expansive interpretation. This is particularly true for maintenance of “public order” that is routinely invoked in a variety of situations.^[8] According to research conducted in 2021 by Vrinda Bhandari and others on the “Use and Misuse of Section 144 found orders issued under the guise of public order restrictions to regulate a variety of activities, many of which would not qualify as illegal activities per se. For instance, orders were issued to prohibit flying of hot air balloons, unmanned aerial vehicles, unmanned aircraft systems, use of “special” or “metallic”  manjhas to fly kites and carrying tiffin boxes inside cinemas.^[9] And tracing encrypted messages to thwart such perceived public order threats would be excessive and disproportionate. The order to intercept, detain, disclose or suspend a communication made between private individuals, acts as a violation of privacy and provides extensive grounds to surveil people.^[10]

These grounds may be used to intercept or monitor all communication where a particular word or set of words is used. And its implementation would require communication of all users to be monitored effectively leading to a lower degree of privacy for all users^[11] - including internet communication based apps due to definitional ambiguity.  The Supreme Court has held that any infringement of the right to privacy should be proportionate to the need for such interference.^[12] The judgement in the Puttaswamy case provides some guidance to assess the limits and scope of the constitutional right to privacy in the form of the three prong test. The test requires the existence of a law, a legitimate state interest and the restriction (to privacy) should be ‘proportionate'. This provision violates a user’s fundamental right to privacy since it fails to meet the proportionality requirement as laid down by the Supreme Court.

Section 20 (2) (b) provides for suspension of telecommunication service or class of services on similar grounds. The Bill empowers the DoT to suspend telecommunication services and if applicable to internet based communication services such as WhatsApp, Signal, among others without the need for any judicial oversight or procedural safeguards as enunciated by the Supreme Court in Anuradha Bhasin vs Union Of India. The provision must incorporate an independent oversight mechanism for such orders and also incorporate safeguards laid down by the Supreme Court in the Anuradha Bhasin judgement^[13] to prevent arbitrary, frequent, and prolonged suspension of telecommunication services in India.

Protection of users

Measures for protection of users

Section 28 - This section should also provide mechanisms for de-registering from “specific messages” . While this section mentions the need for prior consent of users for receiving the specified messages/ class of specified messages, it should look at the full spectrum of rights the Digital Personal Data Protection Act 2023 provides, which includes the right to withdraw consent. Hence we suggest that Section 28(3) adds that the authorised entity providing telecommunication services shall establish an online mechanism for withdrawal of consent, in addition to grievance redressal.

Duty of users

Section 29 - While listing out the duties of the users the Act puts the onus on the user to furnish correct information. It fails to take into account instances where the information is fed into the system by third parties, due to issues of access and literacy on the part of the users. While the section heading states “duty of the user” the preceding text “no user shall” has the potential to penalise users for acts carried out without a malicious intent. Additionally,  there is also a need to look at how notices and terms and conditions   of most telecommunication services are primarily in English, making it even more difficult for a large number of Indian users to read and hence understand the requirements. Furthermore,   the associated penalty for failing to comply with these provisions are, i.e. up to INR 25,000 for the first offence and for the second or subsequent offences, up to INR 50,000 for every day till the contravention continues. Considering the low digital literacy rates, the government would be well advised to reconsider imposition of such hefty fines.

If applicable on internet based services, this will also impact the ability of a user to retain anonymity over the internet. Individuals may choose to remain anonymous online for a number of reasons. It is important to understand that an individual may remain anonymous for a variety of legitimate purposes such as expressing opinions about their employers and whistleblowers, providing anonymous tips to newspapers or law enforcement, expressing political opinions and criticism that may be subject to persecution, or simply someone saying something that they may be embarrassed about. ^[14] In India, in particular, an individual’s caste can be identified from their name, and they may choose to remain anonymous or adopt a pseudonym to escape centuries of stigma and discrimination that their communities have faced. The broad definition of telecommunication services as elaborated above places restrictions on anonymity online and severely degrades an individual’s ability to exercise their fundamental right to freedom of expression.

One must bear in mind that the cost of deploying other infrastructure in remote areas is nearly twice as much, while revenue opportunities are far lower, damaging if not destroying the rural business case. The stark digital divide needs a fresh approach to crack it.

On September 22, the government released the draft Indian Telecommunication Bill, 2022, seeking to replace the colonial era Indian Telegraph Act, 1885. The draft bill compares spectrum to aatma: “In a way, spectrum is similar to aatma, which is ajar, amar as described in Shrimad Bhagwad Gita. Like aatma, spectrum too does not have any physical form, yet it is omnipresent.” And yet there is one immutable difference in this material world. While the value of aatma is inestimable, spectrum has always had a banal price tag associated with it.

Click to access the full article published in Indian Express on October 29, 2022

It summarises the legal and policy instruments that regulate telecom and internet service providers in the country. It covers following areas:

• General overview of acts and associated policiesO
• Operator licensing
• Spectrum and associated fees
• Backbone and backhaul infrastructure
• Universal service/financial support
• Gender and telecom

Read the full document here

The information from this document has also been added to the India’s country profile on the LocNet Wiki, which is regularly updated to keep abreast with developments in telecom policy.

The author is thankful to Divyansha Sehgal, Gurshabad Grover and Isha Suri for their review and suggestions.

This submission brings out the merits of a “use-it-or-share it” approach for spectrum to help bridge the rural connectivity gap. CIS appreciates the continual efforts of Telecom Regulatory Authority of India to have consultations, and is grateful for the opportunity to put forth its views and comments. Read our full response here.

The article by Abhishek Raj was published by the News Minute on December 21, 2021.

The Wi-Fi space has become a lot more exciting with the emergence of new Wi-Fi standards such as Wi-Fi 6E (the latest generation of Wi-Fi)  and WiGig  (that uses the V-band and offers advantages such as faster gigabit speeds). These standards require airwaves in 6 GHz and 60 GHz frequency bands to operate. As a consequence, governments and telecom regulators across the globe are deliberating on policy options for spectrum allocation in the aforementioned bands.

Stakeholders are divided on the issue of allocating 6 GHz and 60 GHz bands in India. For instance, there are certain telcos who strongly oppose delicensing these bands and demand a licensed framework with the use of auctions for allocation. As per their argument, delicensing the said bands will put their investments at risk and upset a level playing field. Whereas, on the other side, US tech majors Cisco and Intel, alongside industry bodies and forums such as the ITU-APT Foundation of India and Broadband India Forum, are in favor of delicensing. Notably, the delicensed/ unlicensed frequency bands are “free to use” by anyone, and the users need not pay any fees or obtain a license (right to use) from the government. On the contrary, licensed bands come with a “right to exclusive use” and are usually allocated through auction. They have associated costs including auction amount, license fees, usage charges, etc.

In this article, I argue that the government should consider delicensing the 6 GHz band and 60 GHz range in the V-band, simply known as the 60 GHz band, to meet the increasing data demand, provide a better connection experience, and, more importantly, unlock the economic value and potential of these bands.

Evolution of Wi-Fi Standards

Let us begin by understanding the fundamentals of Wi-Fi and its evolution over the years. Wi-Fi is a wireless networking technology based on the Institute of Electrical and Electronics Engineers (IEEE) standard 802.11. To keep things simple, consider ‘Wi-Fi’ a user-friendly name for IEEE 802.11 standard.  Since its advent in 1997, Wi-Fi has become an indispensable wireless technology alongside mobile technology. The term ‘Wi-Fi’ is used synonymously with the internet by many users as a result of its widespread use in providing an interface with the internet.

IEEE 802.11 standards have evolved over the years, from 802.11a to 802.11ax. Again, these terms don’t sound so user-friendly, and for this reason, Wi-Fi alliance, a non-profit organisation that owns Wi-Fi trademark, came up with simplified generational names such as Wi-Fi 4, Wi-Fi 5, Wi-Fi 6, etc. The most recent Wi-Fi 6E [read Wi-Fi 6th generation- extended] is a simplified name for IEEE 802.11 ax standard. Needless to say, every new generation of Wi-Fi brings greater speed, lower latency, and a better user experience.

Benefits of Wi-Fi 6E & WiGig: Case for Delicensing

In addition to the pre-existing growth in demand for data, the COVID-19 pandemic has escalated data requirements due to the radical shift to work-from-home, online classes, etc. Dependence on Wi-Fi has increased in parallel to meet this increase in demand. On the other hand, India has only around 700 MHz of spectrum available for unlicensed use, concentrated majorly in 2.4 GHz and 5 GHz bands which are currently used for Wi-Fi services in India. The 2.4 GHz band is already crowded, and the same is anticipated for the latter. In order to support the growing data demand, policymakers in India need to explore the option of opening up more unlicensed spectrum. Notably, the quantum of unlicensed spectrum in India is significantly lower than in other countries such as the USA, UK, China, Japan, and Brazil, all of which have approximately 15,000 MHz of unlicensed spectrum.

The policy reluctance of DoT to delicense more spectrum is partly because of fear of losing out on revenues which licensed spectrum generates, and partly because of a narrow interpretation of Supreme Court’s 2012 judgement. However, considering the recent developments in Wi-Fi, 6 GHz and 60 GHz bands appear to be ideal candidates for creating more unlicensed spectrum. Let us explore this further.

Unlike its previous versions, which operated in either the 2.4 GHz or the 5 GHz band, Wi-Fi 6E operates in the 6 GHz band. The 6 GHz band contains radio frequencies between 5.925 and 7.125 GHz, and is much wider than the 2.4 GHz and 5 GHz bands. The wide channels, along with other distinct features such as lesser interference, enable Wi-Fi 6E to perform with better speeds, even in multi-user connected, congested, and dense networks.

Furthermore, Wi-Fi 6E is a new and niche technology, whose market will undoubtedly develop in the coming years. Indian telecom hardware and software companies have the opportunity to capture a chunk of this market in India as well as globally. We know that service provision in unlicensed bands is less expensive, and thus attracts a lot of innovations. We need to open up the 6 GHz band very soon to foster innovations by indigenous companies. We took a late call on delicensing the 5 GHz band which affected the prospects of Indian innovators and companies. We can’t afford to repeat this.

Similarly, we have WiGig – another exciting Wi-Fi technology. WiGig uses the V-band’s 60 GHz range (i.e., airwaves between 57-71 GHz frequency) to operate. The V-band offers advantages such as faster gigabit speeds and lack of interference due to oxygen absorption within its frequency range, making this band ideal for shared unlicensed use. The government launched a public Wi-Fi initiative of India known as PM-WANI in December 2020. PM-WANI aims to promote broadband in the country through the deployment of public Wi-Fi access points. Supporting such a dense deployment of Wi-Fi access points would require a “fiber speed” backbone. However, cost structure and right-of-way hurdles may be prohibitive for the deployment of fiber backhaul in dense urban environments. WiGig offers a cost-efficient wireless backhaul solution as an alternative to fiber backhaul, with multigigabit speeds and reliability similar to fiber. Delicensing the 60 GHz band can thus especially benefit PM-WANI, because of its potential to provide alternative backhaul solutions.

It is important to remember that unlicensed bands for Wi-Fi access have significant economic value. Although unlicensed bands do not generate direct revenue for the government through auctions, spectrum usage charges, etc., the economic value of unlicensed Wi-Fi is huge. According to a report by Wi-Fi Alliance, the global economic value of Wi-Fi will reach Rs 362 lakh crore (USD 4.9 trillion) by 2025. A BIF (Broadband India Forum) report authored by Prof. Rekha Jain estimates the economic value of Wi-Fi in unlicensed spectrum bands (2.4 GHz, 5GHz, 6 GHz, and 60 GHz) for 2025 to be INR 12.7 lakh crore in India. A major concern raised by telcos recently is that the government might lose out on revenue if 6 GHz and 60 GHz bands are delicensed instead of licensing and sold through auction. However, this concern seems to be evidently misplaced due to the huge economic potential of these bands, as also pointed out by other experts.

Several other jurisdictions have already started delicensing these bands. Almost 35 countries, including the USA, UK, Brazil, UAE, and Korea have delicensed the 6 GHz band, and several others are considering the same. Similarly, around 70 countries across the globe have delicensed the V-band in the 60 GHz range.

Conclusion

Wi-Fi 6E and WiGig are exciting technologies with numerous benefits and will play a crucial role in improving the Wi-Fi scenario in India. Had the 2.4 GHz and 5 GHz bands not been delicensed in the past, could we have even imagined a Wi-Fi revolution? The government must consider delicensing the 6 GHz and 60 GHz bands to bring in the next Wi-Fi revolution.

(The author is thankful to Arindrajit Basu and Isha Suri for their review and suggestions.)

Internet connectivity has become important for socio-economic development of any region, especially the rural and remote regions. However, a major population of the world including India still remains unconnected to the internet. The traditional ‘top-down’ approach for enabling connectivity has proved to be insufficient for rural and remote areas. In this paper, we discuss an alternative ‘bottom-up’ sustainable multistakeholder model for enabling connectivity in rural India which has an active involvement of the village community through ‘Gram Panchayats’ (also known as Village Council). We also discuss the funding mechanism for this model through ‘Gram Panchayat Development Plan (GPDP)’. We suggest that ‘Internet for Development’ be included as one of the cross-cutting development areas in the GPDP to fund access to the internet in villages.

Click here to access full PDF of the paper. (Refer p. 129- 146). The author extends thanks to co-authors of the paper Dr. Sarbani Banerjee Belur and Ritu Srivastava.

This submission presents a response by individuals working at the Centre for Internet & Society (CIS) to the Telecom Regulatory Authority of India’s Consultation Paper on Roadmap to Promote Broadband Connectivity and Enhanced Broadband Speed (hereinafter, the “TRAI Consultation Paper”) released on 20 August, 2020 for comments.

CIS appreciates the continual efforts of Telecom Regulatory Authority of India (TRAI) to have consultations, and is grateful for the opportunity to put forth its views and comments.

Read the response here.

This article first appeared in the Business Standard and on June 4, 2020.

A recent column in this newspaper juxtaposed the way smart, experienced people have high expectations, only to be disappointed by our weak state’s predictable failures (Strong expectations from a weak state, May 25). Is there justification for any optimism, or at least hope? Here is an exploration of reasons for persisting in the face of continued odds, and pushing for economic recovery. Why should one persist with constructive efforts? Because a rising tide lifts all boats, and one’s contribution can affect outcomes. And because attempts at partial opening will not suffice.

This article first appeared in the Business Standard and on May 7, 2020.

Amidst the welter of problems the government is dealing with, one hopes that the removal of restrictions and lockdown status are being thought through with expert inputs and analysis. We can conjecture on the priorities for economic revival, and here is a short wish list.

Cash flows have to start for any downstream problems to be addressed, without questioning that a major remediation to India’s lockdown trauma is providing food and shelter to stranded workers, and getting them to where they want to go. Many will scatter from their work or holding areas back to their homes. What’s needed for economic revival is the opposite: For workers to return to work and resume productive activities. But this may be unrealistic to expect after the loss of confidence from the shocks of the peremptory lockdown, the deprivation of livelihood, and of food and shelter.

Other stranded people who have the means also need the right to move freely while maintaining prudent constraints. Indians abroad are being flown home; Indians in the country need facilitation too.

Next on the list is restarting the economy by ending the forced closure of productive activity for compensation, spending for products and services, and of economic flows. Recall that before the lockdown, we had a monumental late-payments problem, namely, the non-performing assets (NPAs) of the banks and financial institutions. While there has been considerable scrutiny of the NPAs and fraudsters, much less attention is directed at a major component — that is, late payment of dues and refunds by government and its agencies. These encompass all payments, such as to state and private electricity generators and distributors, airlines, hotels, restaurants, manufacturing companies and service providers, and all refunds of taxes, including goods and services tax (GST) and customs duties.

This article first appeared in the Economic Times on 17 May 2020.

In the wake of COVID-19, the PM has emphasized the opportunity to attract FDI by transforming the business environment and urged policy makers to ease the way business is done. The current configuration of broken supply chains and the problem arising from dominance of China in many sectors provide a space where investments in India look attractive.

The obvious question that arises is why not take this opportunity to review the policy and regulation for domestic players ? The need to focus on sectors like telecom that are the bedrock of the knowledge and service economy is critical. This is a sector where Indian businesses have scale (each of the private operator has more than 325 mn subscribers.) and yet only a single private operator of the three seems to be doing well. In no other part of the world, the sector as a whole is under stress. And remember this stress was there long before COVID -19.

This situation was caused not only by the entry of a new operator Reliance Jio, with an all IP network designed and optimized for data usage and a business model optimized for data, but also because of legacy policy and regulatory issues that affected the two older operators, Bharti Airtel and Vodafone Idea more. It is a fact that businesses must bear the consequences of disruptive challenges from new entrants with new technologies and business models. But when policy and regulatory framework cause sectoral disruptions, then these need to be rectified. This is more important in core infrastructure sectors such as telecom.

Given the rapid pace of technological developments and their effect on the economy, the telecom sector, more than any other sector, needs to have a policies that facilitate growth and are in coherence with global trends. The following will illustrate how much catching up India has to do.

A recent news item highlighted that China has installed a 5G network on Mt Everest not only to facilitate communications but also to gather data for research. When we also consider that in many countries, operators have not only been allocated spectrum for 5G networks, they have initiated deployments of such networks, the contrast with India is obvious. In India, 4G coverage is patchy, including in metros. With so much financial stress in the sector, 5G spectrum auctions do not invite a lot of excitement in the two private operators and auctions for 5G are likely to be delayed yet again.

A large part of the financial distress was caused by the penalty and interest payments on license fee and Spectrum Usage Charges (SUC) that are linked to AGR and high spectrum prices paid in 2016. While operators were responsible for devising appropriate mechanisms for managing the outflows due to the AGR issues, the question to ask is, should the DoT have come out with license conditions that are onerous? Just because it has the right and authority to do so, should it do so? Should it take the operators nearly 15 years to seek a review of the license conditions, as the matter goes between TRAI, TDSAT, DoT and the Supreme Court? Should DoT, as the policy maker be filing cases against TRAI and TDSAT? Should these arms of the government not be working in coherence?

Besides these structural issues, the policy framework has deeply embedded anomalies arising out of legacy issues and the orientation of policy makers is to not only continue with them but twist themselves in Gordian knots around them. For example, the SUC was imposed prior to 2012 when the spectrum and service licenses were bundled. But despite unbundling of the latter, this charge continues. This is despite several studies and representations seeking its revocations. A recent TRAI consultation paper (SUC for spectrum trading, April, 2020) highlights, how even regulatory agencies spend so much time in refining such distortions, rather than advocate for its removal.

Even when DoT proposes forward looking market instruments, such as spectrum trading, it distorts the underlying principle of allowing the market to function by over-specification of regulatory parameters such as units in which spectrum may be traded, geographic limits and imposing liability of past dues on the buyer (even when several SC judgments in other sectors have ruled otherwise). Regulation of new technologies and new instruments, it is necessary to start on a clean slate based on certain principles of openness and fairness rather than on legacy parameters.

Should Indian businesses not have a right to a streamlined, forward looking policy environment? Examples from the telecom sector merely highlight a deep malaise in our decision makers that is more broadly prevalent. Should the accountability of the executive not be based on outcomes for the sector such as investments generated and quality of service vis-a- vis global benchmarks? (Despite all the talk about growth of mobile Internet, we continue to have among the lowest upload and download Internet speeds globally). Another benchmark could be how much spectrum was DoT able to make available for commercial use? Timely and appropriately priced spectrum and removal of distortions exemplified above will see these parameters go up and there will be consequent increase in service and corporate tax for the government. High priced restrictive entry and distorted regulation make the sector very unattractive.

Even if businesses wish to move away from China, there are alternatives besides India available to them. That is why, streamlining our policy environment in all sectors to enable Indian enterprises to flourish should be the first step in attracting FDI.

(The author is Principal Advisor at Broadband Forum of India)

This article first appeared Tele.net in March 2020.

Internet and telecom are the key drivers of economic growth. India has the potential to become the largest internet-using country after China, with current estimates showing that five to seven million mobile internet users are being added and about 35 million smartphone shipments happen every quarter in the country. The huge demand for mobile broadband requires adequate spectrum and capacity in radio access networks. Further, due to poor fibre connectivity, estimated at only 15-20 per cent of the existing towers, backhaul spectrum availability is critical.

Given the growth driver of telecom and internet in India is mobile, a critical resource for sector growth is spectrum – the only natural resource that is equally endowed across all nations. However, in India, operators and citizens are spectrum starved. There is a need to introspect why that is so. Further, with an economy on the rise that places ever higher demands on telecom services, the sector should have a growth trajectory that surpasses others. However, the Indian telecom sector story is that of the proverbial killing of the goose that lays golden eggs.

In the current scenario, there are three private sector operators – Bharti Airtel, Vodafone Idea and Reliance Jio – and public sector entities Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL). BSNL and MTNL have a declining market share of 10.5 per cent and hardly any 4G services as they were not allocated spectrum for it. As of November 2019, the teledensity stood at nearly at 88.9 per cent, urban being 157.3 per cent and rural being 56.7 per cent. Mobile services contributed to nearly 98 per cent of the urban and nearly 100 per cent of the rural teledensity.

Vodafone Idea and Bharti Airtel are under tremendous financial stress, caused by accumulated losses of more than Rs 2.2 trillion that include due payments of revenue share (based on adjusted gross revenue [AGR]) due as a part of their licence fee, penalty and interest payments for delayed payments to the Department of Telecommunications (DoT), high prices paid in auctions for spectrum in 2016 and business disruption following the entry of Reliance Jio. To put the numbers in perspective, the entire revenue for the sector was Rs 2.11 trillion for 2017-18. Given the current poor financial situation of the private operators, the government had to delay the auction of 5G spectrum as most private sector operators are not in a position to bid for new spectrum and also invest in the new networks required. A major concern for policymakers is that there could be a significant reduction in competitiveness and consumer choice as there is a possibility that Vodafone Idea may exit the sector, given its weak financial state. Since BSNL and MTNL’s market share is very low and is not likely to grow significantly, the telecom sector could effectively have a duopoly.

What has caused the telecom sector to be in this state? While the private sector’s strategies and actions have contributed to the current situation, a major portion of the responsibility is due to the restrictive policy and regulatory environment in which the sector has operated. While the private sector must contribute to paying its dues for using a public resource (spectrum or right of way) for private gains, overly restrictive licence conditions, a constrictive environment for making more spectrum available from DoT and infeasible pricing of spectrum recommended by the Telecom Regulatory Authority of India (TRAI) could make the sector unviable. I would like to highlight some key concerns that could be addressed in the short term.

AGR

This is exemplified in the basis for AGR calculation that included total income from both activities that require a licence such as provision of telecom services and also that do not such as interest income and equipment sale. AGR forms the basis of licence fee and spectrum usage charges (SUC). While the licence explicitly identified all components of AGR and telecom operators accepted the licence conditions when they signed the licence, and must bear the consequences of the same, it is difficult to understand the logic of DoT in coming out with such conditions. It is true that the government has a sovereign right to specify any condition, but an enlightened and long-term view would indicate that it is not in the interest of the sector to have restrictive conditions.

Another such example is the legacy of SUC that originated when service and spectrum licences were bundled. Since these have been unbundled, there is no longer any requirement of SUC, which constitutes a significant outflow (3-5 per cent), as operators pay a licence fee for the spectrum. This is double charging and unfair. While DoT may be concerned that the removal of SUC would lead to lower revenue for the government, new services, higher adoption of existing services and the corresponding increase in service tax and corporate tax should more than compensate for it. Further, government dues on licence fee and SUC have come down, as the AGR of two of the private operators has come down.

Spectrum availability

Compared to several other countries, India has a relatively constrained supply of spectrum for commercial use, both in the unlicensed and licensed bands. In a spectrum-starved country such as India, where each operator gets about one-fourth of the licensed spectrum as compared to operators in other countries, making more bands both licensed and unlicensed bands available unleashing the potential of unlicensed spectrum is important.

Licensed spectrum

Often operators have not bid when licensed spectrum was made available in auctions. This has been due to the arbitrary and high reserve prices set by TRAI. These are high in comparison to those in several developed countries. Lower propensity to pay and higher competition levels in India (with a peak of 12-14 operators per service area until 2012 and nearly five operators until the recent spate of mergers), and lower amount of spectrum per operator is a recipe for financial stress of the companies. TRAI has a peculiar and unique practice of setting the reserve price in any auction the same as the winning price in the previous auction and when it is a new band or recent auctions have not been held in existing bands, some arbitrary multipliers on the nearest band’s winning price are used. Despite the failure of the 2016 auctions, where bands that are globally in high demand had no bids, TRAI once again set very high reserve prices for the 3.3-3.6 GHz in its recommendations in 2018. After several iterations between DoT and TRAI on reconsideration of prices, TRAI announced that it had reduced them by 43 per cent. Even after this arbitrary reduction, prices continued to be much higher than those in the developed countries where such spectrum had been auctioned.

Unlicensed spectrum

India has around 660 MHz of spectrum available for unlicensed use, spread across various spectrum bands. In comparison to other countries (the US 15,403 MHz, the UK 15,404 MHz, China 15,360 MHz, Japan 15,377 MHz and Brazil 15,360 MHz), this is significantly less. There is a perceived reluctance on the part of DoT to make more spectrum licence-exempt, largely because of a narrow interpretation of the Supreme Court judgment (2012). According to this perspective, the Supreme Court had mandated the allocation of spectrum only through auctions. However, a more informed reading and interpretation indicate that the Supreme Court, in its judgment, had referred to spectrum allocation as a policy decision within the purview of the executives. In a subsequent Presidential reference made by the government, the apex court had elaborated that the scope of the judgment was limited to 2G spectrum distributed on a first come, first served basis during 2007-08. Further, any alienation of scarce public resources needs to be done in a fair and transparent manner, backed by a social or welfare purpose. In the case of unlicensed spectrum, since there is no need to allocate spectrum specifically to any user, there is no contention regarding the choice of the allocation method. By not adopting clarifications in the judgment and the Presidential reference, DoT has delayed spectrum allocation in different bands, including unlicensed bands.

Conclusion

The above examples indicate the restrictive policy regime that has characterised private entry into the sector since its inception. There have been instances in the past, such as a shift from a one-time entry fee to a revenue sharing regime or moving to a technology-and service-neutral licence, where the government has shown how an enlightened policy perspective that could enable services to take off. A similar approach that views the private sector as a partner in growth (with relevant provisions to prevent abuse) and enables competition to bring in consumer choice, innovation and reasonable pricing will see services take off.

While the private sector must take a long-term perspective of what drives the growth in the sector and not just seek redressal through short-term measures, the onus on the government is much higher. It is the one that sets the agenda and has a vision of what kind of development citizens have a right to. So far, given the current state of the telecom sector, the government needs to push for a long-term enlightened policy agenda that will provide world-class services to its citizens and increase India’s competitiveness. I also hope that policymakers will recognise that 512 kbps should not qualify as broadband speed (which it is, by current definitions).

If we aim low, we cannot achieve high growth.

This article first appeared in ET Prime on 13 Feb 2020.

With the Internet increasingly becoming the driver of economic growth and considering its poor penetration in rural India, the government came up with the National Optical Fibre Network (NOFN) project in 2012.

It was an ambitious programme to provide high-speed connectivity to 2,50,000 gram panchayats (GP) by 2015. NOFN was designed to incrementally provide the fibre from the sub-district to the GP, as it was presumed that the state-owned Bharat Sanchar Nigam Limited (BSNL) already had fibre connectivity up to the sub-district level.  

A special purpose vehicle (SPV) called Bharat Broadband Networks Limited (BBNL), a wholly owned government of India enterprise under the department of telecom (DoT), was set up for implementing NOFN. It was envisaged that it would lease existing bandwidth from BSNL, PGCIL, and Railtel — each allocated a specific state, with BSNL having more than 80% share. After the provision of end-to-end connectivity, BBNL would provide non-discriminatory access to all Internet service providers (ISPs), telecom and cable service providers, and other retailers, and enable the extension of mobile broadband. To facilitate the ROW (right of way) rules, BBNL had tripartite agreements with the state governments and the executing agency for that state.   

A tale of missed targets 

Despite recognising the role of broadband network that would “transform governance, service delivery, and unleash local innovation capacity through rural broadband”, NOFN missed its targets by wide margins and was extended several times. Its architecture was changed to provide redundancy and a more-ambitious project called BharatNet was envisaged with a cost of INR42,068 crore.  

 In the BharatNet model, states could also lead and implement the initiative. By December 31, 2019, BharatNet had missed both phase I and phase II targets by a huge margin. Only 50% of the GPs were service-ready. Further, the utilisation of the infrastructure was very poor, with only 15,000 GPs having Wi-Fi connectivity.  

Several reasons, including the following, have been cited for this failure.  

BharatNet was designed as a top-down scheme of the DoT with little involvement of the states, implementing agencies, or vendors. The proposed network architecture that relied on BSNL’s existing fibre was an issue. In several places, the fibre was not available or not in good condition. The decision to implement NOFN/BharatNet only by state-run enterprises (BSNL, PGCIL, and Railtel) caused several delays due to the inefficient management process —a characteristic of the PSUs. The initial focus was only on providing connectivity the GPs without considering the last-mile connectivity options for the end-user. There was little involvement of the states. Often the agency or the GP, where the connectivity terminated, was not aware of the applications for which they could use the connectivity. No separate project-monitoring organisation was put in place.   

BBNL’s functioning was constrained by the fact that it operated within the framework of DoT. It had little operational autonomy and processes for adopting a different approach. The scope for BBNL was further reduced as some of the states, such as Andhra Pradesh, Kerala, and Gujarat, opted to take on this role themselves, citing the slow progress of BharatNet.

Lessons from PMGSY

When we compare the poor outcomes of BharatNet with the Pradhan Mantri Gram Sadak Yojana (PMGSY), one of the transformational development schemes and a key achievement for the government, the question one should ask is: are there some lessons that can be learnt from PMGSY? Though delayed from its earlier target date, PMGSY is set to achieve its deadline. The scheme was initiated by the rural development ministry (MORD) in the year 2000. With an outlay of USD35 billion, it had an objective of connecting all eligible rural habitations having a population of more than 1,000 in three years and all unconnected habitations with a population of more than 500 (in hill states, deserts, tribal areas, and backward districts) by 2007.

PMGSY started as a 100% centrally sponsored scheme financed through cess on high-speed diesel of INR0.75/litre. From 2015, the contribution pattern for financing changed to 60:40 for the centre and state, respectively, and 90:10 for the hilly and backward states. By 2019, it had covered more than 97% of the eligible habitats. Based on the success of the roll-out, the programme was expanded to cover all habitations with a population of more than 500. Given the rapid progress, the completion date was advanced to March 2020 instead of the original date of 2022. As was to be expected, PMGSY has transformed the socio-economic scenario in rural India.  

The ownership for deployment of rural roads lies with the National Rural Roads Development Agency (NRRDA), which was later renamed as National Rural Infrastructure Development Agency (NRIDA). The agency reports to the rural development ministry. Its objective is to provide management and technical expertise to various states for implementing PMGSY. For technical aspects of road design, NRIDA works with state PWD and other agencies.  

Rural roads are selected and prioritised in a bottom-up manner across villages, blocks, district, and the state. Objective methods to prioritise road selection, standardised processes for engineering, design and contract execution, coupled with independent quality monitoring and in-built maintenance in civil contracts were critical to project outcomes. More than achieving the physical targets, PMGSY has brought about a fundamental shift in the way rural roads are mapped, designed, monitored, and built. This led to several states to adopt the PMGSY model in their state-level rural programme. With time, the focus has shifted to low carbon and green designs, using climate-resilient techniques.

Given the possible transformational potential of a broadband connectivity to GPs, some learnings from PMGSY that DoT can consider are:

• User involvement in design: Since rural telecom connectivity enhances socio-economic development, user agencies and the rural administrations are in a position to identify their demand and requirements. Given that new technologies have the potential to create new applications which a layperson may not be able to identify, there is also a need to meld this with an appropriate top-down design that leverages the technology potential. This model has worked well for PMGSY. While the village-level committees prioritise road development, Central Road Research Institute and other research organisations specify the design parameters, taking into account the local context.
• Multi-functional/cross-organisational committees for design and implementation: A large project such as NOFN/BharatNet necessarily requires involvement of a number of agencies — state governments, and district, tehsil, and village administrations. While designing a telecom network requires professionals with telecom background, the success of such a project necessarily depends also on the management and collaboration processes at all levels of administrative hierarchy. However, DoT did not involve any state-level agency in the design of the network. The NOFN/Bharatnet is being implemented by BSNL/PGCIL/Railtel with their state-level units. On the other hand, PMGSY’s organisational structure involves the newly created separate agency — NRRDA/NRIDA and the SRRDA, PWD, rural-road development agencies, gram panchayats, private operators, etc. These agencies are involved in rural-road planning, sectoral coordination, funds, contracts, and maintenance management. While the state-level units of BSNL may be also doing similar activities, the fact that the design, implementing, and monitoring agency is bundled into one in the case of BharatNet, leading to a lack of transparency and diffused accountability for targets.
• Private sector participation: BharatNet is being implemented only by PSUs that were given the responsibility on a nomination basis. The costs for a PSU are higher due to the inefficiency in management. For PMGSY, road works are awarded on a bidding basis, thus leveraging the efficiencies of the private sector. A concern that could arise in involving the private sector may be the loss of quality. The specification of standards, a five-year maintenance contract as a part of the construction project, and independent monitoring mitigate this aspect.
• Ring-fencing USOF: While telecom operators pay 5% of their adjusted gross revenue towards Universal Service Obligation Fund (USOF), the amount is transferred to the Consolidated Fund of India. Allocations are then made on a demand and review basis. So, despite the unspent balance of nearly INR50,000 crore in USOF, there has been delay in its implementation. On the other hand, the rural-road fund is ring-fenced and is funded through cess on high-speed diesel and petrol. Ring-fencing enables smoother flow of funds
• Partnering with PMGSY: : The NOFN/BharatNet should have partnered with PMGSY. Laying the ducts and fiber while the PMGSY roads were being constructed would have increased the PMGSY cost by a small amount. This incremental cost would then have been much smaller than the cost of laying fibre afresh. This would have also streamlined the ROW permissions etc. — something that has often delayed NOFN/BharatNet implementation. The nation, then, could have a more widely dispersed fiber network at a much lower cost.

The article was originally published in Business Standard on February 06, 2020, and mirrored on the Organizing India blog.

It’s not obvious why we function the way we do in India, and who gains from it — considering that we are able to go just about anywhere in the world and thrive, but unable to manage too well on our own shores. Could it be because of the operating conditions here apart from the facilities, the prevailing systems and procedures in our environs, and the organisation, structure, and processes? When we go elsewhere, those places have their own systems and procedures, and it appears we are able to adapt and function well. In India, our constraints of systems and procedures in our environs include the full range of our population, just as elsewhere. The sheer number of people with varied levels of education, competencies, process orientation, and expectations is something that those who go away to other environments are not constrained by.

There are other easily recognisable elements of constraints. There are the post-colonial institutions, structures and methods that have been retained in government without modification for a self-governing, democratic society. Another set consists of the underpinnings of a feudal structure that manifests strongly in political processes. The predominant motivation of both is, to put it crudely, exploitation for the governing entity’s gain. Historically, the gain has been for imperial/colonial/exploitative ends, and after the first, largely well-intentioned post-Independence phase, appears to be focused on perpetuating the power of incumbents, or the position of those controlling government (barring exceptions). The fact of governing entities being locally elected does not appear to make any difference. The essential attribute is of otherness, of “us” (those in power) versus “them” (those governed).

The Laws and the Justice System 

Latterly, our preoccupation with economic, social, and political pressures has left the serious institutional constraints of our legal system somewhat unattended. There are several dimensions of reforms needed in the legal system. One of these pertains to aspects of law and changes to them, another to the judicial system and its dilatory responses. There is also a third aspect, of approach and motivation, i.e., of a systemic perspective and philosophy, which can be minimalist or the opposite, or something in between.

Too Many Laws

A major encumbrance is the plethora of laws. In December 1993, the Ministry of Finance undertook a project with the United Nations Development Programme on economic and commercial legislation, to make it more market friendly. Called Project LARGE (Legal Adjustments and Reforms for Globalizing the Economy), the first phase from December 1993 until December 1997 dealt with central government legislation comprising about 450 of around 3,000 central acts. The second phase was on state legislation concentrating on government orders, rules and regulations relating to land and labour, and other matters such as dispute resolution and competition policy.

While the material is in the public domain, in practice, it is a bear to find it. For those who want to track it, the reports were published in September 1998 as the “Report of the Commission on Review of Administrative Laws”, Volumes I and II.¹ Three articles by the Director of Project Large Bibek Debroy sum up the process, including the later work of the Ramanujam Committee and successive Law Commissions. They are epitomised by his quotation of Tacitus: The more the corruption, the more the laws. The articles are:“Why We Need Law Reform”, “Justice For All: Need Better, Fewer Laws”, and “Old But Not Gold” (links below).² Another by Vagda Galhotra rounds out the set: “Why We Need To Repeal More Criminal Laws”.³

Too Much Government Litigation 

Government litigation expenditure increased threefold from 2016 to 2018, with government being a party to around 46 per cent of lawsuits in July 2018, despite its stated intent of reducing litigation. Quite apart from this, government litigation and some of the disruptive rulings have created chaotic conditions in the economy, such as in coal mines and spectrum after the 2G licence cancellations. This has had a chilling effect on policies facilitating resource use, whether it is coal for electricity, or spectrum for connectivity at a time when there is global advancement in high-speed wireless shared use. The most recent shock to India’s economy was the Supreme Court’s reversal of previous rulings on telecom companies’ adjusted gross revenues. Other disruptive claims, without going into the merits, have been the retroactive tax case against Vodafone, the Tamil Nadu government’s tax claim against Nissan, and the earlier dunning of Nokia.

In 1998, there were an estimated 25 million cases pending in various courts, each taking up to 20 years for resolution, and this increased between 2006 and April 2018 by over 8 per cent. Much of government litigation apparently comprises appeals against lower court judgments, with decisions to appeal taken at the lowest levels of government, whereas decisions to not appeal have to be at the top.

There are many areas we have to work on to move from our present level to being able to grow at a sustainable high rate for any length of time. Beginning from early school, with systems thinking for every child, process discipline and standards, and collaboration and teamwork in lesson plans and play, continuing into work life and polity. Equally, there is a real need for establishing sound institutions. Included in these is a functioning, efficient set of laws and justice system. The discipline and efficient enforcement of contracts, payment terms, and delivery standards to ensure smooth cash flows is critical for markets to function well. This is why reforms on systematic rationalisation of the laws and justice delivery are essential, although such activities do not lend themselves to hoopla and staging events with popular appeal. The talent and experience availablecan contribute significantly to systems and organisation in the public interest. The constitution of the 22nd Law Commission is long overdue, with the 21st Law Commission having ended in August 2018.

1: https://darpg.gov.in/sites/default/files/Review_Administrative_laws_Vol_1.pdf

https://darpg.gov.in/sites/default/files/Review_Administrative_laws_Vol_2.pdf


2: https://www.india-seminar.com/2001/497/497%20bibek%20debroy.htm

https://indianexpress.com/article/opinion/columns/old-but-not-gold/ 

https://www.businesstoday.in/magazine/cover-story/justice-for-all-need-better-fewer-laws/story/227497.html

3: https://thewire.in/law/why-we-need-to-repeal-more-criminal-laws

The article was originally published in Business Standard on January 1, 2020.

If telecom and connectivity are not revived, one of our most successful sectors since liberalisation will be incapacitated. To fix this devastated sector, look no further than the National Democratic Alliance (NDA) government’s action 20 years ago to rescue and revolutionise telephony in India through the New Telecom Policy 1999 (NTP-99). It was before India’s growth story and the mobile phone revolution. The telecom sector had stalled, and some 15 operators were struggling for survival under the burden of high licence fee demands, limited customers, and too much competition, with no money to build out networks to earn more revenues to service their overwhelming debt. That was when prime minister Atal Bihari Vajpayee and his team made a bold move, working with industry and professionals to effect what seems in retrospect like magic. They implemented some constructive policies for telecom that set in motion phenomenal growth with vast changes in markets and behaviour.

The article originally published in Business Standard on November 7, 2019 was also mirrored on Organizing India Blogspot

The Committee of Secretaries to mitigate financial stress in telecom must act quickly on interim measures for the sector to survive. But is its mere survival sufficient for India’s development and growth? Is it possible to fix telecom in isolation?Our communications needs are very poorly served, although at rock-bottom prices. Is it even possible for our hapless citizens and enterprises to get past shoddy services and productivity foregone, to trade with other countries on a more even footing?

Yes, if we succeed at major structural changes, starting with telecom. But to transform telecom, the government and all of us have to come to the stark realisation that just as finance drives the economy, digitisation and communications have to be at the heart of production and delivery. Telecom and digitisation are strategic enablers for all infrastructure and in all sectors. Leading countries are so far ahead and functioning so effectively that it is difficult for us to imagine. We must want that path, plan for it, and put in the requisite effort.

Simply tweaking overdue payments, tinkering to reduce charges, and plugging along as before isn’t going to get us there. In this sense, the Committee’s charter is too limited. All it can do is assuage the pain, whereas our need is for a revitalised industry to serve our purposes.If the Committee’s scope were broader, could we actually adopt digitisation as our core strategy for development and growth? A study on China, “Telecommunications reforms in China”, about the transformation in policies to make digitisation its development priority, is instructive.1

Their approach to reforms was to balance the government’s aims of universal coverage, governance and control, and efficiency; industry’s profit-seeking; and the people and enterprises’ needs for freer, more rapid communications. This is what we need to do, in a way that works for us.Also, the government, the judiciary, the press and users need to understand and accept that the telecom crisis is part of the larger non-performing assets (NPAs) problem. It has systemic links to NPAs and banking, which links to real estate and construction, electricity and roads, and stable and predictable taxes. Government payment delays and tax terrorism must stop. Business as usual will not resolve NPAs soon to enable growth. These two articles explain why and deserve attention.2

Essentially, entities that take deposits need Reserve Bank of India (RBI) regulation. In a crisis, people with domain expertise and capacity must be appointed to take immediate steps to protect assets and operations, as with Satyam or IL&FS, because seizing/freezing assets often hurts depositors and creditors. A bureaucratic process as with the Punjab & Maharashtra Co-operative bank is likely to result in yet another zombie bank, burning depositors’ money just to stay alive.The Committee’s focus should be on cash flows, modelling cash flows and their timing, not just the present value of discounted flows, or other extraneous emotional, political, or judicial/administrative reasons.

Employment is a legitimate consideration, but has to be sustainable, with timely cash generation. Else, other sources of timely cash support must be arranged, because without sustained cash flows, no gambit or subsidy can succeed (and maintaining unproductive employment will not be possible). Some fixes need major legislative changes to policies.

BSNL & MTNL

On BSNL and MTNL, a recent article sets the context and explains why the revival plan is unrealistic.3 In short, these poorly supported and much-abused enterprises have so much debt that earnings before interest, taxation, depreciation and amortisation would have to be at least 35 per cent. Governments have used them as market spoilers as with Air India, precipitating unsustainable price wars that gutted the industry.An alternative is to downsize, re-skill as needed, and retain the public sector entities (as one or both) in the role of security-and-public-interest-anchors in infrastructure consortiums. These must be run by the private sector (and in strategic areas, by defence). This will facilitate policies such as assigning spectrum for payment on usage without auctions, and extending Wi-Fi to 60 GHz and 6 GHz (details at: https://organizing-india.blogspot.com/2019/10/extend-tax-cut-logic-to-infrastructure.html, and https://organizing-india.blogspot.com/2018/11/a-great-start-on-wi-fi-reforms.html).

Weak Financial Systems

The Committee needs to apprehend and convey the need to strengthen financial institutions. Financial systems provide second-order infrastructure for productive activity and wellbeing. They need an adequate underlay of first-order, basic infrastructure, comprising communications, energy, water, waste, sewerage, and transport, leaving aside housing and the basics of security, and law and order. While most of us take these for granted, there should be no doubt about how critical these attributes are, and that they are being eroded and increasingly at risk because of social disorder and economic inadequacies. In addition, basic health care and education are essential adjuncts for the supply of trainable people to operate these sectors.

Until some years ago, despite weak infrastructure, financial systems were among India’s real strengths, although eroded periodically by disruptions resulting in NPAs. However, there was strength in the professional capacity of this sector that held up in spite of the pressures. Over time, these institutions have been severely degraded, through laxity, complicity, pressures for evergreening, the abrupt imposition of credit quality and NPAs, the extent of frauds because of lax or complicit supervision and the reputational damage, the buffeting from demonetisation and pressures to cross-sell products such as insurance. Governments need to understand this and support building professionalism, avoiding melas and waivers.

The scope of the Committee could be expanded to set the objectives of telecom and digitisation in the interests of governance, industry, and users, and to outline next steps. They could consider the experience of China and others such as Sweden for this vast effort, while addressing linkages and NPA issues. Perhaps, they could be exemplars by setting the tone for a national approach that is not departmental and becomes bipartisan, and helps to move away from our abrasive, confrontational politics that leads to deadlocks.

1. Becky P.Y. Loo, October 2004: https://www.researchgate.net/publication/227426547_Telecommunications_reforms_in_China_Towards_an_analytical_framework
2. Debashis Basu, October 27, 2019: https://www.business-standard.com/article/opinion/how-to-fix-the-pmc-bank-crisis-119101400006_1.html October 13, 2019: https://www.business-standard.com/article/opinion/lessons-from-pmc-why-govt-is-responsible-for-co-operative-bank-crises-119102700620_1.html
3. Rahul Khullar, October 31, 2019: https://www.business-standard.com/article/opinion/don-t-bet-on-bsnl-mtnl-s-revival-119103100040_1.html

The article was published in the Business Standard on September 4, 2019 and carried in Organizing India Blogspot on September 5, 2019.

Payments have gained currency, pun unintended, with the sharp focus on consumer spending and the economy. The following anecdote from newspaper reports begins with a payment problem for a traffic infraction, which leads on to existential questions on behaviour and governance.

A motorcycle rider in Uttar Pradesh was booked for not wearing a helmet. Events spiralled quickly to arrive at the heart of the matter: The state of governance and our utter disregard for due process and the law. But let’s not get ahead of the story.

The rider was an electrician on contract with the UP State Electricity Board. He pleaded with the police to be let off on the Rs 500 fine, saying he earned only Rs 6,000 a month, and hadn’t been paid for four months. The police said it was the law, and issued a ticket. The electrician’s superior interceded at his request, but couldn’t convince the police to waive the fine. (It turned out that tickets had been issued to 70 policemen for traffic violations.)

The electrician checked on the electricity dues owed by the police station. Finding that they amounted to Rs 662,463 over several years, he disconnected their power supply. When questioned, he said that this was as required by the law.

The power supply to the police station was soon restored, with the customary, vague assurance that the bill “would be paid soon”. A positive outcome, however, was that the state electricity board then paid Rs 17 crore of arrears for the month of May to 9,627 contract workers, including the electrician. The remaining amount, they said, “would be paid soon”.

Why were wages delayed? Apparently because consumers delayed payments, and the electricity board didn’t have the money to pay. Employees were still owed back pay for three months. Meanwhile, a formal enquiry reportedly began on the episode.

Such incidents are not unusual. In August, there was an instance in Agra of unpaid sanitation workers responsible for the toilets at the Taj Mahal going on strike. In Noida near New Delhi, two major shopping malls, a hospital, and a school had their water and sewer lines shut off because of unpaid dues. There were apparently 107 defaulters who owed over Rs 10 lakh each, with the highest being Rs 46.35 crore.

It isn’t as though citizens and the private sector are the sole culprits, with only stray government entities defaulting. A former Confederation of Indian Industry chairperson said in an interview on television recently that while hard data on government dues to the private sector are unavailable, informal estimates of the dues from central and state governments, state-owned companies such as electricity boards, and arbitration awards, ranged from Rs 2 trillion to Rs 5 trillion. Her observation was that if these dues were paid, it would provide the biggest boost for the economy, because it would result in much-needed capital formation and economic rejuvenation. As to where the funding could be found, given the government’s finances, she replied that the same sources (for example, bonds) could be used that would fund whatever waivers or incentives the central and state governments were promising. Those funds could be channelled for productive use in capital formation by their rightful claimants.

Stepping back for perspective, the problems appear to stem from slack implementation of protocols (defined, sequential steps), whether it is the discipline of timely payments, or rules and regulations. The same malady afflicting payments shows in the disregard for traffic rules, and the confusion in disallowing tyre shredders to discourage driving the wrong way, which is even more dangerous to the public.

In some cases, the design itself is flawed. For instance, resources for infrastructure such as coal and spectrum need to be priced low to facilitate productivity. If auctioned at a premium, instead of abundant supply of good quality at reasonable prices, the supply is constrained in quantity or quality, or priced high. Other instances are of processes not thought through in terms of design (e.g, stranded power generation. A requirement of Letters of Credit (LC) for purchasing power has been around, but has not been enforced. Will a new directive enforce this, when banks acting prudently can issue LCs only to distribution companies with strong finances?) The design shortcomings could result from fragmented and episodic attention, disaggregated responsibilities, lack of professional capacity, or simply winging it.

These failings have existed over decades, regardless of the governments in office. Some initial successes, as in mobile telephony from 2003 to around 2011, or in road construction or electricity supply, have not been consistent, nor have they been convergent to yield all-round, sustainable growth of the sort that could result from well-organised orchestration across the board. They have not even been able to sustain their performance, and now comprise the troubled sectors for banking and non-performing assets.

The root causes may be in underlying contradictions in our attitudes. These include feudal and post-colonial (exploitative) notions, with the trappings of a Westminster system, without the requisite culture and preparation of policies, practices and training. The result is either government and citizens facing off in an “Us vs Them”, with citizens often being viewed in the way colonials regarded “the natives”, or episodic “schemes” that fizzle out. Our political leadership and we have to realise that we are in the same boat, and that there is no substitute for working together with discipline for our common interests.

There are no colonial masters here, only their mindsets that we adhere to, without refashioning them for our purposes. This is what we must change over time from a total-solutions perspective, from on-time payments, to law and order including traffic, to waste management,¹ all infrastructure, finance, industry, farming, the arts and daily living.

The article by Shyam Ponappa was published in the Business Standard on July 4, 2019 and Organizing India Blogspot on July 5, 2019.

There is much talk about improving the big picture in India. What we really need, though, is some successes on the ground — some actual resolution of problems as building blocks for further success. Two instances are discussed below.

The first is a puzzling business failure: Jet Airways running aground in slow motion. It is already bankrupt, but unravelling the sequence could make such financial predicaments, of which there are many, more tractable. India’s once dominant airline slipped up and, inexplicably, was allowed to collapse. Over 16,000 employees are affected, and India’s airline services are in turmoil. One estimate of liabilities was Rs 26,000 crore.

Why didn’t lenders and government agencies use a combination of executive action, judicial process and bridge financing to keep the airline afloat? Did legal obstacles genuinely prevent resolution? Or was it irresolute collective action, including lenders being gun-shy because of the Non-Performing Assets (NPAs) and witch-hunts, or manipulation, complicity, or vindictiveness? Answers and corrective action could help fix other high-profile NPAs.

The second is a macro-level example from telecom: The mishandling of BSNL and MTNL. Since the 1990s, successive governments have repeatedly attempted to give a fresh impetus to these hapless telecom entities, while depriving them of what could actually have made them successful, namely, strong, informed leadership, with independence/non-interference. Consequently, BSNL’s accumulated losses amount to nearly Rs 1 trillion. This is nearly five times Jet Airways’, and double Air India’s accumulated losses until March 2018, the latter being roughly the size of India’s annual health budget.

Sorting out these infrastructure service problems is crucial because of their effect on everything from security, education and healthcare, to work and entertainment.  If BSNL and MTNL can change course constructively, we may be able to get them off their collapsing trajectory. Resolving this situation would remove severe impediments to our effectiveness and convenience, and an enormous drag on productivity. Connectivity and communications are so critical to social and economic capabilities, and our approach for decades has been so flawed and on a disastrous trajectory, that it is incomprehensible that we should be resolutely following this failing path without changing it. Now, the government is reportedly considering infusing thousands of crores into the same business, together with monetising land and assets.

What Is In The Public Interest?

The first step is setting appropriate objectives for BSNL and MTNL. What public-interest needs do they serve? The communications minister mentioned strategic areas like home and defence, and services for crisis management during times of disaster such as cyclones and floods. Two others that he mentioned appear unjustifiable: That they are national assets, and leading providers of free services. The first is just an assertion, while the second is inappropriate for commercial undertakings. It’s time to drop wishful thinking and take honest stock. For instance, after policy statements supporting spectrum sharing, regulations were framed to be so restrictive as to make it not worthwhile. Instead, policy-makers should set objectives that actually serve the public interest.

Thus far, we have had confused and absurdly contradictory objectives in practice: High government collections from auction fees and charges, while expecting ubiquitous, reasonably-priced, good-quality services. It seems self-evident that such contradictory objectives cannot possibly be achieved. The fact that high government charges deprive networks of funds and increase user costs are documented in the following reports:
“A Study of the Financial Health of the Telecom Sector”1 and 

“The Impact of High Spectrum Costs on Mobile Network Investment and Consumer Prices”2

Suggested Objectives

A genuine reset could be attempted on the following lines:

• Connectivity is the most essential objective. The ideal must be balanced with the practical, through trade-offs and phasing. The top cities and clusters have a major share of economic and social activity and are therefore a priority, of which 35-50 may be the fastest growing, with the next 50 requiring attention because of sheer size. For instance, Sweden’s phasing for 2025 is for 98 per cent of the population to have a minimum of 1 Gbps at home/work, 1.9 per cent at least 100 Mbps, and 0.1 per cent at 30 Mbps. But to the extent communications are available in our hinterland together with roads, water and sanitation, activity and prosperity will spread, with less pressure to migrate to urban centres. The longer term objective therefore needs to be good connectivity everywhere (within reason).
• An equally important objective is to safeguard the public interest, while ensuring good, reliable services at reasonable prices. The question is not whether to shut down BSNL and MTNL, but how to provide the right structuring and support including reskilling and continuing education, so that they participate effectively in consortiums and provide safety, security, and oversight in the public interest.
• A third is to avoid disrupting markets with unsustainable prices, including free services. Governments have done this repeatedly in telecom, airline and electricity services. It needs to stop. People need high-quality infrastructure for productivity, not shoddy services that undermine productivity and waste their time, pre-empting better services because of low pricing.
• A fourth is to actively ensure adequate capacity and quality in services to not constrain or waste public resources and potential. This is to avoid the shoddy services referred to above, that are bottlenecks that subvert alternatives as low-priced barriers to competition, through constraining revenues while draining public resources.
• Finally, we must embrace infrastructure- and spectrum-sharing. Sweden provides a model not only for the European Union, but also for India. Singapore had a model public-private partnership until some years ago, when SingTel, a passive anchor partner, took over OpenNet. We need mandatory active network sharing (including spectrum) through consortiums run by the private sector, with BSNL and MTNL as guardian anchor participants. A report by Stokab in March 2017,³ the City of Stockholm’s IT infrastructure company, provides details of an operator-neutral fibre and mobile infrastructure.

Resolving connectivity problems that affect many people may be more easily doable than, for example, clearing the NPAs, or reconfiguring agriculture.

Shyam dot Ponappa at gmail dot com

1: http://icrier.org/pdf/Working_Paper_380.pdf

2: https://www.nera.com/content/dam/nera/publications/2017/PUB_High_Spectrum_Costs_0517.pdf

3. https://www.stokab.se/Documents/Nyheter%20bilagor/Provins%20rapport%20mars%202017_en.pdf

The article by Justin Sherman and Arindrajit Basu was published in the Diplomat on July 3, 2019.

As world leaders gathered for the G-20 summit in Osaka, Japan this past weekend, a multitude of issues from climate to trade to technology came to the fore. Much of the focus was on U.S.-China interactions at the summit, as the two nations are  locked in both a trade war and broader technological and geopolitical competition. Despite the present focus on the U.S. and China, however, it is crucial to not overlook another bilateral relationship of ever-growing importance in the process: The tech relationship between the United States and India.

Certainly, the two countries have many disagreements on some technology issues. But this is a geopolitical relationship that is both strategically important for each country, and a vital opportunity for the two largest democracies in the world to collectively combat Chinese-style digital authoritarianism.

Huawei and 5G

First, with respect to national security and 5G roll-outs, the U.S and India are not on the same page. The United States, for several months now, has been on a diplomatic messaging tour of the world to try to convince — with great resistance (some would argue failure) — allies, partners, and potential partners alike to ban Chinese firm Huawei from supplying components of 5G networks. Many officials across Europe, the Middle East, South America, and elsewhere have been reluctant to ban Huawei per the U.S. recommendation, and India is no exception. Indeed, National Security Advisory Board Chairman P.S. Raghavan told The Hindu that “5G is becoming a fault line in the technology cold war between world powers” and that India must avoid getting caught in these fault lines.

In large part, U.S. diplomatic messaging here has fallen short due to heavy conflations of national security- and trade-related risks; and Trump only contributed further to this fact with his latest reference to Huawei, during the G-20, as a potential trade war bargaining chip. The sheer population of India, however, combined with its fast growing technology sectors and desire to digitize, makes the country an important market player when it comes to the 5G revolution. U.S.-India engagement on 5G issues must be managed effectively through robust articulation of each country’s national interests underscored by a clean segregation of trade and security questions in the discussion. This partnership has the potential to wield great influence in the global market, including in ways that could prioritize or deprioritize certain 5G equipment suppliers (like Huawei).

Data Sovereignty and Data Privacy

Data sovereignty is another hot area in which the U.S.-India tech relationship demands careful negotiation. Over the past year, the Indian government has introduced a range of policy instruments which dictate that certain kinds of data must be stored in servers located physically within India — termed “data localization.” While there are a number of policy objectives this gambit ostensibly seeks to serve, the two which stand out are (1) the presently cumbersome process for Indian law enforcement agencies to access data stored in the U.S. during criminal investigations, and (2) extractive economic models used by U.S. companies operating in India.

A range of conflicting developments emerging from the G-20 summit underscore this fact. India, along with the BRICS grouping, focused on the development dimensions of data governance and re-emphasized the need for data sovereignty — broadly understood as the sovereign right of nations to govern data in their national interest for the welfare of their citizens. President Trump reigned in his focus on the need for cross-border data flows and, in direct opposition to some proposals that have emerged from India, explicitly opposed data localization. While India did not sign the Osaka Declaration on the Digital Economy that promoted cross-border data flows, the importance of cross-border data flows in spurring the global economy did find its way into the Final G-20 Leaders Declaration — which, of course, both countries signed.

Geopolitically, the importance of India’s data governance stance cannot be overstated as it could pave the way for the approach adopted by other emerging economies — most notably the BRICS countries. Likewise, the U.S. has important thinking to do around such questions as what shape a national data privacy law could take. Even though the two countries’ views on data may be quite different from one another, the seats that India and the U.S. have at the table for global data governance discussions — alongside others like Japan, China, and the European Union — underscore the value of meaningful interactions and mutual trust and respect on this issue.

Norms for a Democratic Digital Future

Finally, as the United Nations Group of Governmental Experts and the Open-Ended Working Group meet to resurrect the norm-formulation process for fostering responsible state behavior in cyberspace, India has some homework to do.  Even though it has been a member of five out of the six Group of Governmental Experts set up thus far, India is yet to come out with a public statement delineating its views on the applicability of International Law applies in cyberspace. Further, India has also failed to articulate a cohesive digital strategy — instead relying on a patchwork of hastily rolled out and often ill-conceived regulatory policies, some of which commentators in the West have hastily labeled as digital authoritarianism. The U.S., for its part, amidst a cutback to diplomatic cyber engagement (as part of cutbacks to diplomacy writ large), could also up its support of international engagement on these issues. Its recent repeal of net neutrality protections could also be argued as a step back from long-time international norm promotion around internet openness.

Through a combination of domestic policy gambits and foreign policy maneuvers, both states need to draw lines in the sand that safeguard human rights, international law, and democracy online, while arriving at some balance with each other’s national interests.

A primary example lies with artificial intelligence (AI). AI has found increasing use in digital authoritarianism, as dictators use automated, intelligent systems to boost their surveillance capabilities. The Chinese government has arguably been at the forefront of this enhanced level of authoritarian rule for the digital age.

In addition to focusing on AI applications for everything from natural language processing to self-driving cars — through investments, strategies, policy documents, and so on — Beijing has also been deploying AI in the service of large-scale human-rights abuses. Chinese strategy papers on AI, while similarly emphasizing many commercial or benign applications and raising attention to such issues as algorithmic fairness, concurrently have discussed using AI for “social governance,” censorship, and surveillance. To combat the rising intersection of AI and digital authoritarianism, the U.S. and India could wield enormous leverage — as the two largest democracies in the world — in governing these technologies in a democratic fashion that counters dangerous arms-race narratives and uses of AI for surveillance and repression.

The same goes for paying attention to technology exports and diffusion to human-rights abusers. For instance, companies incorporated in China, among those incorporated elsewhere, have been heavily involved in exports of dual-use surveillance technologies to other countries, including those with questionable or outright poor human-rights records. Although companies incorporated in democracies may engage in such practices as well, most democracies take steps to curtail these practices as much as possible, such as through the multilateral Wassenaar Arrangement — which lays out export controls around conventional weapons and dual-use goods and technologies. The U.S. has long been a party to this agreement, and India officially joined in 2018. Arguments persist about the extent to which Beijing is involved in these dual-use surveillance technology exports, but these exports may only increase going forward as companies increasingly sell not just internet surveillance tools but also dual-use AI tools. In this way, too, India and the U.S. could play an important role in countering the spread of such capabilities to human-rights abusers and standing against the spread of digital authoritarianism in the process.

The relationship here is, therefore, one that requires careful navigation for its significant geopolitical, economic, and ideological consequences. For the future of the technological relationship between the world’s largest democracies—and the extent to which they respect each other’s strategic autonomy while converging on issues of mutual interest—could determine the future of global digital governance.

The article by Shyam Ponappa was published in Business Standard on June 6 and in Organizing India Blogspot on the same day.

Ah, 5G! The very thought seems to excite so many. What is it? It is a mix of telecom technologies¹ delivering much higher data speeds on more extensive connectivity, using much lower power, with extended battery life, and emitting less radiation, for ways to connect and operate most of the conveniences people use regularly. From smartphones and computers for communications, study, work, research, entertainment, to other devices and machines, such as for managing utilities (electricity and water) at home and the workplace, refrigerators and cooking devices, industrial equipment, transport, and more, so that daily activities are eased considerably. The catch is that 5G is at an early stage in a long process — perhaps a couple of years to manifest in large trials in India, and several more years to be widely available, needing huge investment ($100 billion in India).

Yet, there are compelling reasons for developing India’s capabilities. There is the sheer necessity for India to partially meet its requirements, instead of relying entirely on imports. The big draw is the size of the Indian market and prospective demand, the global market, and the possibility of innovation at this early stage. Domestic capabilities are a prerequisite to afford deployment at a level that would otherwise exceed petroleum imports, with unsustainable effects on our balance of payments. Without domestic capacity, energy imports would limit electronics imports. (This highlights India’s need for solar power development, a separate and equally high priority.)

However, the sobering financial condition of India’s communications industry gives pause. Financial capacity — revenue generation and access to capital, both equity and debt at favourable terms — is required to develop capabilities. After the telecom price wars, even Reliance Jio is reportedly cutting staff. Airtel, meanwhile, having invested heavily in 4G infrastructure, has stated its unwillingness to bid for 5G pectrum unless prices are lower.

The government set up a committee for 5G in September 2017 with a steering group chaired by emeritus professor at Stanford Arogyaswami Paulraj, a pioneer in wireless communications. This committee recommended network deployment as the immediate priority, i.e., rolling out early, efficient and pervasive 5G networks. Technology design and manufacturing capacity were recommended for later phases.

Network deployment needs policy support driven by a Systems Approach, especially for a debt-encumbered sector faced with declining revenues per user, and unused, inaccessible spectrum, even as other countries enhance their lead. This is ironic, because India has real strengths in this sector and a large market, with the potential to catapult productivity and prospects. Yet, government policies have not succeeded in coordinating our reservoir of human resources and potential.

India lags in 5G despite the government’s stated interest in establishing a lead. Spectrum allocation and large trials were scheduled towards the end of 2019, and auctions in 2020. However, government statements this week target 5G trials by September, and auctions by the end of 2019. As spectrum band choices and allocations for trials have yet to be made, this appears overambitious without radical improvement in resolving many such issues.

Also, India’s reserve price for spectrum is seven times Korea’s. As sectoral cash flows are weak, there may be takers only at very low prices unless funding is from external sources as for Reliance. A monopolistic outcome would be undesirable in the public interest. Therefore, shared access with Wireless Resource Virtualisation and Network Function Virtualisation may be a much better solution for network deployment and market development.

Inexplicably, government and the public still view communications as a “government cash-cow” instead of as critical infrastructure, while complaining bitterly about poor delivery from low investment. It is obvious that exorbitant government charges (29-32 per cent of revenues plus corporate tax) crowd out investment. The government can change this, or give up on establishing a lead in communications and 5G. Worse, India will continue to lose out on leveraging communications for development.

Initiate a breakthrough - Apply Systems Thinking

The government can catalyse a breakthrough by doing the following:a) Reduce borrowing costs and taxes for communications as infrastructure. This aim of the National Telecom Policy 2012 (NTP-2012) has been ignored.b) Provide adequate spectrum aligned with global allocations. Given India’s low fibre penetration and need for digital technology, allow shared access to all spectrum and infrastructure, with charges for usage based on revenue sharing.c) Clear administrative impasses through coordination and due process without delay. For example, allocate spectrum immediately for 12 months for trials.Many countries have completed 5G spectrum assignments and are already deploying 5G. These include Korea, Switzerland, Finland, UK, USA, Canada, Australia, Germany, Russia, Italy, and Japan.²There are nearly 300 5G deployments, as shown on an interactive map on Ookla’s site (Chart 1).
Chart 1: 5G Map – June 4, 2019



Source: https://www.speedtest.net/ookla-5g-map
In this context, Huawei’s role in India is contentious. One issue is of non-discriminatory trading terms, or fairness in competition.  If an entity such as Huawei achieves global dominance through government support, it competes on terms that cannot be matched because of cost of funds and scale advantages. Such entities can establish dominance in any country against competitors who do not enjoy similar support. Second, while Huawei may be doing nothing different from Nokia or Ericsson, the fact that it is supported by a neighbour with apparently hegemonic behaviour, China, suggests that dependence or entanglement are inadvisable.

To succeed with Digital India and 5G, government can begin by classifying communications as infrastructure, and adopting the approach taken for 5 GHz Wi-Fi.  Take pointers from the US FCC, ETSI, and so on; use spectrum and network sharing to leverage equipment and spectrum fully; support local technology champions such as a fabless chip design unit and a network equipment manufacturer in Bangalore, and a wireless equipment manufacturer in Delhi; and focus only on delivery with sustainable revenue generation.

Shyam dot Ponappa at gmail dot com

1: 5G technologies include Multi-User – MIMO (MU-MIMO) to improve reception, small cells for better performance and reduced radiation, WiGig and other high-speed wireless technologies, Software Defined Networks with Network Function Virtualisation, Wireless Resource Virtualisation, and a fibre backbone.

2: Page 8: https://img.lightreading.com/5g/downloads/ webinar-breaking-the-wireless-barriers-to-mobilize-5g-

The article by Gurshabad Grover was published in Indian Express on May 30, 2019.

The Trump administration has not only passed orders restricting the US government and its departments from procuring networking equipment from Chinese companies, but is exerting considerable pressure on other countries to follow suit. The fear that Huawei and ZTE will aid Chinese espionage and surveillance operations has become common even though there has been no compelling evidence to suggest that Huawei’s equipment is substantively different from its competitors.

These events have also sparked a larger debate about the security of India’s communications infrastructure, an industry powered by foreign imports. Commentators have not shied away from suggesting that India ban the import of network equipment. C Raja Mohan, in ‘The tech wars are here’ (IE, December 11, 2018), expressed these concerns and asked whether Chinese telecom equipment manufacturers should be allowed to operate in India. A larger point was made by D S Hooda in his piece, ‘At digital war’ (IE, October 25, 2018). He pointed out threats that arise from using untrusted software and hardware all over the stack: From Chinese networking middleboxes to American operating systems and media platforms. As a method to establish trust in ICT infrastructure, Hooda recommends “indigenis[ing] our cyber space”.

The path towards indigenised manufacturing of networking equipment is an expensive, elaborate process. Restricting certain foreign companies from operating in the country without evidence would be a knee-jerk reaction solely based on cues from US policy, and would undermine India’s strategic autonomy.

At the heart of threats from untrusted software or hardware, lies an information asymmetry between the buyer and seller. It is not always possible to audit the functioning of every product that you purchase. Open technical standards, developed by various standards development organisations (SDOs), govern the behaviour of networking software, and remove this information asymmetry: They allow buyers to glean or implicitly trust operational and security aspects of the equipment.

It is clear that various governments including India have repeatedly failed to advance privacy and security in the 5G standards, which are developed at the 3rd Generation Partnership Project (3GPP) — the organisation developing standards for telephony. Government and industry dominance at the 3GPP has ensured that telecom technologies include security vulnerabilities that are euphemistically termed as “lawful interception”. From an architectural perspective, 5G does not contain any significant vulnerabilities that were absent in older telecom standards. Unfortunately, these vulnerabilities are indifferent to those who exploit them: A security exception for law enforcement is tantamount to a security vulnerability for malicious actors. As the report from UK’s Huawei Cyber Security Evaluation Centre Oversight Board confirmed, there is perhaps no technical way to mitigate the security risks that 5G poses now. But there is still no evidence to suggest that Huawei is operating differently from say Ericsson or Nokia.

India needs to establish that Huawei is aiding the Chinese government through their products (5G or otherwise) before reacting. That Chinese companies are rarely insulated from Beijing’s influence is indisputable. However, the legal requirements placed on Chinese companies by Beijing are equivalent to de facto practices of countries like the US, which has a history of intercepting equipment from American companies to introduce vulnerabilities, or directly compelling them to aid intelligence operations. Such influence should be fought back by pushing for international norms that prevent states from acquiring data from companies en masse, and domestic data protection legislation.

In the long term, the Indian government and its defence wings would benefit from understanding the argument Lawrence Lessig has made since the 1990s: Decisions of technical architecture have far-reaching regulatory effects. A long-term strategy that focuses on advancing security at technical SDOs will prove more effective in ensuring the security of India’s critical infrastructure than the economically expensive push for indigenisation.

The article was published in Business Standard on May 1, 2019 and mirrored on Organizing India Blogspot on May 2, 2019.

There’s no escaping the blessing or the curse of the Digital Age in India, any more than the benefits and challenges of democracy. The headlong rush into digitised networks provides incredible benefits of reach and efficiency in many different ways, at the individual and many collective levels — of family, friends, community, nation, polity, work, domain, and so on. It also lends itself to the dark side, plumbing the depths of social, religious, or political factions and tribalism, bigotry, autocracy and fascism, anarchy, social dysfunction, and the rest. Yet, there’s no denying that for India, with all its needs, talents, foibles, and contradictions, digitisation is a great enabler.

Likewise democracy.  Romanticised notions of it are pure fluff, epitomised by selfies at the Parthenon, conjectures about Vaishali, or the spectacle and pageantry of electioneering. The reality was, and is, much harsher, whether then or now. Then, it was the practice of a pri­vileged elite. Now, the reality of de­m­ocracy in India with universal franchise and an insufficiently prepared polity is a space captured by politicians, many of them fractious opportunists, not really prepared or equipped for the complex analysis and decision-making that governance requires. Mo­st citizens, however, have an illusory freedom of choice, despite the choice being restricted to accepting or rejecting incumbents, or choosing repla­cements from among th­e­se very politicians. This is where digitisation has a direct role and enormous impact through media in all its forms, in­cluding the nexus between money and politics as in the Cambridge Analytica episode.

According to McKinsey’s ‘Digital India’ report of 2019, the benefits of digitising India are impressive, although only 40 per cent of the population has internet access, and there is uneven adoption in businesses, leaving considerable room for improvement. Yet, newly digitising sectors have experienced tremendous gains. For example, in logistics, fleet turnaround time has been reduced by 50 to 70 per cent, and digitised supply chains helped companies reduce inventory by 20 per cent. The question is whether and how this can be managed to yield more benefits than detriments, while preserving privacy, social convergence, and harmony, while avoiding divergence, repression, and instability through disharmony.

The Imperative for Conscious Regulation
Network science tells us that real-world networks share two characteristics. The first is growth with time, and the second is that new nodes link more often to more connected nodes, or hubs. Growth and preferential attachment result in the emergence of a few, highly connected, dominant hubs in all networks, whether the networks are of the cells in our bodies, computer chips, transport networks for airlines, social networks connecting people, or the World Wide Web. These characteristics are common across networks of any size and are scale-free.

The dominance manifested by companies such as Facebook, Amazon, Netflix, and Google, combined with the attenuated influence of less connected nodes highlights the role of regulation and structure for equitable development and outcomes in networks. The same issues of dominance and the need for regulation arise in democracy.  In India, outrageous changes introduced recently with regard to election funding have increased opacity and the potential for abuse at the heart of democratic processes. Political parties can now receive foreign or do­me­stic funding from any source without constraint, and funds can be anonymous through ele­ctoral bonds. Introduced with retrospective effect, both the National Demo­cratic Alliance and the Congress benefitted, as previous adverse judgments were nullified. Therefore, one pointer is the need for regulation and appropriate controls applied in a host of areas including news and social media.Evidence-Based Policies
An entirely constructive aspect of digitisation relates to the application of network science to issues by mapping the links between factors and actionable policies. Examples are the connection between genes and diseases for effective treatment,1 or the feasibility of upgrading products and exports for countries. An example of how proximate products and exports developed over 20 years is visualised in Chart 1, showing the Revealed Comparative Advantage (RCA) of Colombia (COL) and Malaysia (MYS) in production and exports from 1980 to 2000.

Chart 1: Revealed Comparative Advantage – Colombia and Malaysia

Source: Hidalgo et al: ‘The Product Space Conditions the Development of Nations – Science, 27 Jul 2007). https://science.sciencemag.org/content/317/5837/482
https://www.researchgate.net/publication/6181618_The_Product_Space_Conditions_the_Development_of_Nations
The premise is that most upscale products are from a densely connected core, while lower order products are in a less connected periphery. Countries tend to move to products close to those for which they have specialised skills.The lower chart is for Malaysia alone (it helps to view enlarged images in co­lour on a screen to trace the progression).
India’s manufacturing and export opportunities in its product space in 2017 are in Chart 2.

Chart 2: India - Export Opportunities Product Space - 2017  $292 billion

Hidalgo: https://atlas.media.mit.edu/en/visualize/network/hs92/export/ind/all/show/2017/
Such interactive charts are available and can help in planning for product areas such as automobile parts, chemicals, or electric motors.2

A great deal of appropriate regulation followed by planning and execution is needed, incorporating insights such as these in areas like governance, healthcare and industrial policy. Realpolitik and preoccupation with obscurantism, religiosity, and caste/tribe, require that changes be driven by unraveling the nexus between politics and funding, evolving a transparent, state-funded system. Is such a transformation possible? Recent developments that have overtaken earlier attempts at electoral reform such as the Goswami Committee (1990) and the Vohra Committee (1993) emphasise an urgent need. But can public opi­ni­on and opportunistic opposition interests converge to effect appropriate cha­nges in political funding? And elicit enlightened government action in public interest projects for health, manufacturing and export policies, agriculture, finance, construction, and so on? A tall order. Perhaps the best hope is that reactions to phenomena such as Brexit help create more equitable practices.

1. For connections between diseases and genes, see Alex J. Cornish et al: https://genomemedicine.biomedcentral.com/articles/10.1186/s13073-015-0212-9

2. https://atlas.media.mit.edu/en/ AJG Simoes, CA Hidalgo. The Economic Complexity Observatory 'An Analytical Tool for Understanding the Dynamics of Economic Development.' Workshops at the Twenty-Fifth AAAI Conference on Artificial Intelligence. (2011)

The article by Shyam Ponappa was published in Business Standard on April 3, 2019 and in Organizing India Blogspot on April 4, 2019.

Many of us in India become inured to a laxity in standards and to the implementation of laws. There may be good reasons for targeting one of these for a start, and that is delayed payments. These are broadly tolerated by citizens, farmers, corporates, small businesses, and government agencies. Perhaps this is because payment delays are merely one among several instances we encounter of mediocre standards, indifferent quality, or shoddy performance. Delayed payments are the inception of process flow problems that lead to non-performing assets (NPAs). Perhaps delays in cash flows are a fundamental flaw in our processes that we need to fix as a root cause that drives much else, to begin to address a gamut of inadequacies.

To see why, consider delays in government payments. Central and state government payments are often delayed, apparently even more than in the private sector. Even government payments related to high priority IT systems, for instance, are notoriously delayed. Major IT companies complain of losing money on large projects for this reason. Nasscom estimated a couple of years ago that government dues to the IT industry could be more than Rs 5,000 crore.

Some factors that render domestic projects attractive to the IT industry are the large domestic IT market, projects of significant size from state and central governments, and slowing exports over the last several years. The disincentives, however, are lower margins, long lead times for government contracts, payment delays, and a history of disputed payments and litigation. Also, IT majors complain that government processes often don’t accommodate changes in the terms of contracts when there are changes in the scope of projects. This is why IT companies are averse to domestic government projects.

Quite apart from these opportunity costs, delayed payments create serious cash flow problems for the economy, with outstandings running typically for many months, and sometimes for years. While the instances above are about the IT industry, there are similar problems in other sectors as well. In the construction industry, for example, estimates of private contractors’ dues held up by delays including disputes range from Rs 1 trillion to Rs 3 trillion.

While some bank NPAs undoubtedly result from fraud and malfeasance (which are outside the scope of this article), disruptions in cash flows in commercially sound projects can result in the creation of NPAs. This aspect has to be addressed as a precursor to stressed assets in resolving NPAs, as is evident in considering the problems of power generating companies.

A Ministry of Power portal (http://www.praapti.in/) shows that overdue payments from electricity distributors to power generating companies at the end of January 2019 amounted to Rs 28,504 crore. Meanwhile, in the Supreme Court, 34 power generating companies with NPAs of Rs 1.4 trillion were battling an RI Circular of February 12, 2018, that consigned their entire investment of double the NPA amount (Rs 3 trillion) to bankruptcy proceedings under the Insolvency and Bankruptcy Code (IBC). The reason was that their dues had not been resolved within the RBI-mandated 180 days by August 2018. The RBI insisted on bankruptcy as a time-bound consequence, regardless of the cause of default. By contrast, the Ministry of Power and the supplicants objected to the RBI Circular, attributing loan stress in several cases to factors beyond the borrowers’ control. These factors included reasons such as payment delays by state distributors, problems in the supply of coal, or in some cases, because consortiums of lenders were close to restructuring loans, whereas declaring bankruptcy would not resolve the underlying causes.  A number of bankers suggested that the 180-day rule for bankruptcy in the RBI Circular was impractical. Major banks consider restructuring as the appropriate solution when defaults are caused by factors outside the borrowers’ control, such as delayed payments from state electricity boards or by government agencies, state government overdues, or major adverse changes such as the unexpected imposition of duties by supplier countries on coal.

The Supreme Court quashed the RBI Circular of February 2018 on April 2, 2019. This will likely pave the way for more constructive outcomes for many of these projects, provided the RBI and the banks follow through with feasible restructuring. The alternative of selling stalled projects that were unworkable because of reasons such as there being no fuel supply or power purchase agreement, or overdue payments by customers (state or central agencies) were outstanding, if indeed buyers could be found, would hardly solve these problems. The projects would remain stalled or unproductive until the underlying inadequacies were made good, whether by providing fuel, power purchase agreements, collecting overdue payments, or enabling realistic tariffs to yield viable margins. Until these deficiencies are made good, the problems will remain.

Popular opinion, however, seems to favour “selling off bankrupt projects” regardless of extenuating circumstances, even when owners have no control over them, although selling them will not rectify the conditions that created the default. This approach of attempting to sell off projects to get rid of problems without addressing the underlying issues for otherwise sound projects is best abandoned. To be flip, it’s like an “Off with his head!” approach.

What's needed

Standards for on-time payments are the real requirement, with penalties, e.g., double the SBI rate, enforced strictly for non-performance. Central and state governments need to take the lead on this as an essential aspect of governance. These difficult steps will be a real bear, but are necessary if we are to eliminate NPAs. Is this a realistic expectation? As realistic as it is to expect to eliminate the resulting NPAs.

The RBI will need to provide regulatory oversight, instituting real-time monitoring and reporting systems, and taking prompt action as necessary. Properly designed and deployed, such systems would prevent one form of ever-greening of loans at inception. Separate systems for loan renewals could be designed and deployed to prevent other aspects of ever-greening. These coordinated steps could prevent good assets from turning into NPAs.

The article was published in Business Standard on March 7, 2019 and in Organizing India Blogspot on March 8, 2019.

Growth in the third quarter was disappointing, but there are signs of a cyclical recovery, with a Purchasing Managers Index for manufacturing at a 14-month high. For a significant upward shift of our growth curve, however, apart from lower interest rates, policy-makers have to be constructive. What might we wish for? Here are some suggestions.

Accept the reality that investible funds in India are insufficient for our needs. These include our stock and net inflow of capital, and profits available for investment. We can try to increase our productive capacity or choose business-as-usual, thereby staying below our potential. Why? Because our activities aren’t profitable enough to induce and sustain investment. We need investment —in hard infrastructure, such as transportation and logistics, electricity, water and sewerage, and communications, and in second-order infrastructure, such as security and law and order, health care, education and training, banking, finance and insurance. There’s also the need for reorganisation of markets and practices, e.g., in agriculture, infrastructure, and government procurement.

There’s little doubt that digital connectivity is invaluable for all these. While the imperative is clear, the question is how to orchestrate achieving the desired results.

The telecom operators, alas, have low profitability, inadequate network coverage, and too much debt. Continuing as before means subpar access and productivity for all. We are all hamstrung, and even more so in rural areas. Because of the expanse an7d scattered users there, connectivity entails much higher costs with lower revenue potential.

Self-Organising Infrastructure – A Conceptual Flaw Without Regulatory Support
Meanwhile, there are conceptual flaws in our approach. The National Optical Fibre Network (Bharat Broadband Network Limited or BharatNet) was conceived as a countrywide fibre backbone. The plan was for optical fibre links to 250,000 gram panchayat villages covering India’s approximately 600,000 inhabited villages. A major assumption, however, was that private operators would build access networks to villages and to users. This was unrealistic for a number of reasons. First, there’s the cost of covering sparse users over large expanses with low revenue potential. Second, the supportive regulations for wireless technologies to build the access networks were/are not in place. For example, even for the established 5 GHz WiFi range used globally for WiFi hotspots, restrictive policies meant that 5 GHz equipment could not be used effectively in India in urban or rural installations. This changed with new regulations for 5 GHz, but only four months ago in October 2018 (for details see https://organizing-india.blogspot.com/2018/11/a-great-start-on-wi-fi-reforms.html).

Other wireless technologies for intermediate- and last-mile links are still blocked, and need enabling regulations.

• The 700 MHz band: No operators bid for this given its high price, although it is very useful for covering distances of 5-10 km, and can penetrate walls and foliage. This band together with the 500 and 600 MHz bands could be used to connect gram panchayats to nearby villages. A study of inter-site distances in 14 states shows that most villages would be covered with this range (see Chart below).
  Study of Inter Site Distances - Gram Panchayats and Villages

• Source: https://tsdsi.in/wp-content/uploads/2019/02/Krishna-Ganti-Day-1-5th-Session-1.pdf

• The 500 and 600 MHz bands are allocated for TV, and therefore are part of the “tragedy of the unused commons”. Only a small fraction is used for broadcasting in India because of limited free-to-air TV and better alternatives. As they are earmarked for broadcasting, they are not used for telephony either.

• The 70-80 GHz band (E-band) is effective for short-range links covering more users at 3-4 km, but not permitted in India, although it is light-licensed in many countries with nominal fees, e.g., the USA, UK, Russia, and Australia. While ideally our regulations should align with global norms, there are exorbitant charges on operators (reportedly 37 per cent, plus corporate taxes), a debt overhang from spectrum auctions, huge investment needs, and relatively low revenue potential. Compelling arguments to let operators use the E-band with unlicensed access, with registry on a geo-location database to manage interference, to be reviewed after some years. The additional traffic will generate revenues from which government collections will increase.

• The 60 GHz (V-band for distances up to 1.6 km): the Cellular Operators Association of India (COAI) opposes making it licence-free as in most countries, and wants it assigned to operators for access and backhaul. For the same reasons as for E-band, operators could be allowed unlicensed access, with a review after some years.

Market Structure and Organisation

A larger problem is that legacy structural and organisational issues need concerted efforts to take requisite policy initiatives. This is perhaps a greater, more urgent need for ubiquitous connectivity.

Successive governments have struggled with revival plans for BSNL and MTNL, somewhat analogous to Air India and Indian Airlines in aviation. Governments have not provided sustained support for ambitious connectivity objectives. There is sometimes inadequate understanding of fast-changing, technically complex enterprises, and episodic attention is given to large enterprises that need timely capital- and skill-intensive decisions (and decision-makers in place), and the upgrading of skills and operating practices. BSNL and MTNL are declining, with bailouts, market disruption through price-cutting, and inability to deliver profits. This is a huge opportunity cost on citizens. However, it is conceivable that with appropriate leadership, and organisational and capital backing, these enterprises could contribute effectively to ubiquitous connectivity, rather than being a drag and/or a disruptive factor. This could happen, for instance, if an alliance were possible with private sector operators providing leadership, organisation and capital, while state ownership concentrates on safeguarding the public interest.

Bharti Enterprises’ Chairman Sunil Mittal has suggested an alliance with Vodafone for an optical fibre network. Bharti and Vodafone already have a joint venture, Indus Towers, providing passive infrastructure services to operators. If regulations enabled active infrastructure from a consortium including BSNL and MTNL, it would leverage the infrastructure while reducing the capital requirements, and increase delivery capability. The entire thrust of regulations could be oriented to facilitating service delivery, leveraging capital, equipment and human resources.

The regulatory approach should aim to facilitate access equitably to public resources that belong to citizens, and not to create obstacles.

The article was published in the Business Standard on November 1, 2018 and mirrored in Organizing India Blogspot on the same day.

This item of detail is almost like magic. The MoC has done something splendid regarding Wi-Fi. Its 5 GHz spectrum regulations have everything we could wish for. But it’s a first step — only the first. Much more is needed to reap the benefits.

To put it in context, we now have a policy that enables effective broadband Wi-Fi hotspots, and profound changes in connectivity are feasible for the last mile in India, as in other countries. A high proportion of smartphone traffic abroad is over Wi-Fi. In the recent past, in the US it was around 70-75 per cent, while Japan was around 83 per cent, and Germany about 87 per cent.[1]

Traffic is offloaded from licensed spectrum, freeing it up for re-use. We have 605 MHz added in the 5 GHz band to the existing 380 MHz for Wi-Fi, and a removal of restrictions on external usage as in the US, so Wi-Fi will have much greater capacity.

The ramifications, however, are ironic. These regulations could lead to a surge in economic activity, and consequent benefits from connectivity. But this will increase imports, which are already overboard on account of oil prices and technology imports, an aspect discussed later in this article.

The increased activities in network installation and ensuing benefits will vary depending on supporting ecosystems of policies and practices. This applies within the communications sector as also at points of interface with other sectors, such as electricity and finance. To illustrate, in communications, consider an unlicensed band in most markets including the US, the UK, and Europe, namely the 60 GHz V-band. Whereas the Federal Communications Commission (FCC) in the US delicensed 14 GHz in this band for “wireless fibre” called WiGig, India hasn’t done so. Instead, another WPC[2] notification in October delicensed only 500 MHz (61-61.5 GHz) at very low power. Devices abroad that use this band for 400-metre and 700-metre connections have channels of 2,000-2,500 MHz acting as wireless fibre links over short distances. These can’t be used here. Short-distance connections to Wi-Fi and wired networks in offices and residential, commercial and industrial complexes will need fibre or cable.

This policy link is missing, perhaps because operators oppose it. The user network traffic bypasses operators to the extent that Wireless Internet Service Providers (ISPs) and other entrepreneurs set them up and collect charges, whereas operators have paid huge premiums for the spectrum required earlier. A solution that enables commercial deployment by licensed operators would solve this problem, although ISPs would have to go through operators as before. Another alternative could be to have unlicensed access to public wireless networks owned and operated by BSNL/BharatNet/CSC, or by operator consortiums, on payment of service charges by operators and users.

Equally essential are aspects of ecosystems that are adjuncts from sectors such as power supplies, finances, and local manufacturing, for substantial and stable growth. So for convergence resulting in significant benefits, these are the kinds of problems that will have to be resolved:

• The power situation, with a conscious shift towards more distributed, renewable (solar and, in some areas, wind) energy, with changes comparable to Wi-Fi/5 GHz in policies and practices.

• The financial system and non-performing assets (NPAs), including the steady revival of infrastructure projects. While dealing resolutely with malfeasance and fraud, nursing and reviving good infrastructure underlying the NPAs is crucial. A sorry plight, but if revivable infrastructure projects are allowed to fail, they end up as unproductive, wasted assets (a repeat of Dabhol), with negative multiplier effects.

• The imperative for the domestic manufacture of equipment to reduce imports. This is going to be an escalating compulsion because of our market size, unless we develop solutions that help balance imports, such as a compelling tourism strategy (but just think of the complexity of the ecosystem elements that need improvement) or communications equipment exports (equally complex).

Meanwhile, we are on a path committed to curbing demand to contain the deficit: Battening the hatches, tightening belts, and waiting for oil prices to fall /exports to rise, keeping a wary eye on the current account deficit (CAD) because of imports, and inflation. This pressure may persist for months, possibly even years, restricting growth. Aren’t there feasible, growth-oriented initiatives, tempered by not exceeding reasonable bounds, including the CAD?

The data on the CAD, capital formation, FPI inflows, and FDI are in the chart below.

CA: https://rbi.org.in/scripts/PublicationsView.aspx?id=18603 GFCF: https://data.gov.in/sites/default/files/datafile/Table3.10.xls
FPI Inflows: https://rbi.org.in/scripts/PublicationsView.aspx?id=13729 https://rbi.org.in/scripts/PublicationsView.aspx?id=18599
FDI Equity Inflows: http://dipp.nic.in/sites/default/files/FDI_FactSheet_29June2018.pdf

A study of data from 2001 to 2016 of how the capital account and its components, the current account, and gross fixed capital formation affect each other concluded that sustained capital formation requires more foreign direct investment (FDI) relative to other flows.[3] FDI was found to have an indirect effect on capital formation, which was found to affect the current account. Debt portfolio flows and nonresident deposits financed the current account, but did not contribute directly to capital formation.

In Indonesia, a study of how the CAD affects exchange rates found that when it exceeds about 2 per cent of the GDP, the exchange rate depreciates over 12 per cent after a four-month lag.[4] Tracking such relationships in India would be useful for policy making.

Meanwhile, India’s large growth sectors are plagued by unsustainable economics. For sustained growth, they have to be organised more rationally, to generate profits for productive enterprises. Promising domestic sectors include electricity, communications, and aviation. Bypass strategies as in software and IT-enabled services won’t work, because these services are for domestic markets. They must generate profits without labour arbitrage, while balancing imports and exports, unless growth continues to attract foreign capital. Genuine reform as for Wi-Fi and 5 GHz spectrum with collaboration involving the private sector and governments modelled on the automotive sector are a possible way forward.

[1]. Claus Hetting, October 2018: https://wifinowevents.com/news-and-blog/japan-83-of-smartphone-traffic-runs-on-wi-fi/; https://wifinowevents.com/news-and-blog/germany-wi-fi-carries-87-of-smartphone-traffic/

[2]. WPC: Wireless Planning and Coordination Wing, Department of Telecommunications

[3]. Ashima Goyal & Vaishnavi Sharma, September 2017: http://www.igidr.ac.in/pdf/publication/WP-2017-016.pdf

[4]. Nugroho et al, January 2014: http://bmeb-bi.org/index.php/BEMP/article/download/445/420/

The article was published in Business Standard on October 4, 2018 and in Organizing India Blogspot the same day.

Everyone understands that users need high-speed broadband links for a countrywide transformation, through access to education, healthcare, and much else including opportunity. The lofty aspirations of the New Digital Communications Policy 2018 (NDCP) are 50 Mbps “to every citizen”, 5G, and so on, whereas the reality is a plan for two Wi-Fi hotspots per village. Surely, mere aspirational statements after inordinate delays cannot help attain high-speed “broadband for all”. Nor can a gutted market bereft of policies to induce the required capital for connectivity and network efficiencies.

The NDCP epitomises overstatement juxtaposed with the realities of poor services. Key reforms have been consigned to a future imperfect limbo: reducing additional taxes (from an exorbitant 32 per cent), achieving more efficient spectrum use, and the like. Our needs are staggering, but what we have so far are statements of intent without real policy changes in the public interest. A similar approach has played out in the manufacture of electronics and solar power. India’s mobile revolution depended entirely on imports of network equipment, software, and handsets.1 Likewise for solar power, India has relied on imports. Recent efforts to elicit interest in manufacturing solar equipment locally received lacklustre response, because of perceived inadequacies in policies and incentives. The crux of the matter is how public interest, which many of our politicians, administrators and analysts claim as their motivation, is construed. An additional wrinkle is of being “pro-poor”.

What does the “public interest” mean, and how does “pro-poor” fit in other than by perpetuating poverty? Some proponents regard the “aam aadmi” as being synonymous with the public interest, and others “the masses”, or “the poor”, or farmers. There is also segmentation by exclusion, such as “not those who own vehicles”. Exclusions also apply to manufacturing, such as cars or two-wheelers, because they add to pollution and congestion on roads. So also to air conditioners, refrigerators, and so on, perhaps from the confusion of conflating market principles with socialist ideas of “luxury goods” having a pejorative taint, whereas our need is for engines of growth, except in sin goods and services. In fact, the automotive sector provides a model for coordinated policies (except for fuel pricing).2

Our fuel pricing is puzzling, because while it affects the majority, it is treated as affecting only the affluent (many of whom are also likely to be very productive). Affluent consumers comprised around 27 per cent of India’s population in 2016, and may grow to 40 per cent by 2025.3 Constraining productivity and output is surely not beneficial except in containing imports, especially when productivity is declining (see Chart). Yet, this is the effect of high taxes on inputs. This is why there’s a genuine need for the evaluation of alternatives to demand compression and high taxes.

Labour Productivity in India - January 2010 to November 2017
Source: https://www.ceicdata.com/en/indicator/india/labour-productivity-growth What, indeed, is the definition of public interest?  Here is a version: It is the welfare or well-being of the general public, by which the whole society has a stake that warrants recognition, promotion and protection of the government and its agencies. The overall public interest is about society as a whole, unalloyed by divisive or fractious special interests. It is not the welfare of any individual, group or company. In seeking to maximise overall welfare, however, there need to be trade-offs and selective regulations for justifiable subsets, such as the underprivileged, or in spatial planning for town and country, or sectoral regulations for energy, exports, or automotive products.

Yet, while the criterion should be public welfare, the arguments we encounter are mostly for special interest groups. Rarely is there a consideration for the welfare of society as a whole. How might a holistic approach to public interest alter the stance to policy making, administration, analysis and advocacy? Consider this example from Brazil after the global financial crisis of 2008. Brazil suffered decreasing exports, lower investment, and a credit crunch with deleveraging, resulting in lower incomes and tax collections, and higher unemployment. The government’s response in 2008-09 was a selective reduction in taxes, together with increased liquidity, and reduced interest rates to the most affected sectors.4 These policy changes reduced a tax component, initially in the automotive sector for a quarter, later continued for about a year. This was extended to consumer durables/electrical appliances, and to building materials, the latter for about 15 months. For some products such as stoves and small washing machines, this tax was reduced to zero. Meanwhile, taxes on cigarettes were increased. The result was an increase in tax revenues from higher production and consumption, after an initial fall in tax collections. Simulation is a useful way of evaluating alternative scenarios. Converted to cash flows, these inputs can be used to shape policies, because cash flows are an essential measure of reality.

A compelling reason for scenario planning is that coordinated policies could yield higher growth than foreign borrowings without systematic policy support. A policy framework with lower interest rates and good infrastructure (energy, logistics and communications) could accelerate growth, thereby attracting capital despite current account imbalances. Such alternatives deserve to be evaluated against the approach of higher interest rates to attract, then struggle to retain foreign capital (when there is a flight to quality, raising interest rates in emerging markets is usually ineffective), with lower growth.  Lower rates would also facilitate redeeming NPAs, as banks could profit from rising bond prices.

It is in the public interest to analyse alternative approaches, including input costs and taxes. Areas such as the allocation and management of coal, automotive fuel pricing and automotive manufacturing, and spectrum allocation and management need such analyses. In finance, the alternatives are of inflation targeting, taxes to reduce the fiscal deficit, high interest rates to attract/retain foreign capital, and managing imports, against scenarios with lower taxes, interest rates, and coordinated policies as in the automotive sector for manufacturing and logistics in sectors such as electronics and solar power equipment.

Shyam Ponappa at gmail dot com
1: Sanjib Purohit, NCAER, March 14, 2018

2: http://www.siamindia.com/uploads/filemanager/47AUTOMOTIVEMISSIONPLAN.pdf

3: https://www.bcg.com/en-in/publications/2017/marketing-sales-globalization-new-indian-changing-consumer.aspx

4: [Input-Output Matrix study of tax reductions-Brazil-2014]

The article was published originally in Business Standard on July 5, 2018 and mirrored in Organizing India Blogspot the following day.

The preoccupation with state and Parliamentary elections that is now manifest may take away attention from the economy. Despite some encouraging developments, major structural problems such as the non-performing assets (NPAs) in banks and stalled projects await resolution. They need urgent attention beyond the din of politics.

First, the good news

• Gross fixed capital formation improved to an all-time high of Rs 111.85 billion in the last quarter of 2017-18 from Rs 102.40 billion in the previous quarter.
• There was some credit growth, with non-food credit increasing 11.1 per cent in May 2018, compared to 4.1 per cent a year ago. Credit to the services sector also increased by 21.9 per cent compared to 4.0 per cent in May 2017, and personal loans grew 18.6 per cent compared to 13.7 per cent in May 2017. However, areas such as infrastructure, basic metals and metal products, construction, gems and jewellery, and vehicles and transport actually declined.
• The Insolvency and Bankruptcy Code (IBC) is apparently being implemented more effectively than it might appear. A Brookings Institution report of a conference of financial experts, including a former Deputy Governor of the Reserve Bank of India, in Mumbai in February states: “50 per cent of all NPAs are currently being resolved through the Code, another 25 per cent will soon be. The judiciary has been following the (very tight) timelines prescribed by the Code.”¹
• This week, a public sector bankers’ committee recommended potential solutions for NPAs to the finance ministry. These include an asset management company for stressed assets run by the banks, an asset trading platform for loans, an inter-creditor agreement between banks with the lead bank authorised to implement time-bound resolution, and finally, the IBC and sell off. Sceptics may mistrust these as being too cosy. Realistically, however, we have to accept that functioning together for mutual benefit requires trust, built around good organisation with checks and balances, and validation (observed in the breach in the complicit NPAs). In Ronald Reagan’s phrase (actually a Russian proverb), “Trust, but verify”.

So, is the glass half-full or half-empty? The bad news Here are just two examples of the looming problems.

• Stalled projects: An RBI circular of February 12, 2018, was like a guillotine on a number of private power projects with inadequate cash flows because of circumstances beyond their control. The circular directed banks to begin the resolution (sell off) process for all delayed projects, including those where debt restructuring was under way. There’s a school of thought embodied in this directive that uniform criteria must be applied to all defaulters. Another approach advocated by the power ministry is that there can be problems outside the developers’ control for which they are not responsible, such as a shortage of fuel, denial of access to captive mines, financial weakness of distribution companies, or delays in government or regulatory clearances. Developers cannot control these, and therefore such projects should be excluded from the purview of the RBI Circular. A Parliamentary Committee also recommended this in March.² The Allahabad High Court, hearing a petition by the Independent Power Producers Association of India against insolvency proceedings, ordered that “no action be taken against the power sector under the revised framework, and directed the finance secretary to hold a meeting with his counterparts in the power and coal ministries, along with representatives of the RBI and the Insolvency and Bankruptcy Board of India in June to discuss ways to address the issues faced by stressed power plants.”³

While the RBI held firm at this meeting on June 21, 2018 (e.g., see: https://www.business-standard.com/article/opinion/why-ibc-must-be-sector-agnostic-118070100732_1.html), the finance secretary reportedly asked for written submissions by the stakeholders. A group of experts will review these to consider next steps. The Allahabad High Court may yet save us from the brink.

• Fettered policies: The Wi-Fi example

We have an odd juxtaposition, with the government eager to auction 5G spectrum for revenues, while making it available to operators. The industry wants the spectrum but is overburdened with debt, which it already has difficulty servicing because of hyper-competitive price cutting. In addition, there’s a vast, underserved rural and semi-urban market, which requires even more capital investment. Finally, there are the stressed banks, which have thus far been the major source of funding. Meanwhile, our fettered approach to 5 GHz for Wi-Fi is an example of policies that need unleashing. India’s National Frequency Allocation Plan (NFAP) has delicensed 380 MHz in the 5 GHz band. This is 200 MHz less than required by the standard, so users have less spectrum. Second, India permits only 50 MHz for outdoor use, and the remaining 330 MHz for indoor use. This severely constrains the use of this band and available devices in India, making it ineffectual for Wi-Fi hotspots in both urban and rural areas. We need an amendment in India's 5G policy to conform to international standards. There need be no indoor/outdoor restrictions and less restrictive power limitations, as in the USA. It could mean adopting policies in sync with global markets. For users, it means that any compatible device from any market can be used without customisation. This allows easier installation and maintenance because no customised set-up is required. For manufacturers, devices they make that conform to global or large-market standards can be used wherever these standards apply, which gives access to more markets. Both attributes facilitate higher volumes, which help result in lower prices, making devices more affordable. All users benefit from the full capacity of the device provided it is in a compatible system. Unfettering changes like this and for 60 GHz, as another example, will unleash Wi-Fi. This is the kind of policy change that is required to unfetter ourselves. What’s needed is an attitude of thinking constructively, instead of meanly or restrictively. Without such constructive changes, the way ahead will be hard regardless of who wins the next elections.

Shyam dot Ponappa at gmail dot com

1. https://www.brookings.edu/blog/up-front/2018/03/01/how-to-solve-issue-of-rising-non-performing-assets-in-indian-public-sector-banks/
2. 164.100.47.193/lsscommittee/Energy/16_Energy_37.pdf
3. https://powerline.net.in/2018/06/30/seeking-a-reprieve/

The article originally published in the Wire on May 6, 2018 can be read here. Access the Draft National Digital Communications Policy 2018 here.

The three pillars of the draft policy are ‘Connect India’, ‘Propel India’ and ‘Secure India’, which primarily seek to improve broadband connectivity, accelerate development of next-generation technologies and services and institute measures for data sovereignty, security and safety, respectively.

Several strategies have been devised under each pillar – few carry on from previous national telecom policies, and some are new proposals.

The document is high on aspirations, a lot of which it seeks to fulfil by 2022. It also proposes several favourable institutional and regulatory changes and simplifies obtaining of permissions.

However, it remains quite open-ended in terms of how the details could evolve. For example, while it endeavours to develop a fair, flexible, simple and transparent method for spectrum assignments and allocations, by pricing spectrum at an ‘optimal price’ and linking spectrum usage charges (SUC) to reflect costs of regulation and administration of spectrum, it cannot be said if these measures will fully rejuvenate a debt-ridden telecom sector.

Ideally, the policy should have explicitly mentioned that revenue maximisation is not a goal for the government anymore, to reassure the industry that licence fees and SUC will not be astronomically priced – especially as it is in no mood to change the model of spectrum allocation from auction to revenue sharing (circa NTP-99). A clear commitment would have helped inspire more confidence in this strained sector. Regardless, these changes will also need approval from the finance ministry, where stiff resistance is expected.

Expanding both wireless and wired broadband is a clear priority of the government. It sets out four initiatives, encouraging public-private partnerships to serve both rural and urban centres (BharatNet, GramNet, NagarNet, JanWiFi), and several additional measures to accelerate laying of optical fibre, mobile towers and increase sharing of infrastructure.

Although the previous telecom policies (NTP-99, NTP-2012 and recommendations in ‘Fixing Broadband Quickly’ (TRAI, 2015)) determined the similar gaps and objectives, little has translated into concrete results so far. In 2017, ITU and UNESCO reported that India was the largest unconnected market, with 49.5% (approx. 660 million) of our population still unconnected. The report further noted that the penetration of mobile broadband was much higher than fixed-line broadband connections – and urban centres were better served than rural areas. One hopes that the new strategies and objectives will be better realised this time around.

The policy also seeks to boost domestic innovation in the field of standards in communications technologies. This is reflected in its aims to strengthen domestic IP portfolios by providing financial incentives for the development of standard-essential patents (SEPs) and promote them at standard setting organisations. It mandates access to critical, mostly foreign-owned SEPs on a fair, reasonable and non-discriminatory basis (FRAND basis). This is an approach to patent licensing that has been endorsed by courts and the Competition Commission of India in the context of mobile phone technologies, as well as in other jurisdictions.

However, it remains to be seen how this mandate will be implemented in TRAI’s forthcoming recommendations on promoting telecom equipment manufacturing in India. This is a real opportunity for the telecom regulator to help the low-cost smartphone manufacturing industry in India to overcome their disadvantage in terms of having to pay exorbitant royalties to foreign-SEP holders and getting sued for infringement in the process. Another strategy that should have found place was the creation of government-controlled patent pools for SEPs, which could have solved the issue of uncertainty for local manufacturers and ensured payments to SEP holders to a great extent.

Additionally, the policy proposes a few consumer-oriented changes such as establishing a ‘Telecom Ombudsman’ and a centralised web-based complaint redressal system. In the third pillar of ‘Secure India’, although the document does not reveal the DoT’s approach to net-neutrality nor data protection and privacy, it does say that the government will be amenable to changing the terms of license to fulfill their core principles.

Curiously, in order to ‘facilitate security and safety of citizens’ it proposes to set up ‘lawful interception agencies with state of the art lawful intercept and analysis systems for implementation of law and order and national security’. This measure did not exist in TRAI’s version of the draft policy.

On next-generation tech in the field of IoT and cloud, it retained TRAI’s suggestion of setting up ‘light-touch’ licensing frameworks. This may prove to be a barrier to innovation in the field.

While the policy is broad and forward-looking, the true intent and meaning of the listed steps will only be understood when complementary legislative and granular policy actions to support these strategies are crystallised. That will make all the difference.

The article was published in the Business Standard on May 3, 2018 and in Organizing India Blogspot also on May 3, 2018

A Chinese communications company founded in 1987 in Shenzhen by a former army engineer, Ren Zhengfei, Huawei is now a legend. By 2012, it overtook industry leader Ericsson in global revenues. In 2017, its revenues were over $90 billion, two-thirds from outside China.  It also has a significant and growing presence in India. How did they do it?

Part of Huawei’s mystique stems from its outstanding founder and its driven work culture. This may be unique and difficult to replicate, but it is a byword for hard-charging Chinese high-tech. A meme that epitomises the culture is “9-9-6” — that is, for 9:00 am to 9:00 pm, 6 days a week. Can factors driving its success to be adopted at the policy level and in enterprises in a democracy?

My previous column addressed the hollowing out of our manufacturing and other abilities. My suggestion is to replace obstructive policies with others that facilitate building infrastructure and local capacity, especially in growth areas. The example of Huawei provides a pointer. Perhaps some of what we learn can be applied at the governmental and the corporate levels.

Reports suggest these key factors in its success:

• Strong leadership with a sense of purpose: A customer-first attitude. There’s an anecdote of the founder being willing to meet any customer, but ignoring a potential investor by delegating to a colleague a meeting with a Morgan Stanley team, led by Chief Economist Stephen Roach.
• Broad employee ownership: In 2014, 84,000 employees out of 150,000 owned stock along with the founder, who owned only 1.4 per cent.2 They share an understanding that while an IPO would enrich some, the majority would lose their motivation. The essential requirements are hard work and dedication.
• Government support: Huawei grew revenues by building market share in China to become a national champion, then got support from the China Development Bank. Initially for $10 billion, it is now $30 billion.3 Building networks in Africa and Latin America, and low prices helped win deals in Europe. Mr Ren himself has said that without policy support, Huawei would not exist.
• Its unique culture and organisation: From inception, the founder was passionate about management, and about adapting methods and organisation. For instance, Huawei devised a top management model of a rotating CEO among three top executives, each of whom leads for six months, modelled on a flight of geese that change their order in arrowhead formation.4 Mr Ren is the mentor and coach. In March 2018 there was a change to a rotating Chairman position.

(The founder’s daughter, Meng Wanzhou (aka Sabrina Meng) is the Chief Financial Officer, and holds one of four vice-chair positions. His son Ren Ping works for a subsidiary providing reservations and trade show support.)

Another instance is Huawei’s Integrated Financial Services transformation program, which Ms Meng led since 2007. It was an eight-year partnership program between Huawei and IBM to develop data systems and resource allocation rules, operations, process optimisation, and internal controls.

• Huawei reportedly invests 10 per cent of annual revenues on Research & Development.
• Huawei also emphasises “the power of thinking”. Executives are urged to read beyond their domains, and books are everywhere.

These factors enable Huawei to solve problems for clients in diverse situations. Examples:

• In its early days, networks were at risk from rats gnawing through circuitry in desert and rural areas in China. Multinational vendors did not consider this their problem and left it to their customers. Huawei, by contrast, treated it as their own problem, and developed sturdier equipment and materials such as chew-proof wires. This experience later helped gain large accounts in the Middle East where customers faced similar problems.
• Other extreme environmental conditions have been addressed, such as base stations installed at high altitudes (at 6,500 metres on Mt Everest), or in the Arctic. These experiences helped a dedicated and committed workforce gain more clients. For instance, when expanding their 3G market in Europe, Huawei found that clients expected “base stations to be more compact, easier to install, greener, and more energy efficient, while offering wider coverage”. To cater to these needs, Huawei developed distributed base stations that could handle both large and small private networks, making them cheaper to deploy, which became popular with European carriers.
• The employee-ownership arrangement and associated dedication enable planning for the long term, as with the Chinese government. Huawei plans for 10 years, whereas competitors have to contend with quarterly financial considerations.

Carriers buying Huawei network equipment get significant discounts in smartphones. Focusing on new technology not controlled by the giants of 3G such as Qualcomm, Ericsson, and Nokia, enabled Huawei to develop 4G, which is much faster and ideally suited for updating-apps, to the point that it competes with Samsung and Apple. Undercutting competitors has enabled it to sell to carriers, and its depth of products and technology has enabled it to meet customer needs, displacing competitors.

Huawei’s R&D Centre in Bangalore established in 1999 is its largest outside China, and it has offshore Global Network Operating Centres in Gurgaon and Bangalore, besides Romania and Nigeria. These GNOCs run networks not only in India but across the globe for a number of operators, offering managed network services integrating a range of equipment at low cost. With its market strength, depth of products, and access to funds, Huawei is likely to control network services in India and much of the world from now on through the 5G evolution cycle.

The only way for competition other than in-house NOCs in India is if the Government of India develops end-to-end supportive policies, transcends election cycles, and sponsors a consortium comprising a major transnational anchor, a system integrator, and local design and production wherever technological opportunities arise.

References

The article was originally published in the Business Standard on February 28, 2018 and re-posted in Organizing India Blogspot on March 1, 2018.

Two features about non-performing assets (NPAs) deserve exploration. First, prevailing impressions about banks and NPAs, such as:

• Large borrowers are primarily responsible for non-performing loans;
• Small borrowers rarely default;
• Privatisation will prevent NPAs and frauds; and
• A bad bank for problem loans will help or it won’t.

Second, solutions for NPAs have been limited to providing some government funding, with hopes of muddling through.First, take the contention that large borrowers account for most bad loans. Of total NPAs of Rs 10,149.16 billion, the published Big 12 comprise 25 per cent (Rs 2,537.29 billion).1 Another 100 wilful defaulters of over Rs 2.5 million against whom suits were filed constitute 7.3 per cent (Rs 740.2 billion).2 While these constitute a third of NPAs, smaller accounts make up the other two-thirds.Among housing loans, NPAs are highest among small loans not exceeding Rs 200,000 (10.4 per cent, or Rs 1,361.26 billion of Rs 13,089 billion), more than double the rate for larger loans over the last five years.3 The lowest NPAs are in the over-Rs 2.5-million category at 0.9 per cent, decreasing with loan size.Housing loans contribute 13.4 per cent to total NPAs, i.e.:

• About half the top 12 defaulters (25 per cent), and
• Double the 100 wilful defaulters (7.3 per cent).

Therefore, the need is for a systemic fix across all levels, not only big defaults.Second, the context for NPAs is the economy. As last year’s Economic Survey (2016-17) pointed out:- A number of NPAs resulted from overleveraging after a high-growth period. Corporates used debt to invest heavily in long-gestation projects in infrastructure, such as power, mines and metals, and spectrum and coal auctions, encouraged by the government. From 2004-05 to 2007-08, the investment-gross domestic product (GDP) ratio rose from 27 per cent to 38 per cent, while bank credit doubled. Then, costs rose along with difficulties in acquiring land and environmental clearances, and oil prices. Import prices rose 2.4 times between 2010 and 2014. The rupee dropped sharply against the dollar, increasing foreign borrowing costs. Domestic borrowing costs also increased with interest rates (Chart 1) as growth fell.

Chart 1: Real Interest Rate: Lending Rate Minus GDP Deflator

https://tradingeconomics.com/india/real-interest-rate-percent-wb-data.html

- By 2013, nearly a third of Indian companies had interest cover less than 1 (EC1), i.e., annual earnings before interest and tax (Ebit) less than interest. By 2015, nearly 40 per cent were at this level. From 2012 through mid-2015, EC1 companies’ earnings were around Rs 250 billion per quarter. By end-2015, earnings had dropped to Rs 20,000 per quarter, and by September 2016, to Rs 15,000 per quarter. Cash flow was insufficient to service debt from 2014. The result was a sharp increase in NPAs (Chart 2), which could increase to 11.1 per cent by September 2018.

Chart 2: NPAs

https://tradingeconomics.com/india/bank-nonperfoming-loans-to-total-gross-loans-percent-wb-data.html
What’s difficult to understand is why and how systemic controls against inappropriate evergreening and fraud, such as integrating SWIFT, or Society for Worldwide Interbank Financial Telecommunication, with in-house systems, and avoiding underreporting of NPAs, have not been enforced until now. Systems have to be properly designed and implemented.However, while we dither over a bank for bad loans, NPAs need resolution. The most salutary model of banking reform, privatisation and recovery is from Sweden.

Sweden’s transformation after its banking crisis of 1991-1992 is remarkable. Their prior experience parallels ours in some ways, although our attributes are very different, i.e., small versus large, advanced/developing, highly skilled small population/underskilled large population, and so on. For years, Sweden was an underperforming economy with low real wage growth, high inflation and public debt. Then a period of rapid growth and credit expansion led to a real estate bubble and collapse, like ours.

Housing prices fell by 25 per cent and commercial real estate by 42 per cent between 1990 and 1995. NPAs went from 5 per cent to nearly 50 per cent among banks (all private), and bankruptcies soared. In this crisis, the entire political leadership decided to unite to resolve their problems. Then, despite fighting behind the scenes, they worked together to take quick action.4 The Swedish centre-right government and the Social Democratic opposition decided on (a) state ownership of troubled banks (b) while guaranteeing all depositors and creditors except bank shareholders.

This united approach restored confidence. A ‘bad bank’ was set up and NPAs evaluated and assigned to ‘good’ or ‘bad’ banks by an independent body disposing of bad assets. Sweden’s banking system recovered to support a sound economy with growth.In our case, undertakings untainted by greed or moral turpitude with cash flow problems deserve efforts at rehabilitation. Examples are where there’s a likelihood of improving cash flows, as in some of the power projects that have run aground for reasons such as lower demand, or exceptional input cost increases. An objective evaluation process by an expert group to triage the NPAs is needed, categorising the untainted and impaired, and where there is scope for revival. Also, rehabilitation measures need to be formulated. The rub is that India is ill-equipped by culture and customary practices to do this. Yet, we would benefit greatly if we could draw on Sweden’s experience in taking corrective action. Private asset reconstruction companies have not been effective. It is unlikely that partial measures will fare better.The primary requirement is political unity across all parties.

Without this, none of the rest can follow. Then, setting up an independent professional entity unencumbered with political considerations to do what is needed. This becomes evident in comparing the US crisis of 2008 (all private banks) with the Swedish experience. After Lehman Brothers collapsed, the Democrats agreed to the Treasury Secretary’s ad hoc $700-billion bailout package, then denounced it just before a vote. The Republicans rejected their own plan, leading to turmoil in the markets. The bill finally passed a week later, and although successful in cleaning impaired assets at a much lower than expected cost, led to a slow recovery and was hugely unpopular. Similarly, the Japanese approach has been slow and not a clear success. Can India’s political parties replicate Sweden’s example? Will they?

Shyam (no space) Ponappa at gmail dot com


1: http://www.business-standard.com/article/finance/steel-firms-dominate-list-of-rbi-s-12-defaulters-117061601393_1.html

2: https://suit.cibil.com/

3:https://rbi.org.in/Scripts/BS_ViewBulletin.aspx?Id=17314

4:http://www.slate.com/articles/news_and_politics/the_pivot/2012/10/sweden_when_its_banks_failed_the_scandinavian_country_made_a_miraculous.html

and

https://www.reuters.com/article/us-sweden-banks-analysis/swedish-banks-safe-bet-or-risky-business-idUSKBN1500ZX

The article was published in the Business Standard on January 31, 2018 and in Organizing India Blogspot on February 1, 2018.

There’s an upbeat sense from the annual Economic Survey, and indicators such as soaring stocks and official statements.Yet, the ground realities don’t match because of gritty facts such as not being able to pay electronic tolls on a national highway near Delhi though the Bharatiya Janata Party (BJP) controls local administration1, Korean steel giant Posco abandoning a huge investment last year after struggling for over a decade, two public sector divestments, Bharat Aluminium Company and Hindustan Zinc, mired in difficulties2, or the hobbling state of services such as electricity and telecommunications despite short-term consumer benefits from lower prices, and so on. Another aspect is that so many college graduates, including engineers, law students and MBAs, compete for low-end government jobs such as peons in state governments. Clearly, something beyond talkfests and episodic discussions is needed. Leaving aside fixing the “mountains” — the land acquisition act, non-performing assets (NPAs), high component taxes — here are some thoughts on systemic focus and action.

Fix infrastructure

With rare exceptions, our governments do not appear to recognise a clear priority to fix infrastructural deficiencies. After national security and maintaining law and order, correcting critical deficiencies of infrastructure in all its forms needs to be an all-out priority. This is a basic requirement for citizens to function effectively and live well. Without infrastructure one cannot function anywhere near full capacity, because of having to spend time, energy and resources dealing with problems of living and hygiene arising from the non-availability of adequate water and sanitation, inefficient travel and logistics for employment, education or health care, communications, dysfunctional equipment because of power shortages, and so on.Instead, some misconceptions in policies and practices appear to be broadly accepted as driving factors not only in the government, but also to some extent in the public perception. One is that all foreign direct investment (FDI) is a panacea for our ills and aspirations. The second is the idea that for services such as water, electricity and communications, the public interest is best served by the lowest consumer prices for those who get such services, regardless of sustainability. Issues such as access to services for half the population living outside urban areas, high and consistent quality, sustainability, and minimising environmental impact appear to be less important criteria.

The Panacea of FDI?

There’s no question about the need for foreign investment, but uncontrolled FDI, particularly at our stage of development, is inadvisable. One wonders where these forms of the erstwhile East India Company and/or winner-take-all might lead. And does it matter, as long as consumers enjoy good living, defined as access to material comforts at low prices? To see why it does matter, consider these parodied scenarios, with apologies to Jonathan Swift’s satirical A Modest Proposal3.

A Modest Proposal for 100% FDI — A Parody

Imagine how well all consumers could do, this time without leaving the other half out, if we invite the likes of (indicative list, in alphabetic order) Amazon, Facebook, Google, and Microsoft (with guarantees of compensation if there are sudden policy reversals, which we are prone to) to use all unsold and unused spectrum to provide connectivity and digital services pronto. They could put in so much investment to get to year five on day one a couple of years or so out, even Reliance Jio might pale.Don’t want Americans? Why not invite the Chinese and Huawei? We might get even better deals in digital services from the world leader in 4G and beyond.Not to mention the attendant benefits from associated companies to keep consumers happy with smartphones, air conditioners, refrigerators, air purifiers, TV sets, cars, two-wheelers, and so on. There will also be power plants, aircraft, and trains, fixing all three sectors with one swipe. Some impediments would have to be removed of course, such as allowing power plants to come up, electricity lines to be laid out, spectrum to be used, land acquired, changes in labour laws, and so on. As for employment, there could be plenty of local assembly, manufacturing and distribution from all of the above, provided we willingly submit to some regimentation in our lives.

Alternative: Fix The Basics & Do It Ourselves
We have to fix the basics to help ourselves and make FDI succeed in our interests. We need priorities in objectives, as everything cannot have the highest priority. Even more difficult is getting experts and practitioners to work out detailed process plans, evaluating alternatives with realistic simulations, and so on. It takes time, energy, understanding and competence, and patience, to get beyond seat-of-pants discussions. Apply all these from a systems perspective, map the distilled ideas to action plans for each set of interrelated processes, and the upshot could be those process plans. We may get end-to-end strategies leading to convergent results to improve our infrastructure, which will enable agricultural and manufacturing production, services, and trade, with resulting jobs, while limiting negative environmental impact.Goals such as increasing jobs and farm income are desirable. To get on a higher long-term growth trajectory beyond a cyclical recovery, in addition to skilling, there need to be initiatives and investments that fit with the circumstances. An excellent example is the Automotive Mission Plan 2006-2016, now in its second 10-year cycle, which resulted in India becoming a preferred automobile assembly location with 32 million jobs in FY16. Similar approaches could be worked out for connectivity, electricity, and the rest, that address the needs/opportunities/markets, the products/services, how delivery will be organised, what the resources are and where they will be sourced from, how they will be organised and when, i.e., the detailed strategy, process plans and flow charts.Also, effective corporate practices such as facilitation for catalysing group decisions could be used if they are not already, to help administrators, experts, and practitioners arrive at sound, practical decisions.4 Another area is simulation and modelling of alternatives and scenarios. A third is overall strategy.

These steps will help improve our ability to achieve our aspirations.

Shyam (no space) Ponappa at gmail dot com1. ‘India’s road to digital highway’, Nivedita Mookerji, Business Standard: http://www.business-standard.com/article/opinion/india-s-road-to-digital-highway-118012401544_1.html
2. ‘India as a ‘business partner’, Kanika Datta, Business Standard: http://www.business-standard.com/article/opinion/india-as-a-business-partner-118012401599_1.html
3. https://en.wikipedia.org/wiki/A_Modest_Proposal;https://andromeda.rutgers.edu/~jlynch/Texts/modest.html4.https://www.centreforfacilitation.co.uk/files/public/What%20is%20process%20facilitation.pdf

Preliminary

We welcome the TRAI consultation on the National Telecom Policy 2018.

We believe these should be among the objectives of the next NTP.

NTP-12 does not include any policy mandate for providing accessibility for person with disabilities. The Policy should mandate implementation of systems that would enable better accessibility for persons with disabilities. This could have included formulation of a Code of good practice for manufactures and service providers, conduct surveys and gather statistics on use of telecommunication services by persons with disabilities, etc.

Resource and infrastructure sharing

Resource- and infrastructure-sharing among telecommunications companies and applications is crucial to ensure both eiciency of usage of a limited resource (whether it is cabling in underground ducts, or spectrum, or telecom towers), as well as to lower telecommunications costs (especially capital expenditure cost) and lowering barriers to entry, reducing environmental costs, and to maximize the beneits for consumers.[1]

Eforts must be taken to enable greater sharing of resources and infrastructure, without there being a negative impact on competition.[2]

As a telecom scholar points out, “[O]perators will sometimes share the cost of digging or deploying passive infrastructure, but will lay their own iber lines, which allows them to engage in full, facility-based competition. In these cases, there is no risk of coordination, as networks based on multiple iber lines ensure that access seekers can obtain full control over them. Under such conditions, co-investment agreements are more likely to lead to timelier and more intense competition on the downstream market.”[3]

For this, the separation between infrastructure and service must be maintained, with focus of competition at the service end with infrastructure being largely common. This is managed differently in different countries.[4]

Keeping all this in mind, we suggest that Strategies E(b) and F(c) be reworded to say, "By promoting both passive and active sharing of telecom infrastructure and resources among telecom service providers, while ensuring that doesn’t lead to a decrease in competition, and where appropriate making certain forms of infrastructure sharing mandatory."

Among the resources that require sharing is spectrum. In 2015, DoT guidelines allowed liberalised spectrum to be shared among operators.

Modernizing spectrum management

We are happy to note that the strategy of “ensuring adequate availability of contiguous, broader and globally harmonised spectrum” is listed under Strategy D(u). There are many opportunities for harmonisation of spectrum usage in India vis-a-vis global usage. For instance, currently in India, only 50 MHz of spectrum has been earmarked for unlicenced use outdoors in the 5 GHz band (5.825 GHz to 5.875 GHz). There is no rationale for this distinction between indoor and outdoor use, and this limits the usage of Wi-Fi outdoors. The US has delicensed 580 MHz in the 5GHz band which allows for the IEEE 802.11ac standard to be used on it, whereas India has only delicensed 300 MHz, whereas 1280 MHz is what is dictated by needs.[5] At a minimum 580 MHz (3x160 MHz) ought to be made available for unlicensed used.

Additionally, delicensing the 60 GHz band would bring us in line with global regimes,[6] where at least 19 countries have delicensed the 60 Ghz band for both access as well as backhaul purposes.[7]

The 60GHz band is ideal for delicensing since it there is virtually no interference since due to oxygen absorption and narrow antenna beam width the transmission distances

are short. We also need to liberalize the 70 and 80 GHz bands to enabling lower cost access for these frequencies to extend ibre connectivity where necessary by using other means, including through aerial systems.

While under Strategy D(v), TRAI proposes the “earmarking [of] unlicensed frequency bands periodically for operation of low power devices for public use”, it should instead be “earmarking unused, underused, and unlicensed frequency bands periodically for public use, with licence-exemption and light-licensing where possible, with safeguards to prevent interference”.

Even bands that have been allocated under the NFAP and licensed may lie unused or underused as well. According to a study by IIT-Hyderabad, unused TV spectrum in India amounts to between 85%-95% of the total TV spectrum. A large swath of 115 MHz — from 470 to 585 MHz — lies unused, and is available for alternative uses. Waiting for an ecosystem to develop around the 470- 698 MHz band,[8] is harming the government’s vision of Digital India and an urgent course correction is needed. As we have argued in the past, “[w]hereas Digital India needs low-cost wireless broadband, especially for long-distance links in rural India, because of the high cost and diiculty of building and maintaining ibre or wired networks in diicult terrain, and/or in sparsely populated areas. Therefore, access to TVWS needs to be bundled with BharatNet, and other shared backbone networks like ERNET.

Policies should permit diferent network design scenarios including transmission power and purpose. Point-to-point links are needed over long distances in place of ibre or microwave, and broad coverage is needed for contiguous areas like industrial developments, campuses, commercial complexes, or rural communities … TVWS does need tight radio ilters (unlike Wi-Fi) to minimise interference, the underlying consideration that drives spectrum management. There's also need for varying power speciications depending on the network design and purpose as described above, and policies for unlicensed sharing using geolocation databases, as deined by the US FCC."[9]

Further, following the lead of the FCC in the USA, and Ofcom in the UK, we in India should exempt low-power usage across all spectrum bands. The approach followed by Ofcom (which allows for powers between -90 dBm/MHz to -41 dBm/MHz (and on a sloping gradient from 10.6 GHz onwards), may be recommended. To reflect this, a strategy statement to “explore greater exemptions from licensing requirements where possible, including for low-power spectrum usage”, would be helpful.

The NTP should also lead the way in encouraging the government and the regulator to look to new ways of managing licence-exempt use of spectrum, as has been done, for example, in the UK.[10]

This allows for a movement away from power-oriented regulations to regulation on the basis of interference. For instance, shared spectrum databases may allow for coordinated usage of higher power but without interference. Further, this allows for bands to be categorized not by usage, but by transmit powers and duty cycles.

Accessibility

One of the lacunae in the NTP-12 is its lack of any policy mandate for providing accessibility for person with disabilities.[11] NTP-18 should not make the same mistake. The NTP should mandate implementation of systems that would enable better accessibility for persons with disabilities. This should include formulation of a code of good practice for manufactures and service providers, conducting surveys and gathering statistics on use of telecommunication services by persons with disabilities, etc.

Revenue maximization

We believe that Strategy D(r) (“reviewing the objectives of spectrum management to maximise socio-economic gains”) should explicitly mention that revenue maximization should not itself be a goal, since that may harm the socio-economic gains to be had from optimal usage of spectrum. We believe that it should be made explict that “ensuring revenue maximization for the exchequer will not be the main aim of spectrum management policy”.

Auctions, which ind mention in TRAI’s recommendations, ne — to favour a model of revenue sharing[12] — and at the least they need to be structured in such a manner as to avoid the “winner’s curse”.[13] Revenue-sharing, which was followed after NTP-99, allows for a more sustainable form of revenue generation for the government, while having transparent allocation systems or auctions designed in a manner not oriented towards maximizing the generation of auction proceeds for the government.[14] Just as increasing the USO fund by itself cannot be a goal — ensuring universal service is the goal — similarly, the generation of tax revenue by itself cannot be a goal.

Patents pools, local manufacturing, and cost of devices

Under “Strategies to become net positive in international trade of telecommunication systems and services”, the consultation paper proposes inancial incentives for development of SEPs, as well as “incentivising local manufacturing of network equipment and devices” as strategies. One concrete strategy to incentivise local manufacturing of telecommunications equipment and devices is to create government-controlled patent pools,[15] which can be used to ensure that patent-holders are paid a royalty on SEPs while also lowering the transaction costs and legal uncertainty for local device manufacturers, and ultimately lowering the price of devices for customers.[16]

Private patent pools do not suiciently take care of the legal risks created to manufacturers. If government intervention is not done, then Indian manufacturers will end up embroiled in legal battles as we have seen with Micromax, and others. CIS has provided a very detailed submission on TRAI’s Consultation Paper on Promoting Local Telecom Equipment Manufacturing.[17]

Internet connection and data centres

While under “Strategies to establish India as a global hub for data communication systems and services”, the problem of Internet interconnection is brought up, but the strategies don’t mention what needs to be done. One of the problems facing India currently is a low level of peering interconnection agreements and a high cost of transit interconnection agreements. This results in a higher cost of Internet for everyone. This needn’t be so. The NTP could establish that there should be no licensing required for running an interconnection point. Currently, there is a lack of clarity on the matter, with contrary suggestions having been provided by Trai in the past. Further, the NTP and that existing interconnection exchanges like NIXI should not discriminate between licensed telecom operators and unlicensed content providers, since it is crucial that the latter also be present at interconnection exchanges, and interconnection exchanges will not lourish unless the hurdles put in place, which favour incumbents, are reduced.

It is worrying that TRAI has suggested establishing a “licensing and regulatory framework for cloud service providers” (Strategy H(a)). While cloud service providers are subject to the regulations provided in the IT Act, and other legislations in India, they currently are not subject to any licensing requirements. No rationale has been provided by TRAI for this suggestion, and it would kill innovation in the sector, and would inhibit the emergence of India as a global hub for data communications systems and services. Similarly, while an overarching data protection and security legislation needs to be in place, the suggestion of a “licensing and regulatory framework for IoT/ M2M service providers” (Strategy G(a)) is worrying, and there is no suitable rationale for having licensing in this space, which will only serve to curb innovation without any corresponding or suitable benefit accruing to the public.

Given that telecommunications isn’t an end in itself, but is a means to an end, one of the missions of the NTP could be:

• To enable inclusion through the provision of telecommunications infrastructure and services that is accessible for all, especially for the most marginalized, including those who are disabled, those who live in remote areas, those who are illiterate, scheduled castes and scheduled tribes, women, and transgender communities.

Once again, we are grateful to TRAI for having provided this opportunity to comment.

[].  GSMA, “Mobile Infrastructure Sharing,” 2008, https://www.gsma.com/publicpolicy/wpcontent/uploads/2012/09/Mobile-Infrastructure-sharing.pdf.

[].  José Carlos Laguna de Paz, “How Cooperation Between Telecom Firms Can Improve Efficiency,” The Regulatory Review, June 25, 2015, https://www.theregreview.org/2015/06/25/laguna-telecoms-cooperation/.

[]. Ibid.

[]. Jan Markendahl, Amirhossein Ghanbari, and Bengt G. Mölleryd, “Network Cooperation between Mobile Operators : Why and How Competitors Cooperate?,” in DIVA, 2013, http://urn.kb.se/resolve? urn=urn:nbn:se:kth:diva-134358.

[]. Parag Kar, “Response to TRAI’s Consultation Paper on Proliferation of Broadband through Public Wi-Fi Networks” (Qualcomm, August 10, 2016), http://www.trai.gov.in/sites/default/files/201609011022542916621Qualcomm_india_pvt_ltd.pdf.

[]. See ITU-R Report “ITU-R M.2227 (11/2011)” and ITU-R Recommendation “ITU-R M.2003-1 (01/2015)” on “Multiple Gigabit Wireless Systems in frequencies around 60 GHz”.

[]. Broadband India Forum, “V Band - 60 GHz: The Key to Affordable Broadband in India” (Broadband India Forum, 2016), http://www.broadbandindiaforum.com/img/White%20Paper%20on%20V-BAND%20Revised%20Final.pdf.

[]. Varun Aggarwal, “DoT Says No to Releasing TV White Space Spectrum, Clarifies It Is for Experiments,” The Hindu Business Line, June 16, 2016, http://www.thehindubusinessline.com/info-tech/dot-says-no-to-releasing-tvwhite-space-spectrum-clarifies-it-is-for-experiments/article8737575.ece

[].  Shyam Ponappa, “The Buzz around TV White Space,” Business Standard, November 4, 2015, http://www.businessstandard.com/article/opinion/shyam-ponappa-the-buzz-around-tv-white-space-115110401618_1.html.

[]. “Better Managing Licence-Exempt Usage,” Ofcom, October 7, 2016, https://www.ofcom.org.uk/research-anddata/technology/radio-spectrum/exempt.

[]. Snehashish Ghosh, “National Telecom Policy 2012 — Issues and Concerns,” The Centre for Internet and Society, June 30, 2012, https://cis-india.org/telecom/national-telecom-policy-2012.

[]. David E. M. Sappington and Dennis L. Weisman, “Revenue Sharing in Incentive Regulation Plans,” Information Economics and Policy 8, no. 3 (September 1, 1996): 229–48, https://doi.org/10.1016/0167-6245(96)00010-8.

[]. Shyam Ponappa, “Richard Thaler’s Views on Auctions,” Business Standard, November 1, 2017, http://www.business-standard.com/article/opinion/richard-thaler-s-views-on-auctions-117110101558_1.html.

[]. Shyam Ponappa, “Breakthroughs Needed for Digital India,” Business Standard, April 6, 2016, http://www.businessstandard.com/article/opinion/shyam-ponappa-breakthroughs-needed-for-digital-india-116040601241_1.html.

[]. Sunil Abraham, “Letter for Establishment of Patent Pool for Low-Cost Access Devices through Compulsory Licenses,” The Centre for Internet and Society, accessed January 19, 2018, https://cis-india.org/a2k/blogs/letter-forestablishment-of-patent-pool-for-low-cost-access-devices

[]. Nehaa Chaudhari, “Pervasive Technologies: Patent Pools,” The Centre for Internet and Society, accessed January 19, 2018, https://cis-india.org/a2k/blogs/patent-pools

[].  Anubha Sinha, “Comments on TRAI’s Consultation Paper on Promoting Local Telecom Equipment Manufacturing” (Centre for Internet and Society, November 13, 2017), http://www.trai.gov.in/sites/default/files/CentreInternetSocietyIndia_CP_PLTEM.pdf.

Originally published in Business Standard on January 3, 2018 and also published in Organizing India Blogspot on January 4, 2018.

The recent 2G judgment raises perplexing questions about the case, with pointers in the judgment to issues of concern that we need to address going forward. This preliminary analysis highlights questions that arise from select issues covered in the judgment of over a thousand pages: Can government policy itself be prosecuted as alleged wrongdoing, as the charge sheet apparently tried to do? The judgment states that the FIR alleged in item 1 that the licence fee in 2008 was Rs 16.58 billion as in 2001, and licences were issued on a first come, first served (FCFS) basis without competitive bidding.¹

• These are factual statements in accord with prevailing policies, and licences could be applied for at the fee set in 2001. The charges question the appropriateness of the policies as there was no competitive bidding or auction.² Arguments for changing the policy to adopt auctions, or to increase fees, appear unconnected with proving wrongdoing.
• Regarding the FCFS policy, the charges are twofold. One is whether or not there was in fact an established FCFS policy. Another is alleged malfeasance in policy implementation.

Was there an FCFS policy?

The judgment finds that the FCFS policy has been misrepresented in the claim that only one application was processed at a time.3 This is analysed and contradicted in detail. The judgment gives several contrary examples provided by the defence, such as later applicants being processed earlier when there was a problem with compliance by the earlier applicant, of successive applicants given letters of intent (LOIs) on the same day, and applicants with LOIs seeking repeated extensions before letting them lapse. The judgment states that no evidence was presented of a systematic FCFS process for the issue of LOIs and spectrum allocation/assignment in the case of 51 prior licences issued. The finding is that because there was a single applicant at a time earlier, a sequential process was followed, but that this was not a conscious policy. Also, that the evidence from the Wireless Planning and Coordination Wing (WPC) is that priority for spectrum allocation was from the date of application for spectrum, and not from the application for the unified access services (UAS) licence (LOI). The judgment concludes that there was no evidence to prove that there was an FCFS policy in the form as alleged in the charge sheet. The sense one has from the instances cited is that there was a loose policy with no standard operating procedure.

Possible malfeasance & evidence

Another allegation in the charge sheet is that the FCFS policy, such as it was, was implemented in a manner that resulted in wrongful gains. From press reports at the time, one expects that this statement of possible malfeasance is the sort for which evidence might be available and presented. So, was such evidence presented?

The FCFS process changed from the date of application for a licence in the order in which it was received to actual compliance with terms of LOI. This meant submitting all requisite information, documentation and clearances together with bank drafts and guarantees. Earlier, the FCFS criterion was the completed application (as in the instance of a later complete application being processed before an earlier incomplete application). The judgment records that consideration of the proposed change to LOI compliance was publicly known well beforehand and was even published in the press.

The counter is that because of a large number of applicants, the criterion was established for serious applicants who complied with the conditions of LOIs, including all clearances and payments. All applicants were apparently well informed of impending developments at the Department of Telecommunications (DoT). The judgment notes: “Everything was leaking in DoT. There was no secrecy or sanctity… In such a situation, no blame can be cast on any of the accused alone.” However, one is left with a sense that this area has not been conclusively explored.

Some questions remain
A broad question: Is there a way to deliver justice while avoiding the infructuous path of dealing with the several hundred thousand pages of documents over seven years and the opportunity cost so far for all involved in just this case? If so, how do we change course going forward? The charges appear to have conflated the questioning of policy with allegations of improper implementation and culpability. Might separating the questioning of policy from establishing wrongful implementation and culpability be more constructive? Could defining narrower culpable allegations, focused on evidentiary material, obtain conclusions beyond reasonable doubt?

• The judgment provides a scathing critique of how no proper evidence was presented on the existence of an FCFS policy. What is the explanation for a weak case by the prosecution?
• The charges sought to prove that there was a conspiracy of all the 17 accused, and that the first indication of it was the letter from the DoT to the solicitor general regarding LOIs for pending applications. Could the charges have targeted other events and activities based on likely availability of evidence, and if so, what might they have found? Examples: Bringing forward the deadline for applications from October 1, 2007 to September 25, 2007, or the lack of orderly standard operating procedures adopted in changing the priority of applicants from the date/time of application to LOI compliance.
• Regarding wrongful gains, there is no indication if forensic methods were used in tracking transactions and if so, what the methods and findings were.
• What explains the rough-and-tumble process that applicants had to go through in complying with LOIs related to the case?

For the New Telecom Policy in 2018, we must hope to learn from and avoid such adverse situations. One way is to facilitate collaborative and transparent implementation.

1. Delhi District Court judgment: Cbi vs . (1) A. Raja (A1); on 21 December, 2017.pdf https://indiankanoon.org/doc/17920655/
2. The Trai (Telecom Regulatory Authority of India) recommended auctions in August 2007 for all spectrum except “2G bands”, but not for licensing. Acceptance by the DoT would have made this the policy, but this recommendation was not accepted.
3. (Ibid) Page 524, Paragraph 753

The article was published by Business Standard on December 6, 2017 and in the Organizing India Blogspot on the same day.

“The tragedy of the commons” as you may recall, refers in economics to the overexploitation of shared resources because of unregulated access. The tragedy results from shared resources being depleted or degraded because users pursue their own interests, contrary to the common good. This leads to unsustainable depletion or degradation. The atmosphere and oceans are examples of such shared resources.

There are also reverse situations, in which resources that are available for the benefit of society are unused, to the detriment of the common good. In such cases, there are opportunity costs from disuse that result in detriments, because the benefits of use are foregone. India’s abundant sunlight is a good example. Given its abundance, a reasonable expectation might be that extensive innovation and market organisation would be focused on harvesting this potential energy. Alas, India is a laggard in innovation relating to solar power.

Another resource that is neither depleted nor degraded by usage but underused is radio frequency spectrum. The opportunity cost for unused spectrum is therefore even greater than for a degradable mineral resource such as coal, resulting in an extreme tragedy of unused commons.

Some Issues Need Resolution

The situation today is that swathes of spectrum are unused because of our inability, perhaps unwillingness, to develop the appropriate regulations and organisation to benefit from them. This is true of all unused and underused radio frequency spectrum, although some of it is the most useful means for broadband connectivity for the majority of our rural and semi-urban population. It would also give more urban users less expensive access. For both sets, judicious use would enhance productivity and improve living conditions.
The entire thrust of the Digital India initiative requires these enabling policies and procedures, that is, the administrative rules and regulations that would enable the use of presently unused and therefore wasted spectrum. There are, of course, many other steps required than merely putting in place the regulations. The market structures and organisation have to be created under government leadership with other stakeholders in industry and civil society that would permit sustainable use of “the commons” — namely, the spectrum, if it were a shared resource instead of being apportioned in silos.

At present, private operators in this sector, except one, have too much debt, very low profitability, and insufficient network coverage. Services can be good in some locations, but countrywide, are spotty and not universally accessible. Yet, operators apparently want auctions, not now but at some time in the future (perhaps next year), for the essential resource that is the prerequisite for building the coverage that they don’t have although sorely needed, as it has been for years. While clearly impractical because of how auctions soak up capital, limiting subsequent investment in networks because of the deprivation of capital, operators reportedly want this in order to reduce competitive threats. 

Another baffling aspect of our reality is that the administration and regulator took no effective action to prevent the destruction of existing market structures in the telecom sector when there was a disruptive new entrant. With overwhelming resources from unrelated activities, unsustainable strategies and tactics could be construed as jeopardising India’s current and future productivity. Meanwhile, the administration and the regulator dithered, debating theoretical concepts of what constitutes anticompetitive or predatory activity, and the judiciary remained on the sidelines.

Yet another aspect of puzzling inactivity is that there have been no steps to test certain promising technologies for permitting their use through appropriate policies in India, such as TV White Space or the development of MIMO — Multiple-Input-Multiple-Output — using arrays of antennas, yielding (a) greater throughput (b) over longer distances (c) to more users, thereby improving spectrum capacity for broadband. While initial tests for TV White Space, conducted after a delay of several years, have been promising (disclosure: the author was associated with some), proposals for larger follow-up trials have stalled. Without these, policymakers can’t even consider policies that would enable the development and use of TV White Space devices for extending optical fibre from gram panchayats to hundreds of thousands of village users.

In the press, confusing articles short on facts make policy formulation even more difficult and risky in this already technically and financially complex space. One instance is an article about Maharashtra’s Village Social Transformation initiative avoiding TV White Space because this technology has problems with security clearance, in addition to Foreign Contribution Regulation Act clearance for Microsoft’s sponsorship of the pilot. The fact that the problem in India is in getting permission to use TV White Space for purposes other than for Doordarshan’s broadcasts finds no mention. The security risk in these frequencies is the same as in other frequencies, and transmission in any band can be monitored.

Another article suggests the government is considering allocating a high-speed wireless frequency band of unused spectrum (V band or 60 GHz, which is like short-range wireless optic fibre) on a first come, first served basis “which is a gross violation of the Supreme Court order”. Somewhere down the page is a surmise that since the Broadband India Forum is advocating de-licencing of this band and foreign companies support it, this “means that it should be allocated without auction on first come, first served basis”. The Broadband India Forum in its white paper clearly recommends aligning with an international standard, the Harmonised European Standard.1
According to this, low power equipment within specified emission limits in this band doesn’t need a licence. Wi-Fi is de-licenced spectrum that is open access and not allocated. Other de-licenced spectrum would not need to be allocated either, although in India, bands such as 60 GHz could be restricted to authorised operators.

It needs government intervention to cut the Gordian knot and initiate discussions on pooling spectrum for networks and working out practicable, sustainable options. Here’s hoping good sense and guts will help to make a start.

Shyam (no-space) Ponappa at gmail dot com
1: "V band - 60 GHz: The Key to Affordable Broadband in India"
White Paper by Broadband India Forum, November 9, 2016http://www.broadbandindiaforum.com/img/White%20Paper%20on%20V-BAND%20Revised%20Final.pdf

Read TRAI's Consultation Paper on Promoting Local Telecom Equipment Manufacturing

Preliminary

1. This submission presents comments by the Centre for Internet and Society, India ("CIS") on the Consultation Paper on Promoting Local Telecom Equipment Manufacturing dated 18.09. 2017, released by the Telecom Regulatory Authority of India (TRAI), under Department of Telecom, Ministry of Communications and Information Technologies (“the TRAI Consultation Paper”).
2. We commend TRAI for its efforts at seeking inputs from various stakeholders on this important and timely issue and are thankful for the opportunity to put forth our views.
3. We have addressed questions 3 and 5 of the TRAI Consultation Paper. Question numbers referred to in our submission correspond to those in the TRAI Consultation Paper.
4. Further, the Department of Industrial Planning and Promotion (DIPP) invited comments on SEPs and their availability on FRAND terms on 01. 03. 2016.[1] CIS submitted a detailed response to the consultation, and our present submission will draw significantly from our earlier response[2], as well as new empirical research concluded in the since the time of the consultation.

About CIS

1. CIS[3] is a non-profit organisation that undertakes interdisciplinary research on internet and digital technologies from policy and academic perspectives. Our areas of focus include IP rights, openness, internet governance, telecommunication reform, free speech, intermediary liability, digital privacy, cyber-security, and accessibility for persons with diverse abilities.
2. We strive to maximise public benefit, useful innovation, vibrant competition and consumer welfare. This submission is consistent with our commitment to the domestic goals (as enumerated in Make in India and Digital India), and the protection of India's national interest at the international level.

Submission on the Issues for Resolution

“Q.3 Are the existing patent laws in India sufficient to address the issues of local manufacturers? If No, then suggest the measures to be adopted and amendments that need to be incorporated for supporting the local telecom manufacturing industry.”

We submit that amendments to the Patents Act, 1970 may not be preferred, presently. It may be noted that there have been no judgments concluded by Indian courts on disputes relating to licensing of SEPs, yet. Justice Bakhru’s landmark order in Telefonaktiebolaget LM Ericsson (Publ) v. Competition Commission of India (2016) provided valuable clarity on the issue of conflict between remedies under Patents Act, 1970 and Competition Act, 1970. As various other matters are yet to be conclusively decided, and given the complex legal questions involved around the interpretation of Patents Act, 1970 and Competition Act, 2002, and constitutional issues around the jurisdiction of regulators and the power of judicial review of the courts, we believe that it would be prudent to examine the ruling of the courts on these issues in some detail, before considering amendments.

However, to support the local telecom manufacturing industry the Government of India may adopt and implement the following measures:

1. Develop Model Guidelines to improve the working of Indian Standard Setting Organisations (SSOs): Given the increasing complexity and time-consuming nature of SEP litigation in India, there is a tangible threat of the abuse of the FRAND process, it might be useful for the government to make suggestions on the working of Indian SSOs. The functioning of Indian SSOs has not been satisfactory and it is suggested that the government develop Model Guidelines that may be adopted by Indian SSOs, taking into account India specific requirements. The India specific requirements include a large and exponentially growing mobile device market which has made it possible for manufacturers, patent owners and implementers alike to achieve financial gains even with a low margin. We believe that this measure will also enable the fulfillment of the objectives of the Make in India and Digital India initiatives.
   
   We recommend that various stakeholders, including IP holders, potential licensees and users of IP, civil society organizations, academics, and, government bodies, including the Indian Patent Office, the Department of Telecommunications, the DIPP, TRAI, and, the CCI be consulted in the creation of these Model Guidelines.
   
   In our opinion, the Model Guidelines may cover (a) the composition of the SSO; (b) the process of admitting members; (c) the process of the determination of a standard or technical specification; (d) the process of declassification of a standard or technical specification; (e) the IPR Policy; (f) resolution of disputes; (g) applicable law.
   
   
2. Initiate the formation of a patent pool of critical mobile technologies and cap royalty payments: In light of the observed inadequacies in the IPR policies of various SSOs in India, as well the spate of ongoing patent infringement lawsuits around mobile technologies, we recommend that the government intervene in the setting of royalties and FRAND terms by setting up a patent pool of critical mobile technologies and apply a compulsory license with a five per cent royalty. Further, patent pools should be required to offer FRAND licenses on the same terms to both members and nonmembers of the pool.
   
   Our motivations for this proposal are manifold. In our opinion, it is nearly impossible for potential licensees to avoid inadvertent patent infringement. As a part of our research on technical standards applicable to mobile phones sold in India, we have found nearly 322 standards so far.[4] It is submitted that carrying out patent searches for all the standards would be extremely expensive for potential licensees. Further, even if such searches were to be carried out, different patent owners, SSOs and potential licensees disagree on valuation, essentiality, enforceability, validity, and coverage of patents. In addition, some patent owners are non-practising entities and may not be members of SSOs. The patents held by them are not likely to be disclosed. More importantly, homegrown manufacturers that have no patents to leverage and may be new entrants in the market would be especially disadvantaged by such a scenario. Budget phone manufacturers, standing to incur losses either as a result of heavy licensing fees, or, potential litigation, may close down. Alternatively, they may pass on their losses to consumers, driving the now affordable phones out of their financial reach. With the objectives of Make in India and Digital India in sight, it is essential that Indian consumers continue to have access to devices within their purchasing power.
   
   Further, how did we arrive at a cap of 5 percent? The rationale for this figure is the royalty cap imposed by India in the early 1990s. As part of regulating foreign technology agreements, the (former) Department of Industrial Development (later merged with DIPP) capped royalty rates in the early 1990s. Payment of royalties was capped at either a lump sum payment of $2 million, or, 5 percent on the royalty rates charged for domestic sale, and, 8 percent for export of goods pertaining to “high priority industries”.[5] Royalties higher than 5 percent or 8 percent, as the case may be, required securing approval from the government. While the early 1990s (specifically, 1991) was too early for the mobile device manufacturing industry to be listed among high priority industries, the public announcement by the government covered computer software, consumer electronics, and electrical and electronic appliances for home use. The cap on royalty rates was lifted by the DIPP in 2009.[6] It is submitted in the case of mobile device technology, we are witnessing a situation similar to that of the 1990s. In this sphere, most of the patent holders are multinational corporations which results in large royalty amounts leaving India. At the same time, litigation over patent infringement in India has limited the manufacture and sale of mobile devices of homegrown brands. While SEP litigation in India is indeed comparable to international SEP litigation on broader issues raised, specifically competition law concerns, but differs crucially where the parties are concerned. International SEP litigation is largely between multinational corporations with substantial patent portfolios, capable of engaging in long drawn out litigations, or engaging in other strategies including setting off against each other’s patent portfolios. Dynamics in the Indian market differ – with a larger SEP holder litigating against smaller manufacturers, many of whom are indigenous, homegrown.
   
   In June, 2013, we had recommended to the erstwhile Hon’ble Minister for Human Resource Development[7] that a patent pool of essential technologies be established, with the compulsory licensing mechanism. Subsequently, in February, 2015, we reiterated this request to the Hon’ble Prime Minister.[8] We propose that the Government of India initiate the formation of a patent pool of critical mobile technologies and mandate a five percent compulsory license.[9] As we have stated in our request to the Hon’ble Prime Minister, we believe that such a pool would “possibly avert patent disputes by ensuring that the owners' rights are not infringed on, that budget manufacturers are not put out of business owing to patent feuds, and that consumers continue to get access to inexpensive mobile devices. Several countries including the United States issue compulsory licenses on patents in the pharmaceutical, medical, defence, software, and engineering domains for reasons of public policy, or to thwart or correct anticompetitive practices.”[10] We believe that such a measure will not be in breach of our international obligations under the TRIPS Agreement.
   
   
3. Increase transparency in the patent system by making patentees comply with the law: The Patents Act, 1970 requires patentees and licensees to submit a statement on commercial working of the invention to the Controller every year.[11] Form 27 under section 146(2) of the Act lists the details necessary to be disclosed for compliance of the requirement of “working”. A jurisprudential analysis reveals the rationale and objective behind this mandatory requirement. Undeniably, the scheme of the Indian patent regime makes it amply clear that “working” is a very important requirement, and the public as well as competitors have a right to access this information in a timely manner, without undue hurdles. Indeed, as the decision[12] in Natco Pharma v. Bayer Corporation[13] reveals, the disclosures in Form 27 were crucial to determining the imposition of a compulsory license on the patentee. Thus, broadly, Form 27 disclosures can critically enable willing licensees to access patent “working” information in a timely manner.
   
   However, there has been little compliance of this requirement by the patentees, despite the Indian Patent Office (IPO) reiterating the importance of compliance through the issuance of multiple public notices[14] (suo motu and in response to a public interest litigation filed in 2011[15]), and, reminding the patentees that noncompliance is punishable with a heavy fine.[16] Findings of research submitted by one of the parties[17] in the writ of the 2011 public interest litigation Shamnad Basheer v. Union of India and others[18] reveal as follows. First, a large number of Form 27s are unavailable for download from the website of the IPO. This possibly indicates that the forms have either not been filed by the patentees with the IPO, or have not been uploaded (yet) by the IPO. Second, a large number of filings in the telecom sector remain incomplete.
   
   In 2015, CIS queried the IPO website for Form 27s of mobile device patents to arrive at a similar conclusion. We obtained 4,916 valid Form 27s, corresponding to 3,126 mobile device patents from public online records. These represented only 20.1% of all Forms 27 that should have been filed and corresponded to only 72.5% of all mobile device patents for which Forms 27 should have been filed. Forms 27 were missing for almost all patentees, and even among Forms 27 that were obtained, almost none contained useful information regarding the working of the subject patents or fully complying with the informational requirements of the Indian Patent Rules.[19]
   
   Further, in our study, we observed that patentees adopted drastically different positions regarding the definition of patent working, some arguing that importation of products into India or licensing of Indian suppliers constituted working, while others even went so far as to argue that the granting of a worldwide license to a non-Indian firm constituted working in India. Several significant patentees claimed that they or their patent portfolios were simply too large to  enable  the  provision of information relating to individual patents, and instead  provided  gross  revenue  and product sale figures, together with historical anecdotes about their long histories in India.
   
   The Indian government has made little or no effort to monitor or police compliance with Form 27 filings, undoubtedly leading to significant non-compliance. We also propose the alteration of the Form 27 template[20] to include more disclosures.[21] Presently, patentees are required to declare number of licensees and sub-licensees. We specifically propose that the format of Form 27 filings be modified to include patent pool licenses, with an explicit declaration of the names of the licensees and not just the number.
   
   
4. Require royalty rates to be decided on the basis of the Smallest Saleable Patent Practicing Component: Most modern telecommunication and IT devices are complex with numerous technologies working in tandem. Different studies indicate that the number of patents in the US applicable to smartphones is between 200,000 and 250,000.[22] A comprehensive patent landscape of mobile device technologies conducted by CIS reveals that nearly 4,000 patents are applicable to mobile phones sold in India.[23] It is thus extremely difficult to quantify the exact extent of interaction and interdependence between technologies in any device, in such a way that the exact contribution of the patented technology to the entire device can be determined. Thus, we submit that royalty rates for SEPs should be based on the smallest saleable patent practising component, and not on the net price of the downstream product.
   
   The net cost of the device is almost always several times that of the chipset that implements the patented technology. Armstrong et al[24] have found that the cost of a 4G baseband chip costs up to $20 including royalties in a hypothetical $400 phone sold in the US. One of the litigating parties in the ongoing patent infringement lawsuits in India has stated that one of the reasons for preferring to leverage its patents as downstream as possible in the value chain is that it will earn the company more royalties.[25] In instances where patent exhaustion occurs much earlier in the value chain, such as in the case of the company’s cross-licenses with Qualcomm (another company that owns patents to chip technologies), the company does not try to obtain royalties from the selling prices of devices for the cross-licensed technologies. It is submitted that such market practices could be detrimental to the government’s objectives such as providing a mobile handset to every Indian by 2020 as a part of the Digital India programme.[26] It is also worth noting in this context that the mobile device is the first and only medium of access to the Internet and telecom services for a large number of Indians, and, consequently, the only gateway to access to knowledge, information and critical services, including banking.[27]
   
   “Q.5 Please suggest a dispute resolution mechanism for determination of royalty distribution on FRAND (Fair Reasonable and Non Discriminatory) basis.”
   
   The licensing of SEPs on FRAND terms requires the parties to negotiate “reasonable” royalty rates in good faith, and apply the terms uniformly to all willing licensees. It is our submission that if the parties cannot agree to FRAND terms, they may enter into binding arbitration. Further, if all efforts fail, there exist remedies under the Patents Act and the Competition Act, 2002 to address the issues.
   
   Section 115 of the Patents Act empowers the court to appoint an independent scientific adviser “to assist the court or to inquire and report upon any such question of fact or of opinion (not involving a question of interpretation of law) as it may formulate for the purpose.”[28] Such an independent adviser may inform the court on the technical nuances of the matter.
   
   Further, under the Patents Act, pending the decision of infringement proceedings the Court may provide interim relief, if the plaintiff proves first, a prima facie case of infringement; second, that the balance of convenience tilts in plaintiff’s favour; and, third, that if an injunction is not granted the plaintiff shall suffer irreparable damage. However, it is our suggestion that courts adopt a more cautious stance towards granting injunctions in the field of SEP litigation. First, in our opinion, injunctions may prove to be a deterrent to arrive at a FRAND commitment, in particular, egregiously harming the willing licensee. Second, especially in the Indian scenario, where litigating parties operate in vastly different price segments (thereby targeting consumers with different purchasing power), it is difficult to establish that “irreparable damage” has been caused to the patent owner on account of infringement. Third, we note the approach of the European Court of Justice, which prohibited the patent holder from enforcing an injunction provided a willing licensee makes an offer for the price it wishes to pay to use a patent under the condition that it deposited an amount in the bank as a security for the patent holder.[29] Fourth, we also note the approach of the Federal Trade Commission in the USA, which only authorizes patent holders to seek injunctive relief against potential licensees who have either stated that they will not license a patent on any terms, or refuse to enter into a license agreement on terms that have been set in the final ruling of a court or arbitrator.[30] Further, as Contreras (2015)[31] observes, that the precise boundaries of what constitutes as an unwilling licensee remains to be seen. We observe a similar ambiguity in Indian jurisprudence, and accordingly submit that courts should carefully examine the conduct of the licensee to injunct them from the alleged infringement.

Concluding Remarks

We are thankful to TRAI for the opportunity to make these submissions. It would be our pleasure and privilege to discuss these comments with the TRAI; and, supplement these with further submissions if necessary. We also offer our assistance on other matters aimed at developing a suitable policy framework for SEPs and FRAND in India, and, working towards the sustained innovation, manufacture and availability of mobile technologies in India.

[1] Department of Industrial Policy and Promotion Discussion Paper on Standard Essential Patents and their Availability on Frand Terms, available at https://cis-india.org/a2k/blogs/discussion-paper-on-standard-essential-patents-and-their-availability-on-frand-terms (last accessed November 13, 2017)

[2] Anubha Sinha, Nehaa Chaudhari and Rohini Lakshane, “CIS’ Comments on Department of Industrial Policy and Promotion Discussion Paper on Standard Essential Patents and their Availability on Frand Terms” (April 23, 2016); available at https://cis-india.org/a2k/blogs/comments-on-department-of-industrial-policy-and-promotion-discussion-paper-on-standard-essential-patents-and-their-availability-on-frand-terms

[3] www.cis-india.org

[4] Rohini Lakshané, CIS, List of Technical Standards and IP Types (Working document), available at https://drive.google.com/file/d/0B8SgjShAjhbtaml5eW50bS01d2s/view?usp=sharing (last accessed 13 November, 2017).

[5] Kumkum Sen, News on Royalty Payments Brings Cheer in New Year, available at http://www.businessstandard.com/article/economypolicy/newsonroyaltypaymentbringscheerinnewyear11001 0400044_1.html (last accessed 13 November, 2017).

[6] See Sanjana Govil, Putting a Lid on Royalty Outflows How the RBI Can Help Reduce India’s IP Costs , available at http://cisindia.org/a2k/blogs/lidonroyaltyoutflows (last accessed 13 November, 2017) for a discussion on the introduction of royalty caps in the early 1990s, and its success in reducing the flow of money out of India.

[7] Nehaa Chaudhari, Letter for Establishment of Patent Pool for Low cost Access Devices through Compulsory

Licenses, available at http://cisindia.org/a2k/blogs/letterforestablishmentofpatentpoolforlowcostaccessdevices (last accessed 13 November, 2017).

[8] See Rohini Lakshané, Open Letter to PM Modi, available at http://cisindia.org/a2k/blogs/openlettertoprimeministermodi (last accessed 13 November, 2017) for further details of CIS’ proposal.

[9] Rohini Lakshané, FAQ: CIS’ proposal to form a patent pool of critical mobile technology, September 2015, available at http://cisindia.org/a2k/blogs/faqcisproposalforcompulsorylicensingofcriticalmobiletechnologies (last accessed 13 November, 2017).

[10] Id.

[11] Section 146(2) of the Patents Act, 1970.

[12] Sai Vinod, Patent Office Finally Takes Form 27s Seriously, available at http://spicyip.com/2013/02/patentofficefinallytakesform27s.html (last accessed 13 November, 2017).

[13] Order No. 45/2013 (Intellectual Property Appellate Board, Chennai), available at http://www.ipab.tn.nic.in/0452013.htm (last accessed 13 November, 2017).

[14] Intellectual Property India, Public Notice, available at

http://www.ipindia.nic.in/iponew/publicNotice_Form27_12Feb2013.pdf ((last accessed 13 November, 2017) and Intellectual Property India, Public Notice, available at http://ipindia.nic.in/iponew/publicNotice_24December2009.pdf (last accessed 13 November, 2017).

[15] Supra note 11.

[16] Id.

[17] See research findings available at http://spicyip.com/wpcontent/uploads/2015/05/FORM27WP1Rcopy.pdf (last accessed 13 November, 2017).

[18] In the High Court of Delhi, W.P.(C) 5590/2015. This litigation is currently ongoing. See, illustratively, Mathews P. George, Patent Working in India: Delhi HC issues notice in Shamnad Basheer v. Union of India & Ors. – I , available  at http://spicyip.com/2015/09/patentworkinginindiadelhihcissuesnoticeinshamnadbasheervunionofindiaorsi.html (last accessed 13 November, 2017).

[19] Contreras, Jorge L. and Lakshané, Rohini and Lewis, Paxton, Patent Working Requirements and Complex Products (October 1, 2017). NYU Journal of Intellectual Property & Entertainment Law, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3004283

[20] Form 27, The Patents Act, available at http://ipindia.nic.in/ipr/patent/manual/HTML%20AND%20PDF/Manual%20of%20Patent%20Office%20Practice%20and%20Procedure%20%20html/Forms/Form27.pdf (last accessed November 13, 10`7).

[21] However, we came across some complaints raised by patentees and industry observers regarding the structure of the Form 27 requirement - namely, patents covering complex, multi-component products that embody dozens of technical standards and thousands of patents are not necessarily amenable to the individual-level data requested by Form 27. See Contreras, Jorge L. and Lakshané, Rohini and Lewis, Paxton, Patent Working Requirements and Complex Products (October 1, 2017). NYU Journal of Intellectual Property & Entertainment Law, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3004283

[22] Mark Lemley and Carl Shapiro, Patent Holdup and Royalty Stacking, 85 Tex. L. Rev. at 2015 ; See also, for e.g.,

RPX Corporation, Amendment No. 3 to Form Sl,11 Apr. 2011, at 59, available at http://www.sec.gov/Archives/edgar/data/1509432/000119312511101007/ds1a.htm (last accessed 22 April, 2016), quoting “Based on our research, we believe there are more than 250,000 active patents relevant to today’s

smartphones…” .; See further Steve Lohr, Apple Samsung Case Shows Smartphone as Legal Magnet, New York Times, 25 Aug. 2012, available at http://www.nytimes.com/2012/08/26/technology/applesamsungcaseshowssmartphoneaslawsuitmagnet.html (last accessed November13, 2017).

[23] Jorge L. Contreras and Rohini Lakshané, Patents and Mobile Devices in India: An Empirical Survey, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2756486 (last accessed 13 November, 2017).

[24] Ann Armstrong, Joseph J. Mueller and Timothy D. Syrett, The SmartphoneRoyalty Stack:Surveying Royalty Demands for the Components Within Modern Smartphones, available at  https://www.wilmerhale.com/uploadedFiles/Shared_Content/Editorial/Publications/Documents/TheSmartphoneRoyaltyStackArmstrongMuellerSyrett.pdf (last accessed 13 November, 2017)

[25] Florian Mueller, Ericsson Explained Publicly why it Collects Patent Royalties from Device (Not Chipset) Makers, available at  http://www.fosspatents.com/2014/01/ericssonexplainedpubliclywhyits.Html (last accessed 13 November, 2017).

[26] Romit Guha and Anandita Singh Masinkotia, PM Modi’s Digital India Project:Government to Ensure that Every Indian has a Smartphone by 2019, available at http://articles.economictimes.indiatimes.com/20140825/news/53205445_1_digitalindiaindiatodayfinancialservices (last accessed 13 November, 2017).

[27] Nehaa Chaudhari, Standard Essential Patents on Low Cost Mobile Phones in India: A Case to Strengthen Competition Regulation? available at http://www.manupatra.co.in/newsline/articles/Upload/08483340C1B94BA4B6A9D6B6494391B8.pdf (last accessed 13 November, 2017).

[28] Section 115 of the Patents Act, 1970.

[29] Huawei Technologies Co. Ltd v. ZTE Corp. and ZTE Deutschland , Judgment of the Court (Fifth Chamber) of 16 July 2015 in GmbH C170/13.

[30] Third Party United States Fed. Trade Commission’s Statement on the Public Interest, In re Certain Wireless Communication Devices, Portable Music and Data Processing Devices, Computers and Components Thereof, U.S. Int’l Trade Comm’n, Inv. No. 337TA745 (Jun. 6, 2012).

[31] Jorge L. Contreras, A Brief History of FRAND: Analyzing Current Debates in Standard Setting and Antitrust Through a Historical Lens , 80 Antitrust Law Journal 39 (2015), available at h ttp://ssrn.com/abstract=2374983 or http://dx.doi.org/10.2139/ssrn.2374983 (last accessed 13 November, 2017).

The submission is divided in four parts. The first part introduces the document, the second part gives an overview of CIS and its work, the third part contains general comments on the consultation paper and the fourth part contains specific comments on questions posed in the consultation paper. Click to read the full submission made to the Telecom Regulatory Authority of India on November 6, 2017.

The article by Shyam Ponappa was published in Business Standard on November 1, 2017 and in Organizing India Blogspot on November 2, 2017

You may be surprised to learn that the central government has been applying ideas from this year’s Nobel Prize winner for economics, Richard Thaler, even before the award. According to press reports, a “Nudge” unit was set up last year (2016) by the Niti Aayog in association with the Bill & Melinda Gates Foundation. Its purpose is to apply behavioural insights in policymaking for initiatives such as Swachh Bharat, Jan-Dhan Yojana, and Digital India. There are issues about ethics and motivation in the use of “nudges”, of course, with the best nudges likened to effective GPS devices that make it easier for people to get where they want to go with enabling information, and without covert manipulation.

Recognise, however, that manipulation can cut both ways. It can be beneficial for those being influenced, as when we eat healthier, observe regulations, or manage waste better. It can also be detrimental, as when manipulators entice, persuade, or coerce us to act against our interests, whether it is the private sector, government or vote seekers. Examples are enticements or misleading consumer information, government pressure for compliance without appropriate regulatory bases, or populist measures for votes.

Incidentally, Mr Thaler also advises the $6-billion Undiscovered Managers Behavioral Value Fund, which reportedly does better than 97 per cent of its peers, with average annual returns of 16 percent.

Ironically, one of Mr Thaler’s powerful early insights has been ignored and is awaiting discovery and application especially in India. It is about the “winner’s curse” in auctions, the phenomenon that winners of highly contested auctions tend to overbid. This is because when there is strong contention for a desirable asset, the one who most overvalues the asset tends to bid the highest. Mr Thaler demonstrates that the curse occurs in two ways: Where the winning bid exceeds the value of the winnings, or where the gains are below expectations. Mr Thaler’s 1988 paper demonstrated these effects through examples including oil and gas leases, corporate takeovers, publishing rights for books, and bidding for baseball players.1 This is especially important for India because we need more effective resource management, whether of coal/fuel for power, or of spectrum for communications. We can ill-afford the high opportunity costs of bad policies. 

To be fair to policymakers in India, findings by Mr Thaler and others on auctions have been ignored by other governments greedy for immediate revenue. The UK, Europe and the USA went through disastrous 3G auctions that bankrupted their telecommunications industries. The exceptions were the Scandinavian countries and others such as Japan, South Korea, and China, where circumstances were managed so that there were either no auctions, or less contentious auctions.  Tomes have been written on the “success” of high bids that resulted in enormous government collections. The consequences for the operating companies, however, were devastating, because of the severe drain on their finances from the heavy up-front investments. This was aggravated by the collapse of the technology bubble in 2000.

All the following auctions had disastrous outcomes for services:2

1994: The first US auction netted huge bids. Soon after, a number of “successful” bidders declared bankruptcy.

In India, the 1994 auction was followed by chaos because of overbidding and default. The sector recovered only after the auction fees were set aside for revenue-sharing in 1999 through the New Telecom Policy (NTP 1999), and lower shares were set in 2003.

1995-1996: US “C”-Block auction — several “successful” bidders declared bankruptcy.

2000 UK and 2001 EU 3G auctions: Netted $35 billion in the UK. In Austria, Germany and Italy, bids netted over $100 billion, 10 times the expectation. Considered a huge success, but winners couldn’t repay their debts, and the markets took a decade to recover.

2010: India’s 3G and broadband wireless auction with over Rs 1 lakh crore bid was considered a great success. Having paid too much for spectrum, operators struggled thereafter and new systems are slow to roll-out.

Meanwhile, auction experts wrote disparagingly of “failures” (low fees) in countries such as the Netherlands, Switzerland, Sweden, and ignored countries such as South Korea, Japan and Finland where there were no auctions (until 2009). However, these “failures” had the best broadband services, according to a 2010 study by the Saïd Business School at Oxford.

After India’s 2015 auction, researchers at ICRIER observed that the anticipated growth dividend from telecom didn’t materialise. Their rhetorical question and answer: “Does this mean the much-needed mobile broadband ecosystem will be further pushed into the future? If so, this would be another case of lost opportunity in telecom.”3 And that’s what it has been so far.

Broadband is an essential aspect of infrastructure. For India to break out of its low-growth trajectory, our policies have to recognise the impediments caused by spectrum fragmentation and high-cost auctions, and create practicable alternatives such as shared networks including spectrum that is paid for only when it is used. Also, more open-access and light-licensed bands in line with global developments will help India reap the benefits of ecosystems of devices as they evolve, e.g., in 60 GHz and TV White Space bands (for which India is ideally positioned). Instead, these technologies are blocked as is the spectrum, which remains unused, creating more barriers for ourselves by having to devise high-cost workarounds. Our ministries – for communications, electronics and information technology, information and broadcasting, defence, and finance – need to address technology applications and policies collectively to induct and align our systems and practices with global developments now and for the future.

Shyam (no space) Ponappa at gmail dot com

1. Richard Thaler, “Anomalies: The Winner’s Curse,” Journal of Economic Perspectives 2, no. 1 (Winter 1988): 191-202

2. There was one successful auction in India in 2001 for a fourth mobile operator in each circle (state), when markets were depressed and competition was subdued. Other auctions in India and abroad hailed as successes because of high-auction bids resulted in constrained networks and services

The article was published in the Business Standard on October 4, 2017 and Organizing India Blogspot on October 5, 2017.

An aspect of financial services often overlooked is that they serve as second-order infrastructure, essential for commerce, industry, and daily living. A disruption in the financial sector slows everything by cutting productivity. Other reasons for decline, such as structural issues in power supply, telecom/broadband, and in farming, are accepted as part of the landscape. That is why devising corrective measures is not so simple. Setting aside political considerations, misattribution does not help in problem-solving. Resolution needs root causes to be identified and addressed.

Consider the example of the guillotine approach to non-performing assets (NPAs). Imagine if an inspection of water and sanitation in your locality were to result in the shutting off of the water supply because conditions are deemed unsanitary. There would be a scramble for sourcing water, while economic activity and productivity would tank. What if it were a metropolis, or the whole country?

This is what happened with the abrupt change in booking NPAs. From around 2.5 per cent between 2006 until 2011, they began to rise in 2012 (see Chart 1).

Public sector banks in particular responded to the government’s accommodative efforts after the 2008 crisis. As growth fell, NPAs rose, especially for long-gestation, regulation-dependent infrastructure loans. In 2015, the Reserve Bank of India (RBI) adopted a hard line as the economy was gaining momentum after slumping in 2014 to 6 per cent. Earlier, the RBI was faulted for allowing the ever-greening of loans. An abrupt change without a gradual coming to terms to manage cash flows resulted in a crisis.

Leaving aside malpractice/fraud, NPAs resulted from factors such as aggressive, unsustainable lending, regulatory delays, the domestic and global slowdown, and commodity price shocks, as when export duties were imposed in Australia and Indonesia on coal. Cash flows drive demand, and a weak economy can make or break a business.

Apart from crippling banking and financial services, the consequences of the NPA shock were enormous, especially for sectors such as iron and steel, construction, power, telecom, transport, and agriculture, with knock-on effects on MSMEs across sectors. Could a phased, more gradual, differentiated approach have yielded better results? Probably, just as when water supply fails, interim arrangements involving pipes, equipment and tankers have to be made to tide over the crisis.  For stressed loans, the requirements were for a differentiated approach to the category of wrongdoing, including overreach, and support for stressed sectors undergoing a downturn.   The need was and is to prevent disruption in cash flows from a systemic perspective, conserving employment and assets in untainted enterprises with the potential for recovery.  This also retains momentum and market sentiment to the extent possible.

Ways Out?

1. NPAs in the mid-90s were outrageously high. Yet, what followed especially after 2003 was high growth until the global financial crisis of 2008. The NPAs were reduced and ceased to be a problem (see Chart 1). One explanation is that banks did significant NPA provisioning from profits in bond trading, as interest rates on 10-year government bonds fell 8.1 per cent from 1997 to 2003. A booming economy from 2003 did the rest, although there were no changes in the underlying causes that led to the NPAs. Hence, bond trading could be a way out provided interest rates fall, and so could economic growth.
2. Regarding interest rates, the dilemma is of high rates for domestic savings because people save with banks in India, and for foreign investors in bonds, against low rates for consumer demand and for capital investment. Given our acute need for growth and misaligned real interest rates, this needs rectification (see Chart 2).
   
   
   
   
3. There’s a need to insulate banking from political influence, while ensuring rigorous procedures for evaluation and monitoring. Any system can be gamed, however, and to work well, players need competence, integrity, and the freedom to exercise both. Banks are not well suited for funding long-gestation infrastructure because their deposits are more short-term. This is an institutional and market deficiency that needs to be bridged through developing bond markets, and channeling long-duration funding from pensions and insurance.
4. There are compounding effects from imposing the Aadhaar/UID without the requisite connectivity, processes and safeguards, likewise the hasty imposition of the goods and service tax (GST). There is little doubt of benefits when properly applied, but that needs time and support for thorough implementation; meanwhile, the immediate need is for relief. Rescue measures are needed to lighten the burden of the GST and its reporting requirements on MSMEs (up to a higher ceiling?) over a long period. Interim solutions could be flat rates for a larger set, augmented by support for implementation.
5. Meanwhile, structural issues resulting in NPAs need to be fixed. Three obvious areas:

• Farming, with its large population, small holdings, outmoded practices, low productivity, and the issues around pricing. Pricing is an essential aspect, as are direct benefits, for example, subsidies through cash transfers depending on income. But simply increasing farm prices addresses only one aspect of a multifaceted problem. What’s needed is to change the way production and marketing are organised. Practicable strategies are needed for produce, perhaps like the approach in dairy farming for milk production and marketing. Systems need be designed (worked out) and implemented properly, with design elements to promote and safeguard honest, competent, disciplined behaviour.
• Telecom and broadband services need policies based on a complete change of mindset and market structure, such as shared networks and equipment including spectrum, protection from anti-competitive action, and revenue sharing instead of auctions.
• Electricity supply: Power generation and distribution are both stressed by low economic activity, while many states continue with lax practices of under-recoveries for electioneering.This cannot be resolved as long as profligacy and indiscipline continue.

The Op-ed was published in the Business Standard on September 7, 2017 and re-posted in Organizing India Blogspot the following day.

Apart from the present government’s doings or omissions, other legacies have also contributed to this, such as the complacency of previous governments, the scams, the obduracy of the then Opposition, resulting in the attrition of parliamentary processes, and so on. This, followed by the persistently divisive approach of the incumbent government has effectively scuppered any possibility of convergent societal efforts. There’s no point attributing blame for the purposes of redeeming the situation. Instead, we must try to pick up the pieces.

Some things need doing, and urgently, but we (and especially our governments) seem to be avoiding them. Basic infrastructure is our most urgent need, apart from unifying leadership and social institutions. Certain systemic bases simply must be built and made available to organise and channel energies into constructive, productive activities and well-being, although it will be time-consuming and far from easy on our continental scale.

In infrastructure, broadband can yield the quickest and highest rewards (e.g., http://organizing-india.blogspot.in/2010/10/broadband-for-education-training.html) by adopting policies that enable responsible access to existing resources, instead of continuing with self-imposed administrative restrictions. Everything else — energy, water and sewerage, and transportation — is more complex, and needs far more capital investment and organisation. What’s more, with good communications support, other infrastructure becomes easier to build and manage. On the face of it, the government seems to be addressing this. For example, an Inter-Ministerial Group (IMG) was formed three months ago to recommend solutions for the debt-laden telecom sector. Interim reports did not augur well, though, suggesting there was no need for major policy changes because of signs of recovery. Unfortunately, the IMG’s final recommendations are on the same lines: Deferring spectrum and licence fee payments from 10 years to 16 years, and reducing interest charges by about 2 per cent. However, there is no reduction in licence fees or spectrum charges nor easing of spectrum limits on consolidation; interconnection charges will be decided by the Telecom Regulatory Authority of India, and spectrum auctions will be after April 2018. But for an overleveraged, hypercompetitive sector, deferring the massive capital requirements for auctions by some months and other proposed measures doesn’t really change the game.

Will this enable the telecom sector to recover? Many operators and observers think not, including yours truly. The reasons below leave one wondering whether the IMG made their recommendations with full knowledge, or were not fully cognizant of the realities.

Why major changes are necessary
There are compelling reasons for radical policy interventions. A report by Strategy& (formerly Booz and Company, now part of PwC) suggests that telecom operators in developing countries have negative margins on data services (see chart).
Source: https://www.strategyand.pwc.com/reports/connecting-the-world-media-report

This is significant for India (a) because we need considerable growth in networks and delivery, (b) that is affordable, (c) yet sustainable, i.e., generates positive cash flows.

The reality is that the already troubled sector’s revenues fell steeply after Reliance Jio’s entry in 2016, and so did government revenues from licence and spectrum charges. Yet, having upended the sector’s finances, Jio paid only Rs 47.81 crore as licence fees and spectrum charges for the six months ending June 2017, or less than 1 per cent of total operator payments, since it had minimal revenues. By contrast, Bharti Airtel paid Rs 2,902.75 crore, Vodafone Rs 2,005.25 crore, and Idea Cellular Rs 1,677.67 crore. The sector is being severely weakened by this strategy as revenues and government collections collapse, resulting in deficient infrastructure.

While high government revenues alone are the wrong criterion for telecom policies, this shows how the sector’s finances were gutted, and the likely reality going forward. A recent report by Standard & Poor’s (S&P) expects revenues to fall up to 10 per cent for the year, with the sector settling down over 12-24 months. But that is merely one surmise; the certainty is of continuing damage to the market’s ability to sustain itself, as well as the reality of reduced operating revenues and government collections.

These disruptive practices are hollowing out industry capacity, whereas the country’s need is for more capacity to be built for broader and better access, given under 300 million data subscribers. Adequate network access needs to be built up in underserved areas, and appropriate content and linkages have to be built for the full range of user needs covering education, health, and entertainment through government and commercial services.  
Only the government can develop appropriate policies and regulations, including levying no more than reasonable charges (high government charges have constrained India’s communications development). After the sector stalled in 1997-98, there was a partial remedy by the National Democratic Alliance through NTP-99, substituting a revenue-sharing arrangement for fees owed through auctions. The government’s share was initially too high, but as it was gradually reduced and as competition increased, mobile telephony grew explosively, as did government revenues (see: http://organizing-india.blogspot.in/2017/04/facts-not-beliefs-should-drive-policies.html).

For a similar explosive surge in broadband economic revival, we need policy decisions urgently that:  
a) Adopt infrastructure sharing fully to reduce costs. Do this through two or three consortiums to have competition, with government entities anchoring each. For instance, 70 per cent of Sweden is covered by a shared network between Telenor and Hi3G, which is shared outside the major cities. For shared networks, equipment is readily available to support multiple operators; we need the enabling policies.  
b) Approach spectrum as a shared public resource. For assigned spectrum, allow licensed operators and manufacturers/developers secondary access (primary holder retains priority), at reasonable revenue-sharing charges, without up-front fees. Start with unused or under-used frequencies such as TV White Space. 
c) Allocate spectrum for Wi-Fi conforming to global standards to benefit from ecosystems, e.g., 5 GHz and 60 GHz.  
This will enable maximum utilisation of spectrum and networks for the common good, instead of artificially restricting access as is the practice today. We will all benefit greatly from better networks and services, and government revenues will exceed any conceivable auction fees.

Shyam (no-space) Ponappa at gmail dot com

First published in the Business Standard on August 2 and mirrored on Organizing India Blogspot on August 3, 2017.

The government finally announced in July that a new telecom policy (NTP-2018) in consultation with stakeholders would be in place by March 2018.  There’s been some jockeying for one-up statements thereafter, suggesting the risk of being sidetracked. The need for competent, supportive policies in the public interest must be focussed and driven, and not be allowed to fall prey to being hijacked by bluster, nor be diverted towards maximising government revenues, crony interests, or electioneering tub-thumping.

A quick review of the sector and potential demand indicates what’s needed to fulfil our requirements. Telecom operators are saddled with Rs 4.6 lakh crore of high-interest debt. This has resulted from aggressive bids spurred on by spectrum auctions, aggravated by shrinking revenues and price wars. Meanwhile, urgent concurrent needs for network investment for greater reach and delivery, and for realising more of the potential for extensive and intensive usage, languish — for want of capital, enabling policies, and orderly markets. This has resulted in a crisis in what could have become the most successful communications market in the world. Instead, India’s communications sector is partly on the brink of collapse because of retrogressive policies and practices, unsustainable financial models, the fallout of scandal, and disruptive competition.

The best way forward is for all government agencies, not just the Department of Telecommunications, to define objectives jointly, and devise policies through consultations to enable an effective and robust sector. Here are suggestions for what to aim for and what to avoid in developing NTP-2018.

Objectives for NTP-2018

1. Networks: maximise capacity utilisation/throughput

Maximise the utilisation of networks by increasing throughput. This requires exploring alternative forms of organisation and management to exploit invested capital for public interest objectives, e.g., through consortiums, perhaps with government participation to ensure national security and the common good.  Orderly markets are essential in communications (as in all infrastructure), and competition, while essential, is not constructive beyond a point, unlike in fast-moving consumer goods or non-capital intensive sectors.

2. Spectrum allocation and management: Maximise throughput

Maximise wireless throughput to facilitate connectivity, by: a) Making more spectrum available, (b) In large, contiguous bands, (c) At less cost. Explore pooled usage and secondary sharing of spectrum by operators/consortiums as appropriate (consult with operators and experts).

3. Financial approach: Use revenue sharing

Use revenue sharing to compensate for spectrum and network rights, usage, and all government charges, as was done with licence fees in NTP-99.

Pitfalls to avoid

1. Palliative “default solutions”

It is easier to tinker with policies as they are than to undertake major systemic change. An easy way out would be to fall back on the received wisdom of competition and free markets, hoping to muddle through. For instance, the government set up an inter-ministerial group (IMG) to reduce financial stress in telecom. This group has apparently recommended extending payment schedules from 10 to 16 years, and cutting interest rates from 12 to 8 per cent.1 These sops could become the basis of NTP-2018, leaving the market to shake out, hoping consolidation will remedy inadequate coverage and delivery.2 This will merely reschedule operators’ payments over a longer period. The structural problems will remain, with insufficient network coverage, barriers to technology, less likely benefits from innovation such as “wireless fibre” and small cells with lower radiation, with hyper-competitiveness still a drag.

2.  Rely on consultations and avoid preconceived ideas

Statements such as that NTP-2018 will be app-directed and not connectivity-directed appear inappropriate or misinformed. This is because connectivity remains our most critical need for more effective delivery of services. Connectivity is deficient not only in rural and semi-urban areas, but even in dense urban areas. In fact, ignoring connectivity is typical of India’s approach to and failure in building networks and infrastructure (incomplete systems because of gaps, or with stranded assets, or that fail in end-to-end delivery). Simply put, our requirement is for more user-access and backhaul/networks to enable higher, more widely available access and throughput. This is India’s communications infrastructure need, whether it is broadband or Narrow Band Internet of Things (NB-IoT). Everything else follows.  Otherwise, it’s like trying to deliver more water without a network of pipelines, or more electricity without adequate distribution networks.

3. Anti-competitive disruption

While disruption is a reality in our communications sector, its jurisdiction has become contentious between the Competition Commission of India (CCI) and the Telecom Regulatory Authority of India (TRAI). The CCI reportedly asserted that the Competition Act of 2002 defines “predatory price”, “dominant position”, and “relevant markets”, which fall in its domain, and that it has applied this framework over the last eight years across sectors including telecom.3

Turf issues are not unique to India, and have been resolved in many countries.  Secretary General Pradeep Mehta of Consumer Unity & Trust Society (CUTS) points out that in 2011, a committee recommended amending the Competition Act to include mandatory consultation between the CCI and sector regulators where necessary.

A puzzling question if the telecom sector was in fact being monitored: Why was such disruption permitted? From press reports, it’s unclear whether there are no appropriate regulations, or whether the CCI’s and/or TRAI’s assessments of dominance and predatory pricing rely on precedents from developed economies without appropriate changes for our circumstances. To illustrate, consider the notion that market share is a key criterion for dominance, or Significant Market Power (European Commission).  However, in a developing economy, a large conglomerate investing in a new sector could have SMP even with zero market share, simply because of its size and resources, and economic power (attributes in Section 19(4) of The Competition Act). The European Commission also mentions privileged access to financial resources, economies of scale and scope, and barriers to entry. 

A sound NTP-2018 requires sustainable and integrated end-to-end policies for our realities, not academic or silo-based orthodoxies.

Shyam (no space) Ponappa at gmail dot com
1: “Govt panel for sops to ease financial stress in telecom sector”, BS, July 25, 2017: http://www.business-standard.com/article/economy-policy/img-readies-sops-to-ease-telecom-stress-117072401632_1.html
2: “Short-term turbulence”, BS, July 29, 2017: http://www.business-standard.com/article/economy-policy/short-term-turbulence-in-telecom-sector-117072900022_1.html
3. "CCI tells Trai to consult it on predatory pricing, market dominance issues", BS, July 28, 2017:  http://www.business-standard.com/article/companies/pricing-market-dominance-its-remit-cci-tells-trai-117072800069_1.html

The article was published in the Business Standard on May 31, 2017 and in Organizing India Blogspot on June 5, 2017.

India’s markets are at the heart of what attracts investment and economic activity, with mobile phones and broadband services comprising a significant share. In exploring their magnitude and supply chains, an obvious need emerges for policies and incentives for local manufacturing of components and handsets to boost domestic supply and create employment. Another avenue for deriving local benefits is extending the coverage of digital platforms, expanding the market through policies and incentives facilitating broadband infrastructure. Policy support can help both to extend networks using fixed and wireless technologies, as well as to increase capacity utilisation.

Reforms affecting both supply and demand are needed to fully and equitably provide ubiquitous coverage and exploit digital platforms for public welfare. Such reforms would mitigate the lower revenue potential of rural populations. Enabling steps could include allowing active sharing of spectrum and networks, providing more unlicensed spectrum, financial incentives such as tax credits and spectrum charge rebates for rural infrastructure, and standardised right-of-way charges.

India’s Mobile Handset Market

"A billion smartphones will be sold in India in [the] next five years."

This estimate is from a report by IIM-Bangalore and CounterPoint Researchers.[1] The report notes that India became the second-largest global smartphone market in terms of number of users in early 2016, and still has enormous growth potential even as demand for smartphones elsewhere is waning. In the next five years, almost a billion smartphones and half a billion feature phones will require components worth $80 billion (Rs 5.2 lakh crore). These will have to be imported if they are not produced locally. The report estimates that in 2016, about 50 local units assembled over 180 million mobile phones valued at $9 billion (about Rs 59,000 crore), about 70 per cent of the $13 billion sold. However, the local value addition was only $650 million (Rs 4,225 crore, or 7.2 per cent). This underscores an urgent need for policy changes, considering that emerging manufacturers in these sectors such as  Brazil and Vietnam have value added of nearly 20 per cent and over 30 per cent, respectively, while champions such as South Korea and Taiwan add above 50 per cent, and China has 70 per cent local value added.

In early 2016, India’s domestic smartphones had a 40 per cent market share, but by the quarter ending March 2017, Chinese brands dominated, with a share of over 51 per cent, while local brands dropped to under 14 per cent.[2]

According to the IIM-B/CounterPoint Researchers report, Indian manufacturers import most of their components, and there are few incentives for R&D or to attract component suppliers to form local ecosystems. Further, the existing incentives will become ineffective once the goods and services tax (GST) is introduced, because they will all be subsumed under GST. Accordingly, the Broadband India Forum in association with EY have suggested (a) refunding the GST to manufacturers for handsets and (b) extending this policy to components could provide an appropriate manufacturing incentive.[3] This needs to be done without delay.[4]

The report also proposes a phased approach to maximise local value added, aiming for 30 per cent by 2020, and more thereafter. Early phases suggested are moving from assembling chargers and other such accessories to high-value components such as printed circuit boards, cameras and display units. The researchers suggest that chargers, batteries and cameras can in fact be manufactured locally, contributing to components valued at an estimated $15 billion by 2020. If these proposals are adopted and executed, it will reduce imports and create jobs, deriving local benefits from India’s market opportunities. Moreover, it will help create an R&D capability in India for this sector, which can over time become a supplier to global markets.

The prerequisite for these improvements is policy reforms on matters such as duties on components (including the refund of GST) and incentives for suppliers to set up in India. The report also suggests that policies need to be framed for effectively funding institutions and corporations for research to build intellectual property and skilled professionals.

Extending Digital Infrastructure & Utilisation

There is a parallel need for policies supporting the extension and coverage of digital platforms, of the sort achieved in migrating from up-front auction fees to revenue sharing with the New Telecom Policy in 1999 (NTP-99). These require convergent action within the government and its multifarious departments and agencies, or in some cases by coordination and resolution among stakeholders, i.e., in addition to the agencies of government, the judiciary, the operators and vendors of equipment, the press and media, and the public.

There are some issues that relate to the Telecom Regulatory Authority of India’s (Trai) recommendations over the years that need decisions on implementation. An example is access to broadband services through cable networks. The government’s position on additional charges as a share of revenues conflicts with cable operators’ unwillingness to pay additional charges, and perhaps the cost of the devices for conversion. The effect of this deadlock is that the entire set of cable network users have to use another means for broadband connectivity. As this policy change will affect the competitive dynamics of wireless service providers, it is a candidate for coordinated, participative resolution. Some Trai recommendations may benefit from review, such as open access (like Wi-Fi) on 60 GHz.

Other examples are:

• Enabling additional bands of unused spectrum such as 60 GHz and 70/80 GHz for wireless gigabit links, and

• Enabling the sharing of entire networks, including the radio access network (and therefore spectrum) among operators.

The promise of digital platforms is immense, and both these streams of reforms need to be taken up and completed for India’s digital platforms and markets to deliver on their considerable potential.

[1]. “Mobile Phone Manufacturing: A Practical Phased Approach,” by Pathak, Chatterjee and Shah: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2874689

[2]. http://www.idc.com/getdoc.jsp?containerId=prAP42557317

[3]. http://www.communicationstoday.co.in/index.php/daily-news/6710-broadband-india-forum-with-ey-releases-the-research-paper-on-incentivizing-domestic-handset-manfacturing-under-gst Added after publication - June 6, 2017

[4]. For a detailed exposition of the GST question and why raising customs duties on imported equipment/components is not feasible because of the terms of the Information Technology Agreement 1997 under the WTO, see: https://www.linkedin.com/pulse/incentivising-manufacturing-mobile-phones-india-parag-kar

The article published in the Business Standard on May 3, 2017 was also mirrored on Organizing India Blogspot on May 4, 2017.

Probably because of (a) India’s market size and (b) growth, despite all its inconsistencies and difficulties. Are higher price-earnings multiples desirable? Yes if they are sustained, because more capital is available for equivalent productivity; otherwise, no. The question is whether policies can be better framed to harness the market potential.

India’s large market with its headroom for prosperity seems propelled partly by its own momentum, and its stocks partly by liquidity. The net investment in mutual funds in 2016-17 of Rs 3.43 lakh crore was reportedly double the previous year, the highest in the last decade. Domestic investment in pure equity funds in the last two years exceeded foreign portfolio investment (FPI), because of lower FPI and higher domestic investment. Retail investors grew in the last three years from 28.6 million to 39.3 million.  Other positive factors were a government with a strong mandate and falling oil prices.

Now, reasonable earnings from some large companies and rising global markets augur well, although earnings must improve broadly and a number of caveats remain. These relate to non-performing assets/loans (NPAs/NPLs), structural problems in sectors such as iron and steel, construction, power, telecom, transport, agriculture, continuing deficiencies in infrastructure and institutions, and in productivity. There are social pressures from divisive electioneering, a disturbing rise of exclusionary tendencies echoed globally, and government overreach. There are also self-induced crises because of inappropriate policies, as in telecom, unviable situations created by populism, or by judicial orders, as seen in telecom, coal and power. There could also be failure to improve productivity (by a third to 9 per cent, as during the growth years), or adverse external developments.  

The room for improvement is epitomised by low per capita productivity. According to Bloomberg, the International Labour Organization’s output per worker for India in 2017 is 20 times lower than for Germany. Yet, expectations run high for India in reports from sources such as Euromonitor, the International Monetary Fund, London’s Centre for Economic and Business Research (CEBR), and PricewaterhouseCoopers (PwC). Euromonitor predicts India’s consumer market will be the third largest by 2030, ahead of Japan and Germany. Growth will be for products such as smartphones, automobiles, and durables such as  TV sets, refrigerators and air conditioners. For instance, India is the third largest market for smartphones after China and the US. In automobiles, India is the fifth largest market with over 3.3 million cars sold in 2016 and continues to attract global manufacturers.  

However, Euromonitor cautions against rising inequality with the Gini index rising from 39.9 per cent  in 2011 to 41.6 per cent in 2016   and estimated at 43.4 per cent by 2030. The CEBR estimates that by 2028, India’s gross domestic product will be the third largest after China and the US. PwC forecasts that in 2050, India will be the second largest economy (in purchasing power parity) after China, the US being third and Indonesia fourth, with a caveat: “Emerging economies need to enhance their institutions and their infrastructure significantly if they are to realise their long-term growth potential.”

Can our policies better contribute to realising this market potential? Consider the options. One approach is open exploitation, unmindful of whether the ownership and distribution of profits is domestic or foreign. Prices are determined solely by supply and demand, without government regulation or any other authority. Another extreme is that the government decides everything, which has been seen to fail. A third option is a mix, with open-market principles in areas that can sustain them, such as in consumer goods, tempered with appropriate regulation, e.g., against harmful substances. Ideally, policies should be for the long-term common good with sustainable levels of equitable access. Regulation is essential where network economics apply with few players, as in electricity and communications. Our mix is not ideal because realpolitik and populism overwhelm the need for deep understanding followed by the objective and convergent deliberation needed to frame beneficial policies (through sound institutions, also lacking).

Our policies are often indifferent to where ownership lies, and sometimes, this is a problem. For example, heavy industries or electronics majors abroad often have government backing. Indian enterprises start with a disadvantage, because of restricted access to capital, and at higher cost. Another aspect is when the ownership of major local corporates with privileged access to markets changes to being majority foreign-owned, because the profits are sent abroad. Yet another is that we do not have ecosystems for manufacturing start-ups through commercialisation and scaling up, in terms of financing, production and procurement. Attention seems confined to early-stage start-ups or to small-and-medium enterprises, with no ecosystem to see them through to establishing scale, comparable, for instance, to the building up of Huawei through consistent procurement.

Our greatest deficiency, however, remains lack of good infrastructure. Correcting this requires a long view, capital, slow payback and long lead times for results, usually beyond election cycles. Easily sidelined for populist measures for immediate gains, this area needs concerted, bipartisan, societal convergence. A case in point is telecom and broadband, where spectrum auctions loom again, even as operators struggle with low revenues and high debt from previous auctions. Another is the recent Supreme Court ruling against compensatory tariffs for two ultra-mega power projects at Mundra, of 4,000 Megawatt (Mw) (Tata) and 4,620 Mw (Adani), based on whether a “change in law” applies only to Indian laws. If the tariffs were upheld, five buyer states would get a lower than average price paid, substantially below the current market price. If these projects become unviable, they will add to the deadweight of NPAs. The banks they owe will also suffer, and there will be the opportunity cost of benefits foregone from the lower-priced electricity.

There may be a case for prioritising infrastructure, beginning with defining our objectives and then framing policies to achieve them. For power projects, it’s reasonably priced electricity; for telecom, it’s reasonably priced services. Until these are made possible through appropriate policies, there’s little likelihood of realising our full potential.

The article published in the Business Standard on March 1, 2017 was mirrored on Organizing India Blogspot on March 2, 2017.

The irony is that this inflection point comes when there’s been much ballyhooing about a vigorous push for Digital India, whereas the reality in telecommunications is that conditions are more difficult, with easy markets saturated and average revenues per user dropping, while the need for capital expenditure is higher.

The organisational issues are of a broad social and political nature: (a) An uncoordinated, disunited way of functioning, including our approach to infrastructure in general, and broadband and communications in particular, (b) a divisive political process that rewards opportunistic disunity while discouraging unity, (c) a demoralised and disgruntled administration and technocracy, resulting in an erosion in the standing of civil servants, technocrats and other professionals, made worse by attempts to manage by coercion.  It is best to acknowledge and accept these as problems to be overcome, instead of being in denial. Consider these in more detail to appreciate the nature of what we’re up against.

Government departments in India have functioned in silos barring rare exceptions, without an active work culture and processes for coordination and convergence. While central and state government procedures enable the Cabinet secretary and chief secretaries of states as heads of administration to exercise interdepartmental coordination, ministries and departments have tended to be turf-conscious and maintain an inward focus, either consciously or by default. Episodic instances at coordination have been the exception. Yet, what is often essential for practical solutions to complex interdepartmental issues is a collaborative approach.

Consider the example of spectrum, of which every country has the same amount: The relative shortage for commercial use in India as shown in the table below, and the multiple agencies that need to coordinate and converge on spectrum policies.

https://www.brookings.edu/wp-content/uploads/2016/06/Spectrum-Policy-in-India8515.pdf

The Telecom Regulatory Authority of India is responsible for recommending spectrum use; the Wireless Planning and Coordination Wing in the Department of Telecommunications, the Ministry of Communications, is responsible for spectrum allocation and licensing; and agencies such as Doordarshan under the Ministry of Information and Broadcasting, the Indian Space Research Organisation in the Department of Space, and the Ministry of Defence, are assigned certain bands of spectrum.  Finally, the Ministry of Finance is responsible for all government levies and collections. The turf issues are such that they need the active intervention of the Prime Minister for resolution.

There is also an irrational yet widely held opinion that aligns with an interpretation of the Supreme Court (SC) verdict on the 2G scam, that is viewed as favouring auctions and maximising upfront government revenues. Whereas the judgment allows government to formulate other policies and act on them, and despite the detrimental effect of auctions on services, and that the consequences are not in the public interest.

For beneficial policies, the constituents have to analyse and understand the causes of the problems and possible mitigating steps, to converge on policies in the public interest. Too much to hope for?  Perhaps, yet this is only one aspect of a multidimensional requirement.

Another major aspect is that our political processes  favour dissonance and disintegration over order and convergence. It pays to create factions, run down the opposition — in this age of crassness, the more viciously the better — and to control the swing vote to opportunistic self-interest.  The way our political systems are structured, divisive and disruptive tactics that exploit populism are easier and more effective than building consensus, because funding is more easily available to breakaway politicians serving factional interests, than to those trying to work together seeking common ground.  This highlights the problem of political funding, and the need to rationalise this to align with societal benefits, instead of as it is currently, to society’s detriment.

A third prerequisite for developing constructive solutions is the need to promote professionalism and merit, and to remedy the absence of it across the board.  Instead, there’s a prevalence of feudal approaches, cliques and attempts at browbeating and strong-arming people.  This makes it difficult for administrators and professionals to make objective analyses and recommendations, especially where change is required.  It is a lot easier to just go along with customary practices, however deficient.  A clear example is the auctioning of public resources, compared with the straightforward acceptance of the need to build revenue-generation capacity in enterprises (through allocations that are fair and transparent), before attempting to collect taxes or levy government charges. Often, auctions are patently inferior to other alternatives to ensure transparency, such as production- and revenue-sharing, as has been proven in the instance of telecom licences.  These have yielded nearly 10 times the auction revenues foregone, perhaps highlighting that government’s “take” is too high. The SC upheld the principle negating auctions in its ruling on the Presidential reference in 2012 on mining franchises.  However, because auctions are expedient, we indulge in them. It is instructive to review the SC judgment, excerpts of which follow: “...there can be no doubt about the conclusion recorded in the 'main opinion' that auction which is just one of the several price recovery mechanisms, cannot be held to be the only constitutionally recognised method for alienation of natural resources…”

“Each bit of natural resource expended must bring back a reciprocal consideration. The consideration may be in the nature of earning revenue or may be to ‘best subserve the common good’” (http://www.supremecourtofindia.nic.in/outtoday/op27092012.pdf).

Politicians and administrators construe this to mean that it is safer to resort to auctions, ignoring the fact that in the case of spectrum, the resource is not expended because it is reusable, and there’s no excuse for not subserving the common good.

The article was published in the Business Standard on January 31, 2017 and reproduced on Organizing India Blogspot on February 1, 2017.

Most people believe an optical fibre cable (OFC) connection is necessary for broadband. While largely true, this is often financially viable only in urban agglomerations. What is less known is that trading companies use wireless links between New York and Chicago for high-speed electronic trades.[1] For people outside urban clusters, wireless is a less expensive alternative to fibre. They get only a few megabits per second, but realistically, ubiquitous broadband at 2 Mbps would be great.

Three factors are driving internet access and usage in India. An overriding factor is the growth of wireless devices and traffic as a global phenomenon. Cisco estimated in June 2016 that in 2015, wired access comprised 52 per cent of IP traffic, but would reduce to one-third by 2020, while wireless access would increase to two-thirds. This trend is reinforced by another factor: Innovation that lowers costs and improves performance in mobile wireless (Chart 1).

Chart 1: Mobile Innovation Lowers Costs and Improves Performance

Sources: Cisco Visual Networking Index; International Telecommunication Union; IE Market Research; Motorola, Deutsche Bank; Qualcomm
Note: Data speed indicated the maximum downlink speed, not average observed speeds. The average observed speeds depend on many factors, including infra, subscriber density and device harware and software

The third factor is the combination of the geographic spread of our population, the concentration of broadband penetration (Chart 2), and the limited coverage of OFC networks. While major cities and their connecting links are covered by OFC, less populated and less commercially attractive areas between them are not.  In hilly terrain, there is considerable difficulty in laying OFC, which extends far beyond cost.  In urban areas, cost can be a deterrent because we lack reasonable, uniform charges for rights-of-way. Such procedures and practices are difficult to institute and enforce, but are essential for robust, viable OFC networks.

Chart 2: Broadband Penetration

Source:  http://www.thehindu.com/sci-tech/technology/internet/The-India-wide-web/article14588938.ece

It's not only the installation of the OFC, but of ensuring quality and reliability. OFC networks in India apparently suffer from 12 to 14 cuts per km per month, whereas the international benchmark is 0.7 cuts per km km per month. Apart from more frequent repairs, the capital expenditure in India is nearly three times as high as in Australia or the US.[2]

Estimates for installing OFC using standard procedures vary from about Rs 1 lakh to Rs 4 lakh per km. However, there have been attempts at getting costs down by radical changes in approach. For example, Andhra Pradesh considered an OFC installation of 22,500 km estimated Rs 4,700 crore. By stringing fibre overhead along electric cables, however, the estimate was cut to Rs 333 crore, reducing costs from Rs 21 lakh to under Rs 1.5 lakh per km. It remains to be seen how this network will perform in terms of quality and reliability. Also, wireless technology is needed to extend connectivity from the fibre to villages, and cellular network costs rise with less bandwidth. For instance, one estimate is that excluding spectrum costs, a network using 5 MHz costs nearly 70 percent more than using 20 MHz.

For all these reasons, we need concerted action to redesign our approach to broadband, covering the fundamentals of infrastructure, spectrum and market design.  The exponential growth in mobile services has reached a plateau, and is complicated by the taint of the 2G spectrum scams. This has resulted in a mindset combining witch-hunting and paranoia in the press, the public, government departments, and the judiciary. This is not conducive for the coordinated, collective strategy and action that is required to extricate ourselves. Several proven wireless technologies are not permitted in India, although the Telecom Regulatory Authority of India has recommended their use. Methods to increase connectivity like those listed below are urgently needed, with requisite environmental safeguards such as the use of renewable energy.

• 60 GHz (V band) wireless gigabit for short-haul;
  
• 70 and 80 GHz (E band) for multi-gigabit backhaul up to 5 km;
• TV White Space for the middle mile from the fibre to users in villages up to 8-10 km away in a single hop;

Additional steps, e.g.:

• Increasing unlicensed spectrum in the 5.8 GHz band from 50 MHz to 80 MHz to enable 866 Mbps per channel, or more for gigabit capacity;

• Enabling secondary sharing of spectrum bands such as TV White Space, which has the possibility of existing Indian IPR establishing domestic manufacturing and dominating this niche;

It is evident that despite intense efforts by the people involved, our existing approach is simply not getting us to where we need to be. This has been repeated by government and private sector representatives many times. There’s no substitute for developing a sound approach, collectively and participatively, with professional facilitation, cutting across government, industry (operators and equipment providers), users, and the judiciary, to devise whatever solutions will deliver better results.  We have to move away from adversarial deadlock.

A good way to begin is by accepting facts, and considering the evidence before dismissing points of view. For licensing, we know that government collections from revenue sharing far exceed the auction fees foregone (“Breakthroughs Needed for Digital India”). We have the experience of building other infrastructure such as roads and airports on revenue-sharing principles.  We have to take a similar systematic, phased approach to designing and implementing broadband networks. Policies on infrastructure resource use including spectrum need to be rationalised, and the sector organised through participative path-finding and problem solving.  We have to build national champions in manufacturing to keep costs affordable, for instance, using TV White Space. India could set the standard with its IPR and products where OFC is infeasible or unviable for connectivity to villages and rural clusters. Both the administrative and political leadership need to do this, working with all stakeholders, and not treating any of them as adversaries, or cronies.

[1]. ‘Information Transmission between Financial Markets in Chicago and New York’,  Gregory Laughlin, Anthony Aguirre, and Joseph Grundfest, Cornell University Library, arXiv.org

[2]. Conference presentation, Sterlite, http://www.trai.gov.in/sites/default/files/Sterlite-Badri.pdf

The article was published by Business Standard on January 4, 2017 and mirrored in Organizing India Blogspot on January 5, 2017.

Cashless transactions need ubiquitous connectivity, which we don’t have. Without it, the goal is simply unfeasible. Better to recognise this now, rather than act out elaborate charades, resulting in avoidable economic hardship and social ructions. Connectivity needs effective, efficient communication links at a reasonable cost. These call for realistic objectives and solid implementation, not bluster and unrealistic goals or plans, such as fibre-optic networks everywhere, payment systems on a hastily assembled database riddled with imposters, or insufficient security and privacy.

What is required?

The need is for internet connectivity using fibre backbones, extending to users through aggregation networks that are mostly wireless. The chances of establishing these networks increase if political parties and government agencies take concerted action on how to do so. This is necessary for two reasons. One is that our present network development and spectrum policies do not facilitate achieving universal broadband, especially in areas with lower commercial potential than prosperous urban clusters. The second is the legacy of network development with entrenched rivalries and perceived ways of managing spectrum, and the aftermath of the spectrum scam.  These constrain society’s collective ability to configure solutions for connectivity, as opposed to the biased or limited perceptions of stakeholder groups such as the government, the judiciary, the citizenry, and industry (comprising service providers and equipment suppliers). Government agencies also have divergent agenda, e.g., the Telecom Regulatory Authority of India (Trai) is responsible for recommending spectrum use, the Department of Telecommunications/Ministry of Communications has licensing authority and runs the state-owned operators, the Ministry of Information and Broadcasting holds certain spectrum bands, the Ministry of Defence and government agencies hold other bands, and the Ministry of Electronics and Information Technology is responsible (without the authority) for providing broadband. Hence, the need for a convergent approach, as effected partially for electricity supply, from coal mining through transportation to distribution (although other sectors – hydel, hydrocarbons and nuclear – are yet to be similarly linked).

What needs doing

Radical changes such as pooling and sharing network infrastructure have to be considered for widespread connectivity. Such changes can’t happen with confrontation and mistrust, but only with trust and cooperation. This may seem naïve, but the ruling party leadership sets the tone for cooperation, as does the administrative leadership. Their pitch has to be sufficiently persuasive to induce diverse stakeholders – other political leaders, the judiciary, the citizenry who want industry to pay their pound of flesh while getting good services that are priced very low, and the operators, who have huge investments in networks and spectrum rights – to consider sharing equipment, and to work out worthwhile terms for everyone.

Currently, contending political parties pursuing selfish objectives as antagonists settle at the lowest achievable equilibrium. To understand why, consider two parties, A and B, with objectives along the horizontal X axis for A and the vertical Y axis for B in the chart.

When parties pursue conflicting interests confrontationally, they end up at N or Nash Equilibrium, where neither can improve their position without the other’s concurrence.  Assume A has the objective of maximising a majoritarian agenda, while B seeks to maximise dynastic control of its leadership positions. This holds for any objectives that are unrelated (orthogonal). If their objectives are along the same dimension — say, control of the Centre or of the same states, there can be no accommodation: one wins what the other loses. This has happened so far, as parties are periodically voted in and then out by a disenchanted electorate. But if they accommodate, their equilibrium could move up to S, the “Best Feasible Equilibrium” point, where the acceptable limits of their respective objectives meet. (For more details, see: “Tata’s Corus Buy: A Game Theory Analysis”, organizing-india.blogspot.in, November 2, 2006, and "India’s Access To Nuclear Fuel & Technology", April 3, 2008.)

Imagine waking up to find that instead of the usual confrontation and vitriol, a different and gracious protocol awaits you. One of harmonious interaction marked by accommodation and courtesy, despite nature being red in tooth and claw. Utopian?  Perhaps. But not if the powers that be realise that the way out of the cashless crisis is to seek benefits for everyone, instead of self-destructing by chasing chimera such as pure cashlessness or other unrealistic goals.  Instead, they could give people what they need but don’t have: ubiquitous communications  infrastructure that facilitates all activities (not just cashless transactions), and a more secure, well-ordered environment for pursuing their livelihoods and well-being. Policy decisions to share network infrastructure would be the start of this journey.

We can then break out of the impasse created by legacy communications policies and posturing, e.g., which party was responsible for what scam, the popular obsession with high auction prices for spectrum while wanting cheaper services, and operators committed to cornering spectrum.

Once the leadership collaborates, they’ll find that communications services delivery will be much improved by sharing capacity and coordination. This would enable other stakeholders – private sector operators, the citizenry, the judiciary – to accept that everyone gains from cooperative access to and delivery of communications services, provided adequate profits are generated and shared equitably. This will help in accepting a more rational, pay-for-use policy on the lines of highways, metro rail, or oil pipeline usage, and recognise the financial infeasibility of having auctions as well as funds for investments in networks for countrywide broadband access.

Government and stakeholders can then work together to develop solutions that are fair and practical. For instance, one or more consortium/s of operators with the government as a co-investor in each (on the lines of Singapore’s OpenNet) can co-own the network and coordinate for most effective and efficient service delivery.  Earnings from spectrum usage can be collected by the government once the networks are commercially viable, as for developing any other infrastructure. Such collections are likely to exceed the auction fees foregone, as with revenue sharing from licence fees.

The comments were authored by Japreet Grewal, Pranesh Prakash, Sharath Chandra, Sumandro Chattapadhyay, Sunil Abraham, and Udbhav Tiwari, with expert comments from Amelia Andersdotter.

1. Preliminary

1.1. This submission presents responses by the Centre for Internet and Society (“CIS”) [1] on the Consultation Note on Model for Nation-wide Interoperable and Scalable Public Wi-Fi Networks (“the Note”) published by the Telecom Regulatory Authority of India (“TRAI”) on November 15, 2016 [2].

1.2. The CIS welcomes the effort undertaken by TRAI to map regulatory and other barriers to deployment of public Wi-Fi in India. We especially appreciate that TRAI has recognised [3] two key barriers to provision of public Wi-Fi networks identified and highlighted in our earlier response to the Consultation Paper on Proliferation of Broadband through Public Wi­Fi [4]: 1) over regulation (including, licensing requirements, data retention, and Know Your Customer policy), and 2) paucity of spectrum [5].

2. General Responses

2.1. Before responding to the specific questions posed by the Note, we would like to make the following observations.

2.2. There is no need of a solution for non-existing interoperability problem for authentication and payment services for accessing public Wi-Fi networks. The proposed solution in this Note only adds to over-regulation in this sector. The proposed solution does not incentivise new investment in the sector, but only establishes UIDAI and NPCI as the monopoly service providers for authentication and payment services.

2.3. As the TRAI has consulted widely with industry and other stakeholders before it settled on the list of priority issues contained in Section C.6 of the Note, we are surprised to find that this Note aims to address only the problem of lack of “seamless interoperable payment system for Wi-Fi networks” (Section C.6.d. Of the Note), and does not discuss and propose solutions for any other key barriers identified by the Note.

2.4. The Note fails to clarify the “interoperability” problem in the payment system for usage of public Wi-Fi networks that it is attempting to solve. The Note identifies that lack of “single standard” for “authentication and payment mechanisms” for accessing public Wi-Fi networks as a key impediment to provide scalable and interoperable public Wi-Fi networks across the country [6]. By conceptualising the problem in this manner, TRAI has bundled together two completely different concerns - authentication and payment - into one and this is at the root of the problems emanating from the proposed solution in this Note.

2.5. Lack of standard process for authentication is created by over-regulation via Know Your Customer (“KYC”) policies, and selection of eKYC service provided by UIDAI as the only acceptable authentication mechanism for all users of public Wi-Fi networks across India, creating further economic and legal challenges for smaller would-be providers of public Wi-Fi networks as they assess their liabilities and start-up costs. Additionally, since this would amount to making UID/Aadhaar enrolment mandatory for any user of public wi-fi networks, it seems to create a contradiction with previously communicated policy from the UIDAI and the Government that no such obligation should arise. Supreme Court has also mandated over successive Orders that enrolment for UID/Aadhaar number should remain optional for the citizens and residents.

2.6. As was observed by the respondents to the TRAI Consultation concluded earlier this year, there is no interoperability problem that needs to be solved regarding payments for accessing public Wi-Fi networks. Payment services continue to be evolved and payment aggregator services provided by existing companies may be expected to resolve many of the outstanding issues of service proliferation in the upcoming years, at least in the absence of additional mandatory technical measures imposed by the government. Bundling of payment with authentication will only undermine the already existing independent market for payment aggregators, and further enforce mandatoriness of UID/Aadhaar number.

2.7. Further, the payment mechanism proposed would seem to worsen difficulties for tourists and foreigners in accessing public Wi-Fi in India, as well adds an additional layer of authentication in a system already identified (even in the Note itself) to be overburdened by regulations regarding KYC and data retention. Section C.6.b of the Note highlights the problems faced by foreigners and tourists when the authentication mechanism is premised upon use of One Time Password (OTP) that requires a functioning local mobile phone number. It contradicts itself later by proposing an authentication method that requires the user to not only download an application onto their mobile/desktop device, but also to enrol for UID/Aadhaar number and/or to use their existing UID/Aadhaar number. Instead of reducing the existing barriers to provision of and access to public Wi-Fi, which the Note is supposed to achieve, it creates significant new barriers.

2.8. The technological architecture advanced by the Note upholds support of governance and surveillance projects that, in addition to being costly in their implementation and thereby slowing down the objective of getting India connected, are also of questionable value to the security of the Indian polity. UID, UPI, and related projects risk undermining cyber-security through their reliance on centralised architectures and interfere with healthy competitive market dynamics between commercial and non-commercial actors.

2.9. The Note continues to only consider and enable commercial models for the provision of public Wi-Fi networks. We have identified this as a problematic assumption in our last submission [7]. It is most crucial that TRAI does not ignore and fail to promote and facilitate the possibility of not-for-profit models that involve grassroot communities, academia, and civil society.

2.10. Last but not the least, the term “Wi-Fi” refers to a particular technology for establishing wireless local area networks. Further, the term is a trademark of the Wi-Fi Alliance [8]. It is this not a neutral term, and it must not be used as a general and universal synonym for wireless local area networks. We recommend that TRAI may consider using a technology-neutral term, say “public wireless services” or “public networking services”, to describe the sector. Following the terminology used in the Note, we have decided to continue using the term “Wi-Fi” in this response. This does not reflect our agreement about the appropriateness of this term. Important: The recommendation for technology-neutral regulation also comes with the qualification that safeguards like regulations on Listen Before Talk and Cycle Time are required to prevent technologies like LTE-U from squatting on spectrum and interfering with connections based on other standards.

3. Specific Responses

Q1. Is the architecture suggested in the consultation note for creating unified authentication and payment infrastructure will enable nationwide standard for authentication and payment interoperability?

3.1. No. The proposed infrastructure is likely to be costly for a large number of actors to implement and undermine some of the ongoing innovation in the Indian digital payment services industry. Rather than being helpful, it risks introducing additional requirements on an industry that TRAI has already identified as facing a number of large challenges.

3.2. There is no need for a unified architecture that provides nationwide standard for authentication and payment interoperability. It does not offer any incentive towards provision of public Wi-Fi networks. Neither is there an interoperability problem at the physical or data link layers that has been pointed out, nor is government mandated interoperability required at the payment or ID layer since there are private entities that provide such interoperability (like, payment aggregators). Additionally, we believe it is inappropriate that the TRAI is trying to predict the most suitable business/technological model for digital payments to be used for accessing commercial Wi-Fi networks. India has a booming online payments industry, and it must be allowed to evolve in an enabling regulatory environment that allow for competition and ensures responsible practices.

3.3. The Note identifies several structural impediments to expansion of public Wi-Fi networks in India, namely paucity of backhaul connectivity infrastructure (Section C.6.a), Inadequate associated infrastructure to offer carrier grade Wi-Fi network (Section C.6.c), dependency of authentication mechanism on pre-existing (Indian) mobile phone connection (Section C.6.b), and limited availability of spectrum to be used for public Wi-Fi networks (Section C.6.e). All these are crucial concerns and none of them have been addressed by the architecture suggested in the Note.

Q2. Would you like to suggest any alternate model?

3.4. Yes. The model proposed in the Note is likely to exclude several types of potential users (say, foreigners and tourists), and impose a single authentication and payment service provider for accessing public Wi-Fi networks, which may undermine both competition and security in the market for these services.

3.5. Internationally, there are cities and regions (say, the city of Barcelona and the Catalonia region in Spain) where public Wi-Fi networks have been provided in a pervasive and efficient manner by taking a light regulatory approach that enables opportunities for potential providers to set up their own infrastructures and additionally have access to backhaul. Further, reducing legal requirements on authentication should be considered in place of government mandated technical architectures for authentication and payment. In particular, allowing for anonymous access to Public Wi-Fi or wireless connectivity would reduce both the administrative and the technical burden on potential providers at the hyper-local level, especially for providers whose main activity it is not, and cannot be, to provide internet services (say, event venues, malls, and shops).

3.6. The CIS suggests the following steps towards conceptualising an “alternative model”:

1. remove existing regulatory disincentives,
   
   
2. urgently explore policies to promote deployment of wired infrastructures in general, and to enable a larger range of actors, including local authorities, to invest in and deploy local infrastructures by reducing licensing requirements in particular,
   
   
3. examine spectrum requirements for provision of public Wi-Fi, and
   
   
4. provide incentives, such as allowing telecom service providers to share backhaul traffic over public Wi-Fi, and ways for telecom service providers to lower their costs if they also make Internet access available for free.

Q3. Can Public Wi-Fi access providers resell capacity and bandwidth to retail users? Is “light touch regulation” using methods such as “registration” instead of “licensing” preferred for them?

3.7. CIS holds that capacity and bandwidth are neither comparable to tangible goods nor to digital currency. They are a utility, and the provider of the utility has to accept that their customers use the utility in the way they see fit, even if that use entails sharing said capacity and bandwidth with downstream private persons or customers. Wi-Fi capabilities are currently a built-in standardised feature of all consumer routers. Any individual, community, or store with access to an internet connection and a consumer router could become a public Wi-Fi access provider at no additional cost to themselves, furthering the goals of the Indian government in its Digital India strategy to ensure public and universal access to the internet.

3.8. In order to exploit the opportunities awarded by a large amount of entities in the Indian society potentially becoming Public Wi-Fi providers, TRAI should require neither registration nor licensing of these actors. Imposing administrative burdens on potential public Wi-Fi access providers creates legal uncertainty and will cause a lot of actors, who may otherwise contribute to the goals of Digital India, not to do so. This is particularly true for community organisers and citizens, who may not have access to legal assistance and therefore may avoid contributing to the goals of the government.

3.9. Light touch regulation when it comes to both granting license to public Wi-Fi access providers as well as authentication of retail users, however, are needed not only as an exceptional practice for such instances but as a general practice in case of entities offering public Wi-Fi services, either commercially or otherwise. Further, additional laxity in administrative responsibilities is needed to incentivise provision of free, that is non-commercial, public Wi-Fi networks.

Q4. What should be the regulatory guidelines on “unbundling” Wi-Fi at access and backhaul level?

3.10. The Note refers to unbundling of activities related to provision of Wi-Fi but it does not define the term. It is neither explained which specific activities at access and backhaul levels must be considered for unbundling.

3.11. While unbundling should clearly be allowed and any regulatory hurdles to unbundling should be removed, any such decision must be taken with a focus on urgently addressing the stagnated growth in landline and backhaul, as identified in Section C.6.a of the Note. Relying only on spectrum intensive infrastructures, such as mobile base stations, for providing connectivity, creates a heavy regulatory burden for the TRAI, while simultaneously not ensuring optimal connectivity for business and private users. The CIS is concerned that the focus of the Note on standardising a government-mediated authentication and payment mechanism detracts attention from this urgent obstacle to the fulfillment of the Digital India plans of accelerated provision of broadband highways, universal access, and public, especially free, access to internet services.

3.12. From the example of European telecommunications legislations, implementation of policy measures to ensure that vertical integration between infrastructure (say, cables, switches, and hubs) providers and service (say, providing a subscriber with a household modem or a SIM card) providers in the telecommunications sector does not become a barrier to new market entrants has yielded much success in countries that have pursued it, like Sweden and Great Britain.

3.13. Further, there should be no default assumption of bundling by the TRAI. In particular, the TRAI should consider reviewing all regulations that may cause bundling to occur when this is not necessary, and put in place in a monitoring mechanism for ensuring that bundled practises (especially in electronic networks, base station infrastructures, backhaul and similar) do not cause competitive problems or raise market entry barriers [9]. In most EU countries, especially where the corporate structure of incumbent(s) is not highly vertically integrated, interconnection requirements for electronic network providers of wired networks in the backhaul or backbone (effectively price regulated interconnection), and a conscious effort to ensure that new market players can enter the field, have ensured a competitive telecommunications environment. TRAI may consider reviewing the European regulation on local loop unbundling (1999) and discussions on functional separation (especially by the British regulatory authority Ofcom), within an Indian context.

Q5. Whether reselling of bandwidth should be allowed to venue owners such as shop keepers through Wi-Fi at premise? In such a scenario please suggest the mechanism for security compliance.

3.14. Yes. Venue owners should be allowed to provide public Wi-Fi service both on a commercial and non-commercial basis.

3.15. It is not clear from the Note and the question what type of security concerns the TRAI is seeking to address. In terms of payment security, the payment industry already has a large range of verification and testing mechanisms. The CIS objects to the mandatory introduction of the proposed payment system so as to ensure greater security for Wi-Fi access providers and the users.

3.16. As far as hardware-related security issues are concerned, it is again unclear why consumer equipment compliant with existing Wi-Fi standards would not be sufficiently secure in the Indian context. Wi-Fi has proven to be a sturdy technical standard, its adoption is high in multiple jurisdictions around the world, and it also enjoys great technical stability. Similar security assessments could easily be made for alternative wireless technologies, such as WiMaX.

3.17. The CIS foresees problems is in the allocation of risk and liability by law. The already existing legal obligation to verify the identity of each user, for instance, is likely to introduce a large administrative burden on potential Public Wi-Fi providers, which may lead to such potential providers abstaining from entering the market. Should the identification requirement be removed, however, other concerns pertaining to legal obligations may arise. These include liability for user activities on the web or on the internet (cf. copyright infringement, libel, hate speech). We propose a “safe harbour” mechanism in these cases, limiting the liability of the potential public Wi-Fi provider.

Q6. What should be the guidelines regarding sharing of costs and revenue across all entities in the public Wi-Fi value chain? Is regulatory intervention required or it should be left to forbearance and individual contracting?

3.18. The market segments identified by the TRAI in Section F.18 of the Note should normally all be competitive markets themselves, and so do not require regulatory assistance in sharing of costs and revenues. The more elaborate the requirements imposed on each actor of each market segment identified by the TRAI in Section F.18, the more costly the roll-out of public Wi-Fi is going to be for the market actors. Such a cost is not avoided by price regulation.

3.19. The TRAI may instead consider introducing public funding for backhaul roll-out in remote areas, where the market is unlikely to engage in such roll-out on its own. Presently, some Indian states (such as Karnataka) are committing to public funding for wireless access in remote areas. The Union Government can assist such endeavours.

Endnotes

[1] See: http://cis-india.org/.

[2] See: http://trai.gov.in/Content/ConDis/20801_0.aspx.

[3] See Section C.6 of the Note.

[4] See: http://trai.gov.in/Content/ConDis/20782_0.aspx.

[5] See: http://cis-india.org/telecom/blog/cis-submission-to-trai-consultation-on-proliferation-of-broadband-through-public-wifi-networks.

[6] See Section E.11. of the Note.

[7] See: http://cis-india.org/telecom/blog/cis-submission-to-trai-consultation-on-proliferation-of-broadband-through-public-wifi-networks.

[8] See: https://www.wi-fi.org/.

[9] See: Monitoring bundled products in the telecommunications sector is also recommended by the OECD: http://oecdinsights.org/2015/06/22/triple-and-quadruple-play-bundles-of-communication-services-towards-all-in-one-packages/.

The article originally published in the Business Standard on October 5, 2016 was mirrored in Organizing India Blogspot on October 9, 2016.

In March 2010 before the auction, the capitalisation was Rs 1.84 lakh crore; in March 2016, it was Rs 1.71 lakh crore, with the BSE Sensex up nearly 60 per cent. A larger share of earnings has gone to government rather than shareholders, and also to banks as interest (Rs 2.08 lakh crore). The irony is that no operator has bid so far for the most useful spectrum bands on auction, 700 and 900 MHz. Uncertainties abound, and there are several questions.

Reliance Jio's entry, although expected, is a jolt. Will voice calls priced below mandatory interconnect charges be treated as being predatory or anticompetitive? The technicality is that Jio doesn't have high market share, apparently a criterion under competition law. Will this hold, given that Jio's entry has reduced total market capitalisation? Will delivery capability in terms of network size and/or market power from associated businesses be relevant criteria for dominance? What happens when Jio does have sizeable market share?

• On the face of it, lower prices seem better for users. Look more closely and it's not so simple, especially when you consider other services in India offered for free or at highly subsidised rates. One issue is the structure of a market that supports delivery below cost, and its quality of services/products. Another is the criterion that maximises social welfare that should drive government's policies. Is consumer surplus in the short term a reasonable criterion? As it happens, we have experienced markets with constrained consumer surplus for years. For example, in the category of infrastructure and essential inputs/utilities, we've had this approach towards fertilisers, electricity, petroleum products like kerosene, cooking gas and diesel until recently, water, and sewerage. We've also experienced this in our entire range of manufactured products earlier, when we had exorbitant import barriers. These experiences have been less than sanguine. The misuse of kerosene and gas, and the effects of diesel subsidies are prominent examples. The distortions that have set in, such as overuse of ground water and fertilisers, and the vicious circle with electricity and diesel generators, will be difficult to correct.

• Aren't there similar deleterious effects in communications from spectrum auctions and government charges that inflate input costs, and price wars that degrade investment capacity for network extension and delivery? As it is, the quality of services for voice and data is very poor. An essential resource for better connectivity is spectrum, yet government's approach to its management has been and remains inimical to its stated objective of achieving ubiquitous access of good quality. Governments make it difficult for operators to extend networks simply by not setting the right administrative policies. To quote Google Vice-President Caesar Sengupta: India is "a very large country with very little spectrum". It does not seem clear to our governments that broadband access through fixed lines for everyone is infeasible in the foreseeable future. Also, that unless radical changes are made, it is inconceivable that broadband servcies can be made available at prices and quality comparable to TV.

The Triad of Interests

Even if the criterion for public welfare is user benefits/consumer surplus, judging by price alone is simplistic, because it misses other aspects of service delivery that contribute to the cost-benefit package. One essential aspect is ubiquitous access. Another is effective, consistent service delivery, which requires quality, and stability. A third is the period or life cycle. It doesn't help if you have an inexpensive product or service today, and nothing tomorrow. The definition of long term also varies, depending on one's perception of the life-cycle cost of the product/service. For a user, it may be several years, or his/her life cycle. For a society, it may mean generations.

In addition to consumer benefits, other factors need to be considered from the perspectives of pragmatism and realpolitik. Realistically, a triad of stakeholder interests has to be balanced for a sustainable beneficial outcome. These are: consumer and producer surplus, and what might be termed "government interests" in the broadest sense defined below. The latter has been manifest in many global spectrum auctions, and although detrimental to the sector, is an aspect of reality that cannot be wished away. For example, our governments preferred rationing and auctions to more constructive approaches such as sharing infrastructure, and when the Supreme Court ruled that resources need not be auctioned, spectrum was excluded, which seems logically indefensible. For sustainable, consistent services, champions of all three criteria must partner to adopt mutually acceptable solutions.

Assumptions about Enabling Policies

Certain basic amenities comprise the essential infrastructure that everyone needs to be productive and have reasonable well-being. To some extent, this is linked to reasonably high per capita income. Without it, broad access to good infrastructure is infeasible. It takes that level of organisation, institutions and investment, including its implications for developing and organising human capital, to build such capabilities, as in Organisation for Economic Cooperation and Development (OECD) countries. Emerging economies have to manage with lower order platforms, or a subset of higher order services combined with others of lower order. Prioritisation then becomes the key, and areas of emphasis have to be chosen. This is where the priority accorded to Digital India comes in. If digital systems are crucial facilitators for development and productivity, they need to be accorded that level of importance and effort, with substantive changes to policies.

The government sets the policies and incentives. Government here means not just the central government and the states' executives, but the gamut of regulatory and government agencies: the legislature, the regulators, and the judiciary. These agencies must converge and persuade public opinion to support action in the public interest. Ultimately, society has to pay. If delivery is priced below cost in communications, the services will be as unsustainable and ineffective as in other distorted sectors with freebies.

Reference: Krishna Kant: http://www.business-standard.com/article/economy-policy/spectrum-fees-leave-no-money-in-shareholders-pockets-116092701398_1.html, Business Standard, September 28, 2016. The author can be contacted at [email protected]

The article originally published in the Business Standard on August 31, 2016 was mirrored in Organizing India Blogspot on September 1, 2016.

There's a "List of 10 Things" for realising India's potential that Prime Minister Narendra Modi received as the chief minister of Gujarat from Jim O'Neill, the originator of the "BRIC" concept. Many items on that list are greatly facilitated by information and communications technology (ICT): effective governance; primary, secondary, and tertiary education; improved infrastructure; and sustainable approaches that minimise negative environmental impact. While there's agreement on ICT's importance for India, there's difficulty getting it in place to best effect. This is because policy changes are needed to make Digital India a reality. These are the kinds of decisions that will turn the rhetoric about connectivity into reality.

Some changes are relatively easy, such as enabling 60 GHz Wi-Fi, while others require more effort, as explained below. These include better terms for satellite communications, enabling broadband on the 500-600 MHz bands, and spectrum and network sharing.

In our land of such range and contradictions, so much needs improvement that everything clamours for immediate attention. Attempts to address them all together are misplaced, however, because achieving results requires goal orientation, prioritisation and systematic action, to direct a convergent investment of time, effort and capital. Also, projects must be done with the realisation that the acid test is end-to-end delivery, even if it is initially to a small segment of the market. Only then can the rest of the iceberg be addressed: consistent, ongoing operation and maintenance, and scaling up. Think of the years of effort, capital and human resources invested without that first delivery in the National Optic Fibre Network. While defining objectives appropriately and setting priorities are difficult, both are imperative.

A recent report on The Networked Society City Index for 2016 by Ericsson reaffirms ICT's critical role in productivity and living standards.1 The report also shows that better-developed cities are on more sustainable paths to the goal of the desirable triple bottom line (TBL) of social, economic and environmental betterment. ICT facilitates not only sustainable development of cities and often their surroundings, but extends through the networked society far beyond their geographical environs. Even our metros need attention, with Mumbai and Delhi ranking at 36 and 38 out of 41.

The Wireless Imperative

Efforts at setting up Digital India have to contend with the reality that most non-urban communications have to be wireless, as does a significant proportion of urban access. This is because the cost and practical difficulties in laying and maintaining fibre everywhere is far greater than building wireless networks. The accompanying chart, showing the spread of broadband in India at the end of March 2016, illustrates this point.




The clusters are around major cities, with broadband penetration in Delhi/NCR highest at 58.2 per cent. Except along their major connecting links, the spaces between clusters are more difficult to connect and aggregate, as habitations are not densely clustered. Also, potential revenues are generally lower in less dense areas. Such areas urgently need lower-cost wireless coverage.

Policy Changes Required - from Easy to Difficult

Of the many constraints to building more accessible ICT in India, a major set lies within the control of government and stakeholders, provided they act together and are not adversarial about policies governing access technologies:

• There are unused frequencies in the 60 GHz band for which inexpensive equipment is available abroad with a capacity of several gigabits. Press reports years ago mentioned the de-licensing of this band in India. Last November, the Telecom Regulatory Authority of India (TRAI) recommended de-licensing Wi-Fi use, and light licensing backhaul with minimal charges. Yet, this asset is wasted because there's no policy permitting its use. It costs nothing to de-license in line with global norms. Apart from additional Wi-Fi capacity, service providers could use it for backhaul from small cells. Revenues are likely to rise, and the government would collect increased taxes. Domestic manufacturers could possibly develop products for what should be a huge market.
  
• Another proven technology is satellite communications. This is priced too high in India, as explained in "Satellite communications can drive the broadband revolution", Business Standard, 23 April 2016.2 Satcom tariffs are apparently nearly 300 times higher than in the US, while private sector applications for manufacturing satellites are languishing. Also, there is considerable potential for manufacturing associated equipment, such as VSATs, end-user terminals, and so on.
  
• A third area is unused or underutilised government spectrum. The most-useful and least-controversial, except for turf considerations, is unused broadcast spectrum in the sub-700 MHz bands. Government departments, namely, the department of telecommunications (DoT), the Ministry of Information and Broadcasting (I&B), the Department of Electronics and Information Technology (DeITY), and the Trai, could coordinate their approach, so that I&B and Doordarshan retain the spectrum, while allowing common access to shared spectrum and infrastructure for paid use by service providers. Doordarshan could increase its reach by providing programming and content over these links.
  These frequencies would be most effective in extending rural broadband, because of the distances that could be covered inexpensively. There is an issue with equipment, as there are no large, established markets anywhere yet for TV White Space devices, and there is insufficient support for local manufacturing even with Indian intellectual property rights. In fact, we have a Catch-22 situation here: such devices are likely to have massive deployment in India, but we don't have policies that allow these frequencies for broadband. The irony is that developers who manufacture prototypes in India have no access to spectrum even for testing their products, and will have to rely on markets abroad for testing as well as sales.

Other Frequencies

Rules restricting usage of other frequencies could also be amended through a coordinated process.  The result could be policies that treat spectrum usage as part of a shared infrastructure solution for Digital India.  Using a shared access for payment approach with secondary sharing, primary holders of spectrum can retain usage rights, while government revenues accrue from swathes of spectrum that now remain unused, and holders of spectrum earn from common access.

Preliminary Comments

Even in the early to mid-seventies, many Indians who wanted to own a radio receiver were expected to get a license from the government. If not then they were in violation of the law and there was nothing the government could do to enforce policies for their benefit. The deregulation of radio ownership has been key to its unfettered adoption and popularity today. Similarly, Wi-Fi, a radio transceiver must be deregulated further to bridge India's digital divide.

Before addressing specific questions posed by the Paper, we would like to make the following observations:

1. The Paper considers only commercial models for the provision of public Wi-Fi networks. This is a problematic assumption as it ignores the potential of not-for-profit models that involve grassroots communities, academia and civil society.
2. The Paper is infused with a vision and philosophy that is reminiscent of a colonial, license raj, centralized, top-down, command and control based, state monopoly paradigm. This is diametrically opposed to the foundational ethos of the Internet.
3. The Paper assumes that more regulation is required in order to ensure mass adoption of public Wi-Fi. In fact, the exact opposite is true - the rapid proliferation of broadband through public Wi-Fi networks will only be accomplished by aggressive deregulation.
4. The technological architecture being advanced by the Paper signals support of governance cum surveillance projects such as Aadhaar aka UID, India Stack, UPI and related projects which only undermine cyber-security and interferes with healthy competitive market dynamics between commercial and non-commercial actors. Again this is diametrically opposed to the foundational ethos of the Internet and a modern democratic information society.

Q1. Are there any regulatory issues, licensing restrictions or other factors that are hampering the growth of public Wi-Fi services in the country?

The most pressing issue which is hampering the growth of public Wi-Fi services in the country is that of over regulation. Under the current regulatory framework, public Wi-Fi is subject to licensing requirements, data retention, and Know-Your-Customer ("KYC") policies. The next issue is paucity of spectrum. So far the approach has been to assign exclusive property rights to certain frequencies and also raise billions of US Dollars through spectrum auctions based on the Supreme Court's understanding of spectrum as a national resource. Given the advancements in transceiver technologies, such as cognitive radios, it is possible for us to transcend the grid-lock of property rights and embrace paradigms like shared and unlicensed spectrum. Innovative technologies and neutral allocation of unlicensed spectrum will result in the growth of public and community wireless networks including those built on the Wi-Fi standard.

Q2. What regulatory/licensing or policy measures are required to encourage the deployment of commercial models for ubiquitous city-wide Wi-Fi networks as well as expansion of Wi-Fi networks in remote or rural areas?

The regulatory approach should be to deregulate the radio transceiver as much as possible so as to encourage innovation with lower barriers for participation.

The question falsely assumes that only commercial players can provide public Wi-Fi, Para 1.9 of the Paper only identifies scenarios where Unified License (UL) holders can take advantage of unlicensed spectrum to provide public Wi-Fi services. It fails to recognize that civil society, academia, and grassroots communities can also bring about ubiquitous city-wide Wi-Fi networks and expansion to remote and rural areas. For example, Village Telco and mesh networks are community-driven Wi-Fi models that are allowing a large number of individuals to gain access to Internet services using a public spirited or peer-to-peer philosophy.^[1]

In terms of regulatory measures, CIS would recommend minimal and proportionate regulation, i.e. the regulation of entities involved in the provision of public Wi-Fi networks based on their capacity to harm the public interest and/or individual rights. By this we mean that only public Wi-Fi networks that have a large number of users (say, more than 5,000 individual users) should be subject to any regulation. Small-scale public Wi-Fi network providers, like public Wi-Fi networks in small villages or apartment complexes, should be left to self-regulation. Regulatory burdens which serve no purpose only deter these providers from providing such services at all.

Regulation must be technology-neutral, and should focus on the entities using these technologies who are capable of unlocking good or causing harm. This neutrality should be reflected in the name of the policy: "community-networking policy" and not "community Wi-Fi policy". The necessary changes must also be incorporated in the Paper and the draft policy to make this clear. The current definition of Wi-Fi is closely coupled with certain frequencies, and public wireless networks should be promoted regardless of technology and specific frequency bands.

In cases where private data services, (such as mobile telephony/ other private application specific data infrastructures) which may have been granted permission to deploy on an open-unlicensed or delicensed part of the spectrum, experience interference from a Public Wi-Fi setup. On the same frequency band, we call for the Public Wi-Fi to be given priority. This will prevent spectrum squatting.

Q3. What measures are required to encourage interoperability between the Wi-Fi networks of different service providers, both within the country and internationally?

This is a requirement for elite parts of society only but not a deal breaker for the provision of public Wi-Fi in India. There are a variety of existing market-based approaches. The further deregulation of Wi-Fi will result in the rise of public, community and non-commercial players which in turn will lead to further innovation and competition when it comes to interoperability across disparate Wi-Fi networks and providers.

Q4. What measures are required to encourage interoperability between cellular and Wi-Fi networks?

No measures are required. Millions of consumers in India already are able to interoperate between cellular networks and their home and office networks as they are in charge of the authentication or they have left these networks open. The reason they are unable to operate more easily with other networks is due to data retention, and KYC policies. Even in countries with much more challenging national security concerns, the data retention and KYC policies are not so strict. We are paying a terrible price in terms of broadband adoption because of our flawed approach to surveillance and cyber security. The answer here lies in deregulation of existing requirements, especially for community based organisations, NGOs, research institutions, educational institutions, galleries, museums, archives and public libraries. This will address the needs of those who cannot pay and are vulnerable. For those who can pay - commercial actors will innovate and provide the high-quality interoperability that they seek - this will not require any action on the part of the government.

Q5. Apart from frequency bands already recommended by TRAI to DoT, are there additional bands which need to be de-licensed in order to expedite the penetration of broadband using Wi-Fi technology? Please provide international examples, if any, in support of your answer.

In a 2012 policy brief on unlicensed spectrum^[2], CIS recommended the changes, listed below [in italics]. Since then, more modern approaches may have emerged which merit revisiting this question. These advances also merit delicensing bands more aggressively as the proprietary approach becomes more and more dated. This approach should also be technology neutral and must find a balance between proprietary, unlicensed, and shared spectrum.^[3]

1. Frequencies in the 6, 11, 18, 23, 24, 60, 70, and 80 GHz bands, to facilitate replicating examples like Webpass (USA) which has radios capable of delivering up to 2Gbps both upstream and downstream.^[4]
2. Frequencies in the 5.15 GHz-5.35 GHz bands, as well as 5.725-5.775 GHz bands are unlicensed for indoor use only. These bands should be unlicensed for outdoor use as well in order to facilitate the creation of wider wireless communication networks and the use of innovative technologies.
3. There should be more unlicensed spectrum in the 2.4 GHz range, beyond what is already unlicensed, for the expansion of wireless communication networks.
4. The 1800-1890 MHz band, which is earmarked for the operations of low power cordless communication in India, should be unlicensed in line with international practices. Many bands for this use have already been unlicensed in Europe and the United States. ^[5]
5. 50 Mhz in the 700Mhz - 900Mhz band, earmarked for broadcast should be made available to better utilize available spectrum, almost 100Mhz is currently unused in most parts of the country.

Q6. Are there any challenges being faced in the login/authentication procedure for access to Wi-Fi hotspots? In what ways can the process be simplified to provide frictionless access to public Wi-Fi hotspots, for domestic users as well as foreign tourists?

The challenge here is that of over regulation and the belief that elaborate KYC requirements will solve problems of national security. What these requirements achieve is a lot of inconvenience for the general population while criminals are able to evade detection through fake IDs, burner phones, etc. as KYC requirements only create barriers without security payoffs. The fact that jurisdictions such as the UK, and other countries in Europe allow for purchase of SIM cards without KYC norms goes to show that there are effective ways of gathering intelligence that do not involve a KYC regime.

In terms of authentication, a healthy ecosystem will allow for both anonymous access to Wi-Fi hotspots as well as access through authentication.

There is a need for deregulation in order to allow anonymous access. For access through authentication, some providers may wish to have light KYC norms whereas others may choose to have rigorous KYC norms that are integrated with Aadhaar, India Stack, etc. The decision should ultimately be taken by the provider and thus deregulation is the key. The most frictionless model is the unauthenticated model that allows anonymous access, followed by a light KYC regime, and the model with the most friction is that with intensive KYC requirements.

The existing customer log-in procedure requirements that have been laid down by the Department of Telecommunications (DoT), Ministry of Communications, Government of India, which necessitate a user to provide a photo ID or to avail a one-time password (OTP) through SMS should be done away with for two reasons. First, it does not allow for a user to access the public Wi-Fi network without authentication and this leads to a loss of anonymity over that network when the user accesses any Internet-based services. Secondly, it assumes that all people will have access to mobile phones/smartphones. So far as the Indian scenario is concerned, this is certainly not the case in many households where only the head of the family, who is more often than not a male member, has access to such devices. Many individuals also use much simpler devices which may not be able to receive OTPs (see Raspberry Pi models, for example). Such a requirement would, in effect, deprive a large number of individuals from accessing public Wi-Fi services and would defeat the purpose of even setting up such networks.

Q7. Are there any challenges being faced in making payments for access to Wi-Fi hotspots? Please elaborate and suggest a payment arrangement which will offer frictionless and secured payment for the access of Wi-Fi services.

This question is backed by three assumptions. First, it assumes that only commercial provision of Wi-Fi is possible. Second, it assumes that "a (singular) payment arrangement" is the preferred approach. Third, it assumes that it is possible for regulators to predict the most appropriate business / technological model for payments online. This is best left to competition between commercial and noncommercial players in the market. The existing regulations from the RBI and laws that govern electronic transactions are sufficient. No specific regulations are required for access to Wi-Fi hotspots.

Q8. Is there a need to adopt a hub-based model along the lines suggested by the WBA, where a central third party AAA (Authentication, Authorization and Accounting) hub will facilitate interconnection, authentication and payments? Who should own and control the hub? Should the hub operator be subject to any regulations to ensure service standards, data protection, etc.?

"A central third party AAA (Authentication, Authorization and Accounting) hub" is antithetical to the foundational ethos of the Internet. Any attempt to foist that on Indian citizens will lead to a slowing down of wireless broadband adoption. From a cyber-security perspective this can only lead to large-scale and irreversible disasters and on the contrary policy measures should be taken to prevent centralization. For Indian cyberspace to be a resilient and free market, competition amongst both commercial and noncommercial players must be enabled for Authentication, Authorization and Accounting.

Q9. Is there a need for ISPs/ the proposed hub operator to adopt the Unified Payment Interface (UPI) or other similar payment platforms for easy subscription of Wi-Fi access? Who should own and control such payment platforms? Please give full details in support of your answer.

As we submitted in response to the earlier question: "a central third party AAA (Authentication, Authorization and Accounting) hub" is antithetical to the foundational ethos of the Internet. Aadhaar aka UID, India Stack and the Unified Payment Interface (UPI) are similar state sanctioned monopolies that only increase fragility and interfere with the functioning of markets. Also this question assumes that citizens will have to pay for access to WiFi. Therefore, we recommend that the government does not regulate payments beyond the existing measures in Banking Law.

Q10. Is it feasible to have an architecture wherein a common grid can be created through which any small entity can become a data service provider and able to share its available data to any consumer or user?

The government or the regulator should not be making recommendations on technical architectures. All that is required to the lift all limits on reselling or sharing data via law.

Q11. What regulatory/licensing measures are required to develop such architecture? Is this a right time to allow such reselling of data to ensure affordable data tariff to public, ensure ubiquitous presence of Wi-Fi Network and allow innovation in the market?

CIS would ask for forbearance in this regard, as anything else will be a case of over regulation.

Q12. What measures are required to promote hosting of data of community interest at local level to reduce cost of data to the consumers?

There are two measures that can be taken. The first is to change the public procurement policy to promote openness in the form of free and open source software, open standards, open content, open access, open educational resources and open data.

The second is to use public funds to shape the market and create publicly licensed material, or material available under exceptions and limitations of copyright law. To promote hosting data of community interest at a local level, public funds must be used to create intellectual property that can be freely licensed to the public. India already has a progressive copyright law, and the exceptions available under it should be seeded by the government through public funding. These exceptions include the statutory exception of copyright cess/ levy to broadband bills, exceptions for the disabled, libraries and archives and also education.

Q13. Any other issue related to the matter of Consultation.

Figure 2.2 of the Paper depicts Wi-Fi Monetization Pyramid based on Cisco's Wi-Fi Opportunity Pyramid.[2] As pointed out earlier, this ignores the possibility of non-commercial models. To quote Bruce Schneier, "surveillance is the business model of the Internet" ^[6] and this business model is one that should not be encouraged. The pyramid only allows for a for-profit model and it is inherently based on needless surveillance of users. While monetization may be one of the main incentives, it is by no means the only way to sustain such public Wi-Fi networks and for this reason, CIS recommends that such a depiction be discarded.

The balancing of this monetization pyramid is one of the requirements to put in place an effective public Wi-Fi network structure. Another issue arises with respect to the definition of Wi-Fi. Currently, spectrum is limited to the 2.4 GHz or the 5 GHz bands but this has been expanded upon to encompass the LTE (4G) Core during the GSMA, Wireless Broadband Alliance and Wi-Fi Alliance 3GPP following the Mobile World Congress in 2013. Such a set-up would allow for frequency hopping between bands and to prevent (or allow) this, the definition of Wi-Fi in the context of public Wi-Fi networks must be clarified.

Airtel also reportedly promises that its call centres and physical stores have been upgraded with tools based on the new interface to allow for easy reporting of network coverage issues.[1] Users can report issues or request new cell towers directly through the platform.

This is part of Airtel’s wider ‘Project Leap’, a Rs. 60,000 crore overhaul of the operator’s network, which claims to include a bevy of technological solutions aimed at improving service. Airtel claims that these include smaller cells, indoor solutions, Wi-Fi hotspots and upgraded base stations.

This is a praiseworthy move on Airtel’s part. No other major telecoms company has undertaken a similar initiative. There exist private alternatives such as OpenSignal[2][3] that provide cell coverage map, among others. However, these services make use of crowdsourced data collection from users to create their maps.

While the portal is very convenient, it is worth pointing out that the website itself contains no links to any open data -- merely the visualization of data. At the time of writing, there was no indication of any way to request access to raw data on network coverage. While OpenSignal and other alternatives provide APIs[4] or direct access to their database, we saw no similar services on the Open Network website. Without access to raw data the Open Network initiative isn’t really open, as citizens cannot make use of data in any way other than what is provided in the visualization. Raw network coverage data would be immensely valuable to public and private actors, researchers, and the general public alike.

Furthermore, while the portal indicates the quality of coverage in an area (including separate indicators for voice and data quality) it gives no indications as to how these categories were arrived at, or what a ‘Moderate’ level of data quality means empirically. It is also unclear how often the visualization is refreshed, or how old the data currently on display are.

In addition, the provisions for reporting issues through the platform seem to be lacking, and it is unclear how open Airtel will be with these. Expressing interest in hosting a cell tower takes you to an online form and a promise that ‘we will get in touch with you.’ By contrast, trying to report an issue takes you to a ‘network troubleshooting guide’ with some basic tech support information and a number to call an advisor.

The Open Network website promises that “the more open questions you ask, the more open answers we can give.” But the platform contains no fundamentally new or different mechanisms for reporting issues which take advantage of the crowdsourced ethos that Airtel lays claim to. While this is a very promising first step for the company, we hope that they continue to refine their website and display a meaningful commitment to the principles they have espoused here.Furthermore, while the portal indicates the quality of coverage in an area (including separate indicators for voice and data quality) it gives no indications as to how these categories were arrived at, or what a ‘Moderate’ level of data quality means empirically. It is also unclear how often the visualization is refreshed, or how old the data currently on display are. In addition, the provisions for reporting issues through the platform seem to be lacking, and it is unclear how open Airtel will be with these.

http://gadgets.ndtv.com/telecom/news/airtels-open-network-launched-on-app-to-show-coverage-quality-across-india-849280

opensignal.com

https://radiocells.org/

http://developer.opensignal.com/networkrank/

The article originally published in the Business Standard on April 6, 2016 was also mirrored on Organizing India BlogSpot on April 7, 2016.

It helps to remind oneself of the scale of Digital India, its magnitude and sweep: to provide e-governance and other e-services everywhere, including 250,000 gram panchayats serving another 400,000 villages. That includes all the backbone and aggregation networks, and institutional processes to get there. The links indigitalindia.gov.in, such as http://www.bbnl.nic.in/, illustrate what's involved - and because many users are from households, the demand is for even more extensive networks.

The menu of services through Internet access is ambitious, and includes government services, health care, education, market information, financial services and so on. But it's the lack of basic access, of the "pipes" and "plumbing" for connectivity, that's the first, most difficult, yet essential step. Until this aspect is in place, getting results in areas such as efficient delivery of electricity, e-governance - including subsidies, education and skills, health care, manufacturing, and so on - is very much more difficult.

These services make up a robust wishlist, although their commercial underpinnings have yet to be designed and spelt out. As regards delivery, significant policy developments were reported last week. The Telecom Commission approved the operation of virtual network operators, allowing for operators who don't own networks or spectrum. They also recommended lowering spectrum usage charges from five per cent to three per cent of Adjusted Gross Revenues, while the exception of one per cent for Broadband Wireless Access spectrum continues. The bad news was in the Budget for 2016: service tax of 14.5 per cent on spectrum acquisitions, including through auctions.

But these are simply not enough. It's time the government accepts that Digital India is too distant, and they'd better formulate corrective measures. For example, even after 10 years with some success in setting up Common Services Centres (CSCs) in parts of the country, there doesn't seem to be a replicable template with sufficient momentum for ubiquitous connectivity. Worse, urban services remain constrained by too little spectrum that costs too much, with many impediments to augmenting capacity.

Consider factors affecting execution and delivery.

First, there's the telecommunications industry in its current beleaguered state. Its constituents have their backs to the wall for various reasons:

• Low revenues and high costs.
• Constrained access because of shortages - of networks; or of the means to build them, such as inexpensive rights-of-way, where laying fibre is feasible and viable; and where that isn't, shortage of inexpensive spectrum, and other cost-impediments such as local government charges for towers.
• Below-par services for current demand.
• Loads of debt, much of it incurred to pay for spectrum.
• Banks with little appetite for further lending to this sector, and
• Uncertain market sentiment.

For the government, there's an overriding imperative for revenue collection. The motivation is an unrelenting need for (legitimate) expenditure on infrastructure, governance, and basic welfare in a developing economy. This is compounded by execution on a massive scale that also involves changes in user behaviour, for instance, village institutions like CSCs that have yet to take root. Another level of complexity is because two-thirds of users are from non-urban areas requiring extensive wireless broadband, untested for rural delivery except for satellite television.

With the public and media suspicious of government and industry, resolving these aspects is more difficult because of their skepticism and opposition. There's a disinclination to evaluate policies objectively because of recent scams. It is increasingly obvious that plugging away at legacy plans with their failure rate won't do, and more effective ways must be framed to achieve connectivity. For solutions acceptable to the government, to service providers, and the public, essential criteria are transparency and fairness. Next, the approach must be practicable, yield reasonable government revenues, and have reasonable profit potential. All these elements are required for sustainable initiatives. Every step has to be thought through, with all government departments working together (another big ask) and with industry, from the basic strands: connective links, sustainable equipment at reasonable cost, and revenue streams (whether from user payments or partly from subsidies) for services and content to more than cover those costs.

Download the submission document: PDF.

Post-Open House Discussion Submission to TRAI

Dear Ms. Kotwal,

This is to heartily congratulate TRAI once again for taking several steps, including the Open House Discussion, to ensure that various opinions about the topic of ‘differential pricing for data services’ are presented and are responded to - and are all in full public view.

This brief note is to a) add to the positions and arguments submitted previously by the Centre for Internet and Society (CIS), India, b) put in writing our comments during the Open House Discussion (January 21, 2016), and c) respond to other comments shared at the same event. We have six points to share in this note:

1. Forbearance is not an option: We are of the opinion that though the data services market has thus far been kept un-monitored and unregulated, and there are several reasons why this situation should not continue any more. Although the reality of differential pricing (that is data packets originating from different sources being priced differently by ISPs) was highlighted with the recent offering of zero rated packs, it is a general practice in the sector, as illustrated by widely available special/curated content packs for the user to consume data from a specified web-based source. It is not surprising that most such special/curated content packs involve an arrangement between the ISP and a prominent leader in the web-content/platform sector, such as Facebook and Twitter. Serious market distorting impacts of such arrangements are imminent if they are allowed to continue without any monitoring, enforced public disclosure, and regulatory actions by a public authority.
   
   
2. Address differential treatment of data, and not only differential pricing: Pricing is only of the three ways in which data services can be treated differently by the ISPs depending upon the source of the data packets concerned. The other two ways are: a) differential speed, or throttling of some data packets and prioritisation of the others, and b) differential treatment of data protocols, for example, the blocking of peer-to-peer or voice-over-IP traffic by an ISP. If the public authority decides to only regulate differential pricing of data service, it is highly probable that ISPs may shift to other forms of discrimination between data packets - either in terms of prioritising some data packets over others based upon their origin, or blocking of specific protocols such as voice-over-IP to prevent the functioning of certain web-based services - and continue the market distorting impacts through these other means.
   
   
3. Allow and define reasonable network management practices: Reasonable network management has to be allowed to enable the ISPs to manage performance on their network. However, ISPs may not indulge in acts that are harmful to users in the name of reasonable network management. Below is a set of potential guidelines to identify cases when discrimination against classes of data traffic in the name of reasonable network management can be considered justified and permissible:
   
   • there is an intelligible differentia between the classes which are to be treated differently,
   • there is a rational nexus between the differential treatment and the aim of such differentiation,
   • the aim sought to be furthered is legitimate, and is related to the security, stability, or efficient functioning of the network, or is a technical limitation outside the control of the ISP, and
   • the network management practice is the least harmful technical means that is reasonably available to achieve the aim.
   
   
4. Establish an effective enforcement mechanism: TRAI must establish an enforcement mechanism that is open to users [and groups of users] and private sector actors as current forums are insufficient. Clear and simple rules must be established ex-ante, if they are violated - ex-post regulation must be undertaken on the basis of principles listed in the TRAI consultation paper, that is “non-discrimination, transparency, affordable internet access, competition and market entry, and innovation” [1]
   
   
5. Take regulatory decisions now, but also conduct and commission further research to review and refine the decisions over a defined period of time
   
   
6. Need for better collection and proactive disclosure of statistics: TRAI publishes quarterly performance indicators statistics collected from the telecom companies about telephone, mobile, and internet sectors in India [2]. It will be very useful for researchers and analysts, and allow for a much more informed public debate on the matter, if the content and form of such data are improved in the following ways:
   
   Content:
   • Please start collection (unless already done) and publication of not only data of average incoming and outgoing MOUs, average of total outgoing SMSs, Average Revenue Per User, and average data usage per GSM and CDMA subscriber, but distributions of the same in terms of user deciles (that is in terms of representative figures for each 10% section of users in ascending order of usage),
   • Provide granular data about data usage across service areas and service providers (the numbers on ‘average data usage’ and total ‘revenue from data usage’ provided at present are very insufficient for the state of public debate),
   • Provide data about internet subscriber base according to network technologies (for both wired and wireless) and the service providers concerned,
   • Provide data about IP-based telephony across service areas and service providers,
   • Provide data separately for the North Eastern states, and
   • Provide granular data (separated from the corresponding state data) for all tier-1 cities.
   
   

   Form:

   • Please do not publish the data only as part of the quarterly reports available in PDF format, but also as independent machine-readable spreadsheet file (preferably in CSV format),
   • Do not only publish quarterly data in separate files, but also provide a combined (all quarters together) dataset that would make it much easier for researchers and analysts to use the data,
   • In some exceptional cases, the data is not provided in the report directly but a diagram containing the data is published [3], which should be kindly avoided, and
   • Please publish these statistics as open data, that is in open standards and under open licenses.
     
     

Further, we request TRAI to explore possibilities of distributed sourcing of data, perhaps from the users themselves, about the actual network usage experiences, including but not limited to signal strength, data transfer speed (incoming and outgoing), frequency of switches between mobile (GSM and CDMA) and wi-fi connectivity, etc.

References

[1]. http://trai.gov.in/WriteReaddata/ConsultationPaper/Document/CP-Differential-Pricing-09122015.pdf.

[2]. http://www.trai.gov.in/Content/PerformanceIndicatorsReports/1_1_PerformanceIndicatorsReports.aspx.

[3]. http://www.trai.gov.in/WriteReadData/PIRReport/Documents/Performance_Indicator_Report_Jun_2015.pdf , sections 1.43 and 1.44 (pp. 31-32).

The Op-ed was published in Business Standard on March 2 and cross-posted on Organizing India BlogSpot on March 3.

Past decisions deserve scrutiny when we can learn from them. The Budget expects about Rs 75,000 crore from spectrum auctions. What will be gained and lost? A study by the Telecom Regulatory Authority of India (TRAI) in 2005 has some pointers for policies going forward. These relate to decisions that enabled the proliferation of mobile telephony between 2003 and 2011. Other decisions had less salutary outcomes, which we would do well to recognise and avoid. Reviewing some of these could influence supportive policies, resulting in industry growth with enhanced user benefits and government revenues.

1. Reasonable fees increase govt revenues

The TRAI report cited below states that as a consequence of the New Telecom Policy 1999's (NTP-99's) shift to revenue sharing for licence fees and spectrum usage charges, government revenues soared. Collections through March 2007 greatly exceeded the auction payment commitments of Rs 19,314 that were given up.

The NTP-99 stirred controversy because of this opportunity loss, as a suspected sellout to the private sector. However, government collections actually turned out to be much higher through revenue sharing. Operators did indeed benefit, but for a good reason: explosive growth in mobile services. Users also benefited immensely through the rapid spread of widely accessible services at relatively low cost, as did government revenues.

In the chart below, the second column shows the auction fees foregone through March 2007 after adopting the NTP-99, amounting to Rs 19,314 crore. The third column shows annual government revenues collected, while the fourth column shows cumulative government collections. Compared to the opportunity cost of auction revenues foregone of Rs 19,314 crore, government collections by March 2007 amounted to over Rs 40,000 crore, more than double the "loss". With revenue sharing, collections did not stop in March 2007, and by March 2010 were nearly Rs 80,000 crore, or four times the "loss". By March 2015, the "loss" had been made up by more than eight times, by collecting over Rs 1.6 lakh crore.

Sources
Column 1 - 1999-00 to 2006-07:Indicators for Telecom Growth, Study Paper No. 2/2005,TRAI:http://trai.gov.in/Content/StudyPaperDescription/ShowPDF.aspx?LNK_PATH=WriteReaddata/StudyPaper/Document/ir30june.pdfColumns 2 & 3 – 2002-03 to 2009-10:Peformance Audit Report on the Issue of Licences and Allocation of 2G Spectrum by the Department of Telecommunications, CAG:http://www.performance.gov.in/sites/default/files/departments/telecom/CAG Report 2009-10.pdfColumns 2 & 3 – 2010-11 to 2014-15 are from the TRAI web site:http://www.trai.gov.in/Content/PerformanceIndicatorsReports/1_1_PerformanceIndicatorsReports.aspx

In hindsight, a combination of policies, market structure/competition, and technology resulted in enormous growth, much higher government collections, and tremendous user benefits. A key impetus was the adoption of the high-volume-low-margin approach of Henry Ford's "Model-T" strategy. This principle is an essential ingredient for achieving Digital India.

2. Unenforced regulations lead to chaos

In our conditions of deficit infrastructure with constrained capital, the need for collaborative access to capital-intensive resources cannot be sufficiently emphasised. It's either that or do without the connectivity, as we've had to so far.

Until around 1999-2000, only GSM technology was permitted in India for mobile telephony (Global System for Mobile Communications, originally Groupe Special Mobile). Thereafter, CDMA (Code Division Multiple Access) technology was introduced for wireless last-mile connections. While CDMA was supposedly restricted to the so-called Wireless-Local-Loop or WLL in place of fixed-lines for basic telephony, ambivalence/laxity in the enforcement of stated policies and the extension of this technology to mobile services led to unending contention and protracted legal battles between GSM and CDMA operators. While users benefited from price wars resulting from overly intense competition, both industry and users suffered considerable opportunity losses, as broadband development was constrained by a hypercompetitive environment roiled by unrelenting conflict. The marketplace was simply not conducive to the extension and evolution of broadband networks, particularly for less dense rural markets, so connectivity and services suffered.

Although several operators negotiated a degree of resource-sharing among themselves that was permitted, the industry couldn't converge on collaborative approaches to highly capital-intensive network building and service delivery, nor did the government devise supportive policies. Those in favour of unbridled market forces may approve of such intense competition. However, the cost of creating capacity and expanding networks is so prohibitive that, as a study on EU networks suggests, "as market conditions appear to be insufficient in most countries so far to trigger broad-scale NGA [Next Generation Access (Networks)] roll-outs in view of high investment requirements… and risks, identifying the right policy measures becomes crucial." It concludes, "public subsidies are the dominant policy alternative in white [unprofitable] areas, whereas access regulations can be the preferred policy in white or "grey" areas, where only monopoly structure or co-investment models lead to private investment."1 And this is for the Organisation for Economic Co-operation and Development.

The takeaway: good policies are essential, but are meaningful only if they are enforced. Otherwise, we all suffer the opportunity loss.

3. Global developments in sharing infrastructure

A major change globally has been a move towards sharing infrastructure. One motivator is broadband usage needs for greater capacity including for wireless delivery. The US pioneered a solution for better spectrum utilisation by permitting secondary sharing while primary holders retain rights of priority access. The FCC permitted commercial access to 150 megahertz in the 3550-3700 MHz band (3.5 GHz Band) in its ruling of April 17, 2015.² Work is under way in Europe on Licenced Shared Access, eg, in 2300-2400 MHz.

Another motivator for sharing infrastructure has been the financial challenge of providing rural and suburban coverage. Shared networks enable more effective and efficient coverage through multiple operators in such markets. Operators save on capital and operating expenses, while gaining access and higher profit potential. For users, better services improve financial prospects, convenience, and access to services that are otherwise inaccessible, including in areas like health care, education and skills development, and government services. Network sharing equipment is now available to support multiple operators and technologies to make sharing a reality.

We need to stop obstructing ourselves with our own rules. Our regulations must instead enable us to make the most of our capital and potential.

1 "The Impact of Alternative Public Policies on the Deployment of New Communications Infrastructure - A Survey", Briglauer et al: http://ftp.zew.de/pub/zew-docs/dp/dp15003.pdf

2 Amendment of the Commission’s Rules with Regard to Commercial Operations in the 3550-
3650 MHz Band: https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-47A1.pdf

The article was published in the Business Standard on February 3, 2016 and also mirrored on Organizing India BlogSpot on February 4, 2016.

The productivity bottled up in assets in this country is mind boggling. The catch is that to be unleashed, the systems in which these assets are embedded must function effectively.

Take the road network. A study of Delhi-Mumbai truck traffic by Indian Institute of Management, Calcutta (IIM-C) and Transport Corporation of India in 2012 reported an average speed of just over 21 km per hour. Of 18 stops, 16 were to pay tolls manually with average delays of 10 minutes, constituting 80 per cent of total stoppage time. The study estimated that delays cost the economy Rs 27,000 crore ($5.5 billion at the time), with the additional fuel consumption estimated at Rs 60,000 crore ($12 billion at the time).

The Indian Highways Management Company Limited, set up in 2012, was tasked with implementing electronic toll collection (ETC) systems. It began with ICICI Bank, then added Axis Bank. ETC was introduced on the Delhi-Mumbai expressway in 2014. A dedicated ETC lane across the country was to have been completed by 2014, then 2015; perhaps it will be ready in some months. But, for full efficiency gains, the entire traffic flow needs ETC, not just a small segment. Also, anomalies such as the unwillingness of sections of the populace to pay tolls, or for political parties to exploit these tendencies, will need to be "sorted out". In effect, similar criteria will operate as in electricity distribution networks: Users must either pay for services - directly or with the help of subsidies, or forego infrastructure services of reasonable quality. If there is no enforcement of rules (quality service-supply and payment-collection), there will be a shoddy mess.

The underlying expressways already exist, but installing these systems require effort and investment. Imagine the productivity gains and reduced pollution if vehicles going through over 370 toll plazas in India don't have to stop, wait for 10 minutes on average to pay tolls, then accelerate back to cruising speed.

Inter-City Road Network Organisation

An important feature of the way road networks are organised and managed is the concept of common-pool resources, i.e., all public roads that do not require special tolls are part of a common pool, and are accessible to anyone who pays road taxes for the vehicle used. Another strength is that controlled-access roads with tolls connect to the rest of the road network. (There are negative aspects such as state registration, whereby states collect high fees for re-registering a vehicle on a change of domicile, but our focus here is on strengths).

Extending Similar Concepts to Communications

Now consider the infrastructure network of the communications system. Why don't we apply these beneficial aspects of operating our roads, namely, common-pool resources with access charges, to communications? There are several reasons, since transportation and communications have evolved in different ways. While they are customarily treated differently, these legacy issues can be resolved.

In communications, spectrum bands were separated into one lot for broadcasting and another for telecommunications, which began with voice and now extends to data. Concerns about anticompetitive dominance in the US led to spectrum auctions in the 1990s, initially to prevent concentration of power in the hands of press barons-cum-broadcasters. The emphasis changed, however, to embellishing government treasuries, barring exceptions as in the public-spirited Nordic countries, Japan,1 and China. In India, events following the 2G scam and a war-of-attrition death spiral in politics have resulted in a paroxysm of righteous inability to take a long-term view, which is a prerequisite for making constructive policy choices. But, as the economy stalls and dark days loom, perhaps the political and administrative leaders will muster the courage to understand our predicament and find a way to get off the beaten track leading to a morass.

We have economic uncertainty, a burgeoning working-age population that could either contribute to supply-and-demand or to disorder, high interest rates, and a heavily over-leveraged communications sector. The indebtedness is aggravated by previous spectrum auctions and constrained reach. Inadequate connectivity limits not only opportunity, but service provision and revenue potential.

The sector's urgent need is for more spectrum at less cost. More countries are pooling communications infrastructure including spectrum. Australia, Denmark, Spain, the UK, Sweden, and latterly, Brazil, Colombia and Mexico have different levels of shared infrastructure including spectrum (see chart below).2 Mexico is deploying a countrywide wholesale network using 700 MHz (megahertz). In India, restrictive regulations hinder effective spectrum sharing.

“In Latin America passive sharing has been the preferred approach, with Tower Cos. playing a key role…”

Source: Daniel Leza-TMGTelecom-12 March 2014: https://www.itu.int/en/ITU-D/Regulatory-Market/Documents/CostaRica/Presentations/Session8_Daniel%20Leza%20-%20Mobile%20Infrastructure%20Sharing%20-%2012%20March%202014.pdf

Studies by Columbia University and the Indian Institute of Science affirm that pooling infrastructure can maximise total returns as well as for individual operators, while users gain enormous benefits.3,4 The studies' apprehensions, regarding trust, willingness to cooperate, and transparency, would not arise if there were mandated pooling through consortiums of operators and the government, and charges based on metering.

A change in regulations alone could mandate that all existing spectrum and networks be freely shared for roaming, depending on capacity and efficiency. Second, unused spectrum, for example, in the 500-800 MHz band, could be made available for secondary sharing to operators paying for metered use. Shared control in consortiums, including the government, would ensure transparency. Similarly, government spectrum could be secondarily shared. Tax collections would increase with additional revenues, as they did dramatically after 2003, when reasonable revenue-sharing rates were introduced for licence fees. USO funds could subsidise rural delivery where necessary for ubiquitous access.

Instead, if we continue with auctions, the 700 MHz band where range and penetration could reduce costs by 70 per cent may remain untouched, because a countrywide five MHz block could cost Rs 55,000 crore, almost a third of industry revenues.

1. "Spectrum Auction Strategy - Canada vs Japan", Lars Cosh-Ishii, August 7, 2013: http://wirelesswatch.jp/2013/08/07/spectrum-auction-strategy-canada-vs-japan/; [Added later: Japan telecommunications market, February 2016
   http://www.eurotechnology.com/insights/telecom/]
2. "Mobile Infrastructure Sharing": https://www.itu.int/en /ITU-D/Regulatory-Market/Documents/CostaRica/ Presentations/Session8_Daniel Leza - Mobile Infrastructure Sharing - 12 March 2014.pdf
3. "A coalitional game model for spectrum pooling in wireless data access networks", Saswati Sarkar, Chandramani Singh, Anurag Kumar, 2008: http://repository.upenn.edu/ese _papers /490
4. "Cooperative Profit Sharing in Coalition Based Resource Allocation in Wireless Networks", Chandramani Singh, Saswati Sarkar, Alireza Aram, Anurag Kumar, 2012: http://www.ece.iisc.ernet.in/Rs anurag/papers/anurag/singh-etal11cooperative-resource-allocation.pdf
   
   

This was published in Global Voices on December 29, 2015.

But the app has already been suspended, at least temporarily, as the Telecommunications Regulatory Authority considers new rules governing network neutrality. Depending on how they're written, the rules could render Free Basics a violation of the policy.

Free Basics, which has been deployed in 30 developing countries across the globe, gives users free access to websites that meet Facebook's technical standards for the application. The application does not give users access to the Internet at large. For open Internet advocates, this undercuts consumer choice and violates the principle of network neutrality, under which Internet providers are to treat all Internet traffic equally. Net neutrality allows users equal access to any website they want to visit, and gives website operators equal opportunities to attract visitors.

Facebook has responded to the pending regulation with an aggressive ad campaign both online and off. Over the last week, Facebook users across India (and some in the US) upon logging into the site have been greeted with notifications urging them to take action. The Free Basics page on Facebook now leads to a pleading form that asks users to contact the Telecom Regulatory Authority of India (TRAI) and voice their support for making Free Basics available in India. The company has also purchased a smattering of billboard advertisements across the country and taken out numerous two-page ads in leading national newspapers, as seen above.

The Indian Internet bites back

Indian netizens and activists have spoken out against the company's actions en masse, protesting heavily on social media, blogs and newspapers.

The grassroots open Internet group, SavetheInternet.in, that has been advocating for net neutrality in India throughout 2015, has launched an email campaign asking users to send letters to TRAI explaining how Free Basics violates net neutrality principles and propagates an inaccurate picture of the Internet for new users by placing it inside the confines of Facebook's application.

Multiple stand-up comedy groups have created videos explaining the regulatory debate and supporting net neutrality, which have gone viral:

Above, the third in a series of videos created by All India Bakchod, in partnership with SavetheInternet.in. Below, a video by East India Comedy.

The issue has also been hotly debated on Twitter, with technology and law experts leading the way.

Internet policy expert and lead staff member of the Center for Internet and Society in Bengaluru Pranesh Prakash tweeted:

New Delhi-based technology lawyer Mishi Choudhary, who leads the legal team at the Software Freedom Law Center, tweeted:

The Free Software Movement of India, a non-profit promoting use of free software and its philosophy in India via their local chapters, also has taken the campaign to the streets where the volunteers raised public awareness about Free Basic's adverse side.

Apart from local experts and activists, companies like Reddit, Truecaller and Indian e-commerce platform Paytm have publicly shared their opposition to Facebook's actions.

Facebook targets open Web activists

Facebook is paying close attention to civil society opposition to its activities in India. Across the globe, the company's Free Basics page now opens to a plea for users to contact TRAI, and includes a statement that directly targets open Internet advocates, suggesting that their motives are somehow driven by financial incentives:

…Free Basics is in danger in India. A small, vocal group of critics are lobbying to have Free Basics banned on the basis of net neutrality. Instead of giving people access to some basic internet services for free, they demand that people pay equally to access all internet services – even if that means 1 billion people can't afford to access any services.

SavetheInternet.in explicitly states in their About page that they are entirely volunteer-run and have no affiliation with any political party in India or elsewhere.

Users also have tweeted screenshots alleging that Facebook is restricting access for individuals sending messages opposing Free Basics. This has not been confirmed, but the tweets have only further stoked public frustration with the company.

Zuckerberg vs. SavetheInternet

On December 28, Facebook CEO Mark Zuckerberg penned a piece in the Times of India arguing that Free Basics will help “achieve digital equality for India,” and claiming that the initiative “isn’t about Facebook’s commercial interests.” India represents the world's largest market of Internet users after the US and China, where Facebook remains blocked.

In response, Nikhil Pawa, founder of online portal MediaNama and a volunteer with Savetheinternet.in, authored a critical opinion piece in the same newspaper:

[…] Why hasn’t Facebook chosen the options that do not violate Net Neutrality? For example, in India, Aircel has begun providing full internet access for free at 64 kbps download speed for the first three months….In Bangladesh, Grameenphone users get free data in exchange for watching an advertisement. In Africa, Orange users get 500 MB of free access on buying a $37 handset…

[…]

Facebook is being disingenuous — as disingenuous as the company’s promotional programmes for Free Basics to its Indian users — when it says that Free Basics is in conformity with Net Neutrality.

Pawa also quoted Naveen Patnaik, Chief Minister of Indian state of Odisha, who wrote to TRAI supporting net neutrality. “If you dictate what the poor should get, you take away their right to choose what they think is best for them,” he wrote.

“If you dictate what the poor should get, you take away their right to choose what they think is best for them.”

Writing for Quartz, technology critic Alice Truong expressed similar sentiment: “Zuckerberg almost portrays net neutrality as a first-world problem that doesn’t apply to India because having some service is better than no service.”

For Mahesh Murthy, an Indian venture capitalist and self-described net neutrality activist, it all comes down to revenue. On the Wire, Murthy offered untempered criticism of Facebook and Zuckerberg's efforts to appease the country's leaders:

[..] Unlike Facebook, who tried to silently slime this thing through last year when it was called Internet.org, and then are spending about Rs. 100 crores on ads – a third of its India revenue? – to try and con us Indians this year again. This is after we’d worked hard to ban these kind of products, technically called “zero rating apps” last year.[..] This Facebook ad [spread] doesn’t include the full-on Mark Zuckerberg love event put up for our Prime Minister when he visited the US, aimed again at greasing the way for this Free Basics thing through our government.

The article was published in FirstPost on December 24, 2015.

But net neutrality regardless of your preferred definition is a very complex regulatory question and there is no global or even national consensus on what counts as relevant evidence. To demonstrate the chain of causality between network neutrality violations and a variety of potential harms - expertise in a wide variety of fields such as economics, competition law, telecom policy, spectrum allocation, communications engineering and traffic management is required. Even with a very large research budget and a multidisciplinary team it would be impossible to predict with confidence what the impact of a particular regulatory option will be on the digital divide or innovation. And therefore the advocates of forbearance say that the Indian telecom regulator — Trai — should not regulate unprecedented technical and business model innovations like Facebook's Free Basics since we don't understand them.

Till recently I agreed with this empirical line of argument. But increasingly I am less convinced that scientific experiment and evidence is the only basis for regulation. Perhaps there is a small but necessary role for principles or ideology. Like the subtitle of Nassim Nicholas Taleb's book, we need to ask: How to Live in a World We Don't Understand. Let us take another area of technological regulation – cyber security. Do we really need to build a centralised database containing the passwords of all netizens and perform scientific experiments on it to establish that it can be compromised? A 100 percent centralised system has a single point of failure and therefore from a security perspective centralisation is almost always a bad idea. How are we so sure that such a system will be compromised at some date? To quote Sherlock Holmes: “Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.” Decentralisation eliminates the possibility of a single point of failure thereby growing resilience. The Internet is perhaps the most famous example. It is not necessarily true that all decentralized systems are more secure than all centralised system of a decentralized network but it is usually the case. In other words, the principle of decentralisation in cyber security does not require repeated experimental confirmation across
markets and technologies.

To complicate matters, the most optimal solutions developed using economics and engineering may not be acceptable to most stakeholders. Professor Vishal Misra has provided a Shapley Value solution using cooperative game theory in the multi-sided market to determine how surplus should be divided between three types of ISPs [eyeball, transit and content] and Internet companies using transparent paid transit arrangements. But a migration from the current opaque arrangement to the Misra solution may never happen because Internet companies will resist such proposals and are increasingly getting into access provision themselves through projects like Google Fibre and Loom. Walter Brown from South African Communications Forum proposes that billing by minutes for phone calls and billing by message for SMSes should be prohibited because on 4G networks voice and text messages are carried as data and price is the best signal to consumers to ensure optimum use of network resources. This according to Walter Brown will eliminate the incentive for telcos to throttle or block or charge differently for VOIP traffic. Again this solution will not be adopted by any regulator because regulators prefer incremental changes with the least amount of disruption.

So given that we only have numbers that we can't trust - what should be some of the principles that form the bedrock of our net neutrality policy? To begin with there is the obvious principle of non-discrimination. The premise is simple – anyone who has gate-keeping powers might abuse it. Therefore we need to eliminate the possibility through regulation. Non-exclusivity is the result of non-discrimination and transparency is its precondition. That can also be considered as a principle and now we have three core principles to work with. Maybe that is sufficient since we should keep principles to the bare minimum to keep regulation and compliance with regulation simple. Some net
neutrality experts have also identified fairness and proportionality as additional principles. How do we settle this? Through transparent and participatory policy development as has been the case so far. Once we have principles articulated in law - how can we apply them to a specific case such as Facebook's Free Basics? Through the office of the appropriate regulator. As Chris Marsden advocates, net neutrality regulations should ideally be positive and forward looking. Positive in the sense that there should be more positive obligations and incentives than prohibitions and punitive measures. Forward looking in the sense that that the regulations should not retard or block technological and business model innovations. For example zero-rated walled gardens could be regulated by requiring that promoters such as Facebook also provide 50Mb of data per day to all users of Free Basics and also by requiring that Reliance provides the very same free service to other parties that want to compete with Facebook with similar offerings. Alternatively, users of Free Basics should get access to the whole Internet every other hour. All these proposal ensure that Facebook and it business partners have a incentive to innovate but at the same time ensures that resultant harms are mitigated.

Just to be absolutely clear, my defense of principle based regulation does not mean that I see no role for evidence and research. As regulation gets under way – further regulation or forbearance should be informed by evidence. But lack of evidence of harm is not an excuse for regulatory forbearance. India is the last market on the planet where the walled garden can be bigger than the Internet – and Facebook is sure giving it its very best shot. Fortunately for us Trai has acted and acted appropriately by issuing a temporary prohibition till regulation has been finalised. Like the US, coming up with stable regulation may take 10 years and we cannot let Facebook shape the market till then.

I would like to thank Amba Kak, on whose research the survey was conducted.

Zero­-rating is the practice of not counting (aka “zero­-rating”) certain traffic towards a subscriber’s regular Internet usage. There are different types of zero-rating that exist in the market.[1] For example, Facebook Free Basics or Internet.org as it was formerly known is a platform which provides limited content to subscribers, free of cost.[2] Airtel Zero is another such platform that provides free content to subscribers. Instead of charging these subscribers, the providers who choose to get on the platform are charged.[3]

Social media packs offered by major telecom companies are another variation of zero-rating. For a fraction of the price of regular data plans, users have access to apps like Facebook and Whatsapp. As per the Airtel website, a Whatsapp pack that allows 200 MB of Whatsapp for a month costs INR 46 in Karnataka.[4]

I conducted a small survey in Bangalore to determine the effects these limited social media packs have on users. I conducted interviews that were spread over five days in three different localities in Bangalore. I interviewed eight people and five recharge shops about their take on these limited packs.

I targeted two groups of users: new users of the Internet, and early adopters. The group of interviewees comprised of three university students, two shopkeepers, and three watchmen. I also talked to recharge shops in the neighbourhoods of the interviewees.

Through my research, I wanted to understand how users reacted to these social media packs, and gauge the popularity of these packs. This is where feedback from recharge shops would have been useful, however, what was surprising was that none of the shops I talked to offered these plans. Two out of the five shops had not even heard of Facebook or Whatsapp packs.

The fact that recharge shops did not offer these services made it difficult to identify subscribers of limited packs. I instead decided to talk to users of mobile internet, and discern their interest towards such packs. My questions followed a specific format: I’d find out which service provider the user subscribed to, their billing structure, their internet browsing patterns, whether they had heard of limited packs, and their interest towards such packs. Out of the people I interviewed, only three expressed interest towards these packs, Whatsapp in particular. For two of them, Whatsapp was the only service they used on their phones, and a Whatsapp pack seemed more useful to them than a regular data pack.

I also wanted to find out how much of an effect price played on the users while they chose a data plan. Even though a limited pack is substantially cheaper than a regular[5] data plan, six out of the eight users said they would choose an all-access data pack. Three of these six users expressed wariness towards such plans as they found the billing structures confusing. They were nervous about the possibility of being charged unfairly high rates in the accidental case of accessing services that were not provided by the limited packs. Further, three of the others were of the opinion than a regular data pack with full access to the internet was preferable to the limited access services provided by these packs.

From these interviews, one can assume that knowledge of these limited packs is low among both users and recharge shops, and the takers for the same are minimal. It would be hasty to jump to the conclusions from this admittedly anecdotal evidence, keeping in mind the small pool of interviewees, but it raises interesting questions with no easy answers: how great a factor is price for the users while choosing limited packs over regular internet packs? Perhaps more importantly, do these packs confine users to the walled garden, or will they venture out of it in order to access the whole Internet? [6]

My findings explore a tiny proportion of what users think about these plans. However, there is a long way to go for policy and regulation decisions.

[1]. The Background Paper to CIS Submission for TRAI Consultation on Regulatory Framework for OTT Services which can be found here: http://trai.gov.in/comments/24-April/Attachments-75/2015-04-24_CIS-background-paper_Net-neutrality.pdf

[2]. Facebook, Reliance Communications launch Internet.org in India by Nimish Sawant for Firstpost

[3]. Airtel Offers Customers Free Access to Select Apps With 'Airtel Zero'

[4]. The tariff rates can be found here.

[5]. For example, an Airtel Whatsapp pack is less than half the price of a one month 2G connection

[6]. Zero for Conduct by Susan Crawford for Backchannel

The article published in the Business Standard on November 4, 2015 was mirrored in Organizing India Blogspot on November 5, 2015.

One such category is unused/underused TV spectrum or "TV White Space" (TVWS). Despite growing demand, operators face bleak prospects as they struggle to deliver, starved of spectrum and infrastructure. Their dilemma is how to extend delivery capability without choking on buying spectrum so precious it's like an albatross around their necks, leaving little capital for densifying and extending their networks.

There's a war brewing around wireless broadband trials using TVWS in India, years after completion in other countries. These frequencies are most effective for long-range broadband. Mobile operators are watchful of developments such as Microsoft getting preferential access, triggered by announcements of its partnership with the Education and Research Network (ERNET) for countrywide rural broadband. Equipment suppliers also seem apprehensive of developments that could lead to swathes of spectrum being "unlicensed", reducing markets for their established products for licensed spectrum.

This article aims to clear some of the misinformation to facilitate policies for Digital India.

What is "TV White Space"?

There's confusion and disinformation about what TVWS is. Quite simply, TVWS is unused TV spectrum, or TV bands devoid of TV signals. The meaning derives from the areas on a page without print or pictures. Microsoft calls [the technology developed for] it "White-Fi", while some call [the technology developed for] it "super Wi-Fi".

Even bands broadcasting TV programs can have underutilised sections that can carry broadband, as pioneered by researchers at Rice University in Houston, Texas. Rice has a system that uses TV bands for both broadcasting as well as broadband.1 According to researchers, although the 400 to 700MHz band is used for broadcasting TV in many US cities, its capacity is largely underutilised because of alternative ways of accessing TV signals, such as through cable, satellite, or Internet TV. Therefore, incorporating Rice's technology in TV sets or remote equipment could significantly expand the urban reach of "super Wi-Fi", and not restrict it to rural areas.

Is there any TVWS in India? Some say there isn't!

Studies across the country show that over most of it, unused TV spectrum (white space) amounts to 85 to 95 per cent of TV spectrum.2,3,4 Studies excluding northern India show that in over a third of the area, a large band -- 470 to 585 MHz -- is available for alternate use.2,4

An odd controversy has been created about whether this is "white space" or not, precisely because the spectrum is largely unused.5 The convoluted semantics are mystifying, because white space is by definition unused broadcast spectrum. The National Frequency Allocation Plan already designates this band for fixed or mobile wireless, in addition to TV. In other words, without changes in allocation, operators can share TV spectrum on a secondary basis, as in the USA, the UK, and Singapore.

Regarding spectrum usage charges, as with any infrastructure, it is much more beneficial in the public interest to provide affordable services first and to collect government fees and taxes later, than to front-load auction fees and have no services at all (imagine road systems if up-front charges had to be paid for the right to build them). Overall benefits from Digital India, which is impossible in the foreseeable future without low-cost wireless broadband connections to the NOFN and other backbone networks like ERNET, will far exceed cash collections from auctions.

Proponents of auctions suggest that TVWS be reallocated as cellular spectrum and auctioned. Their reasons: (a) The transfer of public property to private operators; (b) Transparency and fairness; and (c) Government collections. This reasoning is false and misleading, because: (a) No transfer is required, as all operators can get secondary access equitably through a consortium approach; (b) This ensures transparency and fairness; and (c) Government collections from productive use will far exceed any auction collections, as evidenced by licence fees: in 2005, estimated auction fees lost until March 2007 were Rs 20,000 crore, whereas actual collections were double, at Rs 40,000 crore; collections by March 2010 were Rs 80,000 crore, in addition to the public benefits of better services.

Should TVWS be used only for 3G & 4G?

Another negative argument is the insistence that TVWS should be auctioned for 3G and 4G. Whereas Digital India needs low-cost wireless broadband, especially for long-distance links in rural India, because of the high cost and difficulty of building and maintaining fibre or wired networks in difficult terrain, and/or in sparsely populated areas. Therefore, access to TVWS needs to be bundled with the National Optic Fibre Network/BharatNet, and other shared backbone networks like ERNET. Policies should permit different network design scenarios including transmission power and purpose. Point-to-point links are needed over long distances in place of fibre or microwave, and broad coverage is needed for contiguous areas like industrial developments, campuses, commercial complexes, or rural communities. At the user end, TVWS could interface through cellular (3G or 4G) or Wi-Fi transceivers.

TVWS does need tight radio filters (unlike Wi-Fi) to minimise interference, the underlying consideration that drives spectrum management. There's also need for varying power specifications depending on the network design and purpose as described above, and policies for unlicensed sharing using geolocation databases, as defined by the US FCC (Federal Communications Commission).

To be most beneficial, it is not important to extract the maximum carrying capacity from TVWS in every location, as in the misplaced number-of-subscribers-linked spectrum policy some years ago. Rather, the objective for Digital India is to use this technology in combination with others for the purposes people need, namely, for affordable broadband wherever they are, while mitigating radiation hazards. This is essential for India to get its basic communications infrastructure.

Shyam (no space) Ponappa at gmail dot com

1. http://news.rice.edu/2015/07/13/rice-tests-wireless-data-delivery-over-active-tv-channels-2/, Jade Boyd, September 5, 2014.
2. IIT-Hyderabad studied TVWS in southern India from 2009, shared findings with the government/other IITs from 2011, and published in 2014:http://link.springer.com/chapter/10.1007/978-3-319-08747-4_3#, Kalpana Naidu et al.
3. http://www.cse.iitd.ernet.in/~vinay/papers/coral13.pdf, Pradeep Kumar et al, June 2013, IIT-Delhi.
4. arXiv:1310.8540v1 [cs.IT], Gaurang Naik et al, 31 October 2013, IIT-Bombay.
5. https://www.linkedin.com/pulse/tv-whitespaces-how-white-spaces-parag-kar;http://www.financialexpress.com/article/fe-columnist/editorial-beware-the-white-spaces/146355/

The article was published in the Business Standard on October 1, 2015 and mirrored in Organizing India Blogspot on October 2, 2015.

The announcements are certainly promising. For instance, that Indian Railways will provide Wi-Fi services at 500 railway stations over the next few years. Google's support tendered by CEO Sundar Pichai offers new hope that this will happen. Other promising announcements include Microsoft CEO Satya Nadella's announcement of cloud-based services from India, and connectivity at the village level through TV White Space (unused broadcast spectrum), and Qualcomm CEO Paul Jacob's $150-million fund for start-ups in India.

There have been announcements like these before. For instance, the Railways announced Wi-Fi projects for years, with modest achievements. For details, see "A history of Wi-Fi and Indian Railways from 2006 to Infinity (maybe)". [See http://www.medianama.com/2015/02/223-a-history-of-wi-fi-and-indian-railways-from-2006-to-infinity-maybe/, Riddhi Mukherjee, February 27, 2015].

What's troubling is that in terms of ground realities, except for TV White Space for broadband, there's little evidence of a systematic approach to problems besetting communications, and changes in policies to solve them. Everyone seems carried away, and this is as true of most of the media and the commentariat as it is of the politicians. But informed, systematic efforts at solutions are absolutely essential to achieve these aspirations.

Take the ingenuous comparisons of Silicon Valley with Bengaluru, with the latter being described as "nearly there". Such election rhetoric from former US Senator and Secretary of State John Kerry is one thing, but our savvy media folk should know better. People who visit Silicon Valley from India, or those who are based there and occasionally visit India, can't be blind to the stark differences. One is a place where the basics related to living and functioning effectively actually work well; the other isn't. One has potholed streets with garbage, decrepit or nonexistent sanitation, and chronic power cuts; the other doesn't. It's as simple as that.

This leads to another observation that's tossed off too easily, about less need for government. Blithe statements that government needs to be reduced, or to get out of the way and let the private sector function, are often made with apparently little understanding of what governments do before getting out of the way. Those essential services in Silicon Valley and elsewhere that function seamlessly and are taken for granted? That's what governments can do. In other words, that is government's responsibility: to provide, apart from security and law and order, the infrastructure services and organisation of communities, markets and financial systems that enable citizens to function effectively and live well. Yes, markets are indeed planned and structured in order to function well.

The data on broadband at the end of 2014 in the Broadband Report 2015 by the ITU and Unesco suggest that India is not doing too well compared with its developing neighbours in Asia (see chart at http://www.broadbandcommission.org/ documents/reports/bb-annualreport2015.pdf). Our leadership and government need to confront this reality, and apply themselves to reforms to improve conditions. Broadband subscriptions as a percentage of our population trail most countries, and the percentage of individuals using the Internet is at the bottom of the pack, with Myanmar, Bangladesh, Pakistan and Nepal.

To make Digital India a reality, here's what the government needs to do:

• Trials using TV White Space (TVWS, or unused broadcast spectrum) for broadband are finally under way, after years of struggle to get them going. If they work out, policies must be framed quickly for this spectrum to be bundled with fibre backbones such as BharatNet (the erstwhile National Optic Fibre network), and licensed service providers given access at reasonable cost.
• Policies need to be formulated with government and operators working together, instead of as adversaries. This will increase the probability of success, as the private sector can be convinced of and contribute to practicable methods that they accept.
• Policies for sharing spectrum can be extended to other under-used spectrum held by the government and Defence (secondary sharing, as in the USA), and to networks as well. This will facilitate broad, contiguous spectrum bands that are essential to support rising data usage that is affordable. Policies must also enable authorised operators to access all networks, fostering competition while increasing revenue potential and reducing costs. The data on broadband at the end of 2014 in the Broadband Report 2015 by the ITU and Unesco suggest that India is not doing too well compared with its developing neighbours in Asia. Our leadership and government need to confront this reality, and apply themselves to reforms to improve conditions.
• The TVWS devices are manufactured by relatively small companies abroad with the exception of Huawei, which acquired Neul, one of the pioneers in the UK. Indian innovators can produce such devices locally, but only if they have a supportive ecosystem. That means sufficient continuing orders to create revenues for sustainable profits and cash flows. In a market like India, such orders need government support until new policies are in place and the demand is established. Once that happens, private enterprises can compete.
  
  For instance, a chip designer start-up in Bangalore with designs for TV and broadband cards using TV White Space has had to scramble to manufacture complete products to bring their prototypes to market. Without sustained buying, they'll languish like other device manufacturers overseas, with episodic sales to narrow markets. That's because developing economies are likely to be bigger markets for these devices than developed economies, but only after policies allow deployment; secondly, there's insufficient support in developed markets. The irony will be if Indian innovators can get only offshore prospects like Huawei as partners or investors.
• Unremitting government effort in the systematic development of basic infrastructure services (at the primary level, besides communications, there's power, transportation, water and sanitation, basic health and education; at the secondary level: communities, markets and financial systems) will round out the potential for India as a producer economy as well as a large and growing market.

This is the work that now needs to get done: accept the reality of our infrastructure deficiencies, change our spectrum and network sharing policies, plan step-by-step, and execute for results.

It is praiseworthy that the panel emphasizes the separation in regulatory terms between the network layer and the service layer.  This also means that telecom carriers should be regulated differently from OTT services.

Licensing of Communication OTT Services

The proposal by the DoT panel of a licensing regime for communication OTT services is a terrible idea.  It would presumptively hold all licence non-holders to be unlawful, and that should not be the case; as the panel itself notes, apps that lower the cost of communication are a welcome development and should be encouraged by the government and not made presumptively unlawful.

While it is in India's national interest to want to hold VoIP services to account if they do not follow legitimate regulations, it is far better to do this through ex-post regulations rather than an ex-ante licensing scheme.

A licensing scheme would benefit Indian VoIP companies (including services like Hike, which Airtel has invested in) over foreign companies like Viber, or free/open source technologies like WebRTC.  The Universal Licence is designed for a world where all the licencees have an operational presence in India.  This is not true of communications OTT services.  Therefore a licensing regime would unjustly favour some services over others.

Further, VoIP services need not be provided by a company: a person can choose to run XMPP, SIP, or Mumble — all of which are protocol that support VoIP — on their own computers.  Will a licensing regime force such individuals' many of whom may not be Indian nationals — to become licence-holders if they facilitate domestic communications within India?  The DoT panel report doesn't say.  This would also result in a licensing regime unjustly favouring some services over others.

The report also doesn't say how one would distinguish between OTT communication services and OTT application services, when many apps such as personal assistance apps like HelpChat, are centred around communications.  It also does not mention what regulatory distinction exists between text communication services and video/voice communication services, or between purely domestic and international video/voice communications.  Stating that certain telecom companies are currently earning most of their revenue from domestic voice traffic will not suffice as a regulatory, just as it did not suffice to say that VSNL's international telephony monopoly earned it a lot of money.  Regulatory fairness is the important issue and not protecting specific business models.  Thus, there is no rational distinction to be drawn.  Even if the panel has some regulatory distinction that it has not stated, this is an impossibility to enforce.  Much domestic IP traffic is 'round-tripped', with traffic leaving India and coming back in.  How would the regulator propose to regulate that?

Will there be a revenue-sharing mechanism, as is currently the case under the Unified Licence?  If so, how will it be calculated in case of services like WhatsApp?  These questions too find no answer in the report.

Given these numerous objections and unanswered questions, the government would be well-advised not seek to license OTT communications services.  Instead, it would be useful for the government to hold public consultations about:

1. What Universal Licence conditions makes sense in the world of IP-based services, and international services?
2. How can we frame ex-post regulations that address legitimate concerns?  Is there overlap with provisions of the IT Act such as s.69, s.69B, s.79, and others?
3. How can we ensure that the regulatory burden for telecom players with respect to their being able to provide IP-based services that are equivalent to OTT communication services?

Net neutrality

While the DoT panel reiterates a number of times that the core principles of Net neutrality should be adhered to, it nowhere defines what these core tenets are.  We suggest the following definition:

• net neutrality is the principle that we should regulate gatekeepers to ensure they do not use their power to unjustly discriminate between similarly situated persons, content or traffic.

The above definition applies to the way the ISPs treat consumers, treat interconnecting networks, as well as the way they treat traffic internally.
We agree with the panel that in that while Net neutrality should find place in a new law, for the time being Net neutrality principles can be enforced through the licence agreement between the DoT and telecom providers.

Traffic Management

It is unclear what precisely the DoT panel means by "application-agnostic" and "application-specific" network management.  Different scholars on this issue — such as Barbara van Schewick and Christopher Yoo — mean different things when they use the word "application".  Without a definition, it is difficult to say whether the panel's recommendation on that front are sound.
Instead, we suggest the following tests:
Discrimination between classes of traffic for the sake of network management should only be permissible if:

• there is an intelligible differentia between the classes which are to be treated differently, and
• there is a rational nexus between the differential treatment and the aim of such differentiation, and
• the aim sought to be furthered is legitimate, and is related to the security, stability, or efficient functioning of the network, or is a technical limitation outside the control of the ISP, and
• the network management practice is the least harmful manner in which to achieve the aim.

As for the provision of enterprise and managed services, which we more broadly term "specialized services", we would recommend:

• Provision of specialized services is permitted if and only if it is shown that
• The service is available to the user only upon request, and not without their active choice, and
• The service cannot be reasonably provided with "best efforts" delivery guarantee that is available over the Internet, and hence requires discriminatory treatment, or
• The discriminatory treatment does not unduly harm the provision of the rest of the Internet to other customers.

Lastly, we would recommend that the above regulatory guidlines only be applied against ISPs, and not against public providers of Internet connectivity, such as a library, a school, an airport, a hotel, etc.

Zero-rating

On the contentious issue of zero-rating, a process that involves both ex-ante and ex-post regulation is envisaged to prevent harmful zero-rating, while allowing beneficial zero-rating. Further, the report notes that the supposed altruistic or "public interest" motives of the zero-rating scheme do not matter if they result in harm to competition, distort consumer markets, violate the core tenets of Net neutrality, or unduly benefit an Internet "gatekeeper".

Much of the discussion around zero-rating has been happening around an assumption of common understanding of the phrase.  Unfortunately, that is not true.  There is no consensus as to whether a "special Facebok pack of 200MB for Rs.20" offered by a telecom company constitutes zero-rating or not.  Without a working definition of zero-rating, not much progress can be made.

We propose the following as a definition:

• Zero-rating is the practice of not counting (aka "zero-rating") certain traffic towards a subscriber's regular Internet usage.

The zero-rated traffic could be zero-priced or fixed-price; capped or uncapped; subscriber-paid, Internet service-paid, paid for by both, or unpaid; content- or source/destination-based, or agnostic to content or source/destination; automatically provided by the ISP or chosen by the customer.

We believe that zero-rating can be non-discriminatory in nature, and such zero-rating should not be prohibited.  Having a system with both ex-ante and ex-post checks is rather heavy-handed regulation, but since the issue is very contentious in India, we believe it might be merited.

We thank you for giving us this opportunity to comment.
Pranesh Prakash, Policy Director at the Centre for Internet and Society

The article originally published in the Business Standard on September 2 was mirrored in Organizing India Blogspot on September 3, 2015.

Will the government's variant of "speak softly and carry a big stick" deliver Digital India in a hurry? Unlikely, because the problem is an overloaded system with a too-spare design, and insufficient cash flows. Increasing call drops are a symptom of inadequate carrying capacity for the demands of traffic, from voice to data in 3G and 4G. These are structural problems, because the system doesn't generate sufficient investible funds; nor are conditions right to develop such investment capacity; nor are the prospects demonstrably healthy. The situation requires the policy changes outlined below, which only the government can bring about, as it has in the past.

A fundamental aspect of the problem is low spectrum availability. India's operators have 12-15 MHz, compared with a global average of 45-50 MHz. Leading countries have even more; for instance, operators in Seoul reportedly have 10 times more spectrum than operators in India. Limiting the spectrum available to operators compels them to invest more to deliver a given level of traffic and quality than if more spectrum were available.

There are other aspects as well:

• high charges for licences and for spectrum, 8+4 per cent of (adjusted) revenues in addition to auction payments,
• imported equipment paid for with a weak stream of local-currency revenues,
• changes in spectrum holdings that require adjustment in equipment after older spectrum assignments lapse and new spectrum has been acquired, and
• the burgeoning need for new investments for 3G and 4G services. Embedded in the latter is the additional overload caused by tower shut-downs and the difficulties in getting additional sites, apart from the need for more capital.

Add regulations that hinder spectrum trading and sharing, and we have a sector that is structurally weak and restricted in scope.

As for call drops, operators in developed markets experienced similar capacity pressures when there was very rapid growth in data usage, for instance AT&T in the US and O2 in the UK some years ago. The difference is that they were able to invest rapidly to shore up their networks. By contrast, Indian operators had to invest disproportionately in acquiring spectrum, leaving less capacity for investment in networks. For example, in 2014 operators in China reportedly invested $35 billion in 4G equipment, whereas in India, only $3 billion went into equipment. Most of its $32-billion investment - $29 billion, over 90 per cent - was for spectrum. There has also been the diversionary effect because difficult business conditions in the sector led to profits being invested elsewhere, instead of back into communications infrastructure. The difference in approach and functional capacity is stark: China is moving ahead with building high-speed data capability, while the struggle in India is with dropped calls and simply keeping users connected. The government, therefore, needs to facilitate conditions whereby operators invest substantial amounts every year.

For this to happen, the structure of high charges for spectrum and licences relative to earnings has to change, as do restrictive regulations. The monthly average revenue per user in India at the end of 2014 was of the order of Rs 110-120. Capital expenditure ranged from 13 to 15 per cent of revenues in 2014, rising to 20 per cent in 2015. The latter exceeds the percentage invested in the US - but the revenue in India is about 25 times less than the $50 revenue in America, and the US has had well-developed networks for decades. Meanwhile, the recent spectrum-sharing guidelines that restrict more than enable effective sharing epitomise our dysfunctional regulations.1  It is baffling why the government would issue such retrograde regulation if the goal is digital development, because these guidelines do exactly the opposite of what is needed.

Government versus Private Sector
Meanwhile, there has been an escalating war of words between the government and service providers. The latter are trapped in a vicious circle of heavy investment requirement with low revenue-generation capacity, as explained above. Breaking out of this trap is possible only if the government develops conducive policies, as it did with the path-breaking changes associated with the 1999 New Telecom Policy (NTP-99). The change at that time was from up-front licence fees to revenue-sharing. It fell short because the government's share was too high, and began to work only after 2003, when government charges were reduced. In like manner, the government needs to frame policies applying similar principles to spectrum, and ultimately to network infrastructure, so spectrum and networks become more productive.

Our problems arise from three sources: regulations and government charges, operator behaviour and responses, and public opinion and the perceptions and actions of the judiciary. The government can take the initiative through creating policies that facilitate investment and service delivery. Many changes are purely administrative, such as permitting unrestricted spectrum sharing without additional "conversion" charges, or reducing licence and spectrum charges. Surely the department of telecommunications, the finance ministry, and the prime minister's office understand the logic of higher net present values that accrue from incremental revenues to operators. Conversely, any restriction of revenues or opportunity loss reduces the government's share, resulting in lower net present values. For example, restricting 3G roaming or insisting on payments to convert administered spectrum before it can be shared limit revenues, resulting in opportunity losses.

The government needs to be persuasive while acting decisively, to influence operators and public opinion through well-formulated systematic initiatives. Tighter monitoring of quality, including dropped calls, and related penalties are needed - but balanced with constructive policies. These could cover enabling regulations such as for roaming and secondary spectrum sharing with the government, and in developing a consortium approach for active network sharing initiated by the government with broad private participation, led by a private-sector partner. Other potential areas include enabling, organising, and facilitating broadband through cable networks, and inducting technologies such as TV White Space and satellites.

This is where the rhetoric of leading Team India has to be walked and not just talked, to persuade and lead the sector to collaborate and not undercut institutional development.

The Op-ed was first published in the Business Standard on August 5 and mirrored in Organizing India Blogspot on August 6, 2015.

Public opinion is conflicted, wanting better services at low prices, fearful of the hazard of more towers, while also wanting operators to pay dearly for spectrum through auctions. The government asserts there's enough spectrum and operators need only to invest and deliver. Can these be resolved to get better services?

There are several elements in this situation relating to technology, to the regulatory aspects of administration (policies and regulations), or to management aspects (structure, organisation and processes). Understanding these and managing them will be crucial in devising solutions.

First, an overview from a lay perspective. An operator runs a number of "cell towers" connected together, as well as to other operators' towers (mobile networks) and fixed networks. A cell tower in its simple form - for one operator, covering one cell/area - comprises a base transceiver station (radio), antenna (mast), and other equipment. Radios need spectrum for wireless communication between towers, and subscribers linked to towers.

Apart from spectrum and licensing costs, the number of towers in an area drives the capital and operating costs, materials and energy used, and the environmental impact. As each tower covers a number of subscribers and spectrum is used for wireless connections, more subscribers need more spectrum. So, a given set of towers provides greater traffic-carrying capacity if there is more spectrum. Conversely, less spectrum requires more towers and equipment, which means higher costs and environmental impact. In other words, for a given frequency range (spectrum band) and set of towers and subscribers, a small set of broader bands can carry more traffic than can a large set of narrower bands.[1]

Calls get dropped or blocked if there is too little spectrum for the number of subscribers, because the calls exceed the spectrum's carrying capacity. Users get good reception if they are near towers, but if other towers are too close, interference from signals from those towers can reduce the capacity of available spectrum, and reception may also be noisy. A weak connection with a distant tower results in poor reception. Distance cuts both ways: a short distance from tower-to-user yields a good connection (strong signal), but other towers must be far enough to avoid interference (i.e., have weak signals for the user). For 900 MHz with a mast height of 10 metres, this tradeoff results in distances between towers of under 100 metres in Delhi because of the scarcity of spectrum, compared with 200 metres in Istanbul, 300 metres in Munich, or 350 metres in Berlin.[2]

An additional benefit of more spectrum is that peak-hour capacity increases, so that more traffic can be carried without calls being dropped or blocked over the same network configuration. Our problem is that we have many operators with narrow, non-contiguous slivers of spectrum. This further reduces the efficiency of the available spectrum.

A reduction of towers because of closure on account of public pressure or for environmental reasons creates genuine problems, but simply adding towers is only a partial solution, as it doesn't remedy the shortage of spectrum. One reason is interference resulting in the reduced capacity of available spectrum - because cells in our urban centres are less than 100 metres apart, much less than in other countries, because sufficient commercial spectrum hasn't been made available. Therefore, more towers alone will cause spectrum to be used less efficiently, but won't reduce dropped calls arising from insufficient, fragmented spectrum. Also, adding towers is expensive, and is detrimental to the environment.

Operators deal with scarce spectrum by deploying more base stations per unit area, and also by using advanced technologies such as adaptive multi-rate codecs and synthesised frequency-hopping. In 2008, Indian operators were among the few worldwide to adopt such techniques, while having the smallest outdoor sites and heaviest traffic densities per MHz.[3] This results in higher costs relative to revenues.

Contrast with China

Comparing the approaches taken by China and India, there's little doubt of the need for a change in our approach. China provided operators with low-priced spectrum to scale up and drive economic growth, among other forms of support. Despite foreign holdings, it hasn't imposed substantial fees. India brought in more operators than other markets, didn't provide as much commercial spectrum, fragmented what it had, and priced it out of sight. Consequently, substantial spectrum is idle with the government, while large operators with very little spectrum and the legacy of underdeveloped fixed networks have over 100 million customers each, with high voice and growing data usage. This situation is likely to worsen as more spectrum holdings come up for renewal.

Efficient data transmission requires even broader bands. The charts below show how capacity increases per MHz with broader bands, and the bandwidth in terms of megabits per second (Mbps) needed for services.

Capacity Increases with Broader Bands

Possible solutions

One possibility is to adopt policies and regulations that facilitate spectral efficiency, e.g., allowing roaming and spectrum trading. This wouldn't mitigate the problem of excessive capital expenditure on spectrum auctions that exceeds investment in networks (according to an industry estimate), but would probably improve spectrum utilisation.

Another is to share all spectrum through pooling, allowing common-carrier access on payment to Radio Access Networks including spectrum. If charged only a reasonable revenue share with incentives such as reductions for rural services, there is likely to be explosive growth in broadband delivery with an increase in government revenue, if the organisation and coordination is done right. The government needs to bring together operators and other stakeholders, including the Ministries of Communications & Information Technology and of Information & Broadcasting, and with expert help, work out how to organise and deliver the promise of Digital India.

[1]. An assessment of spectrum management policy in India, 2008; p 10: http://www.aegis-systems.co.uk

[2]. For GSM, there is a 50 per cent increase in the capacity per MHz using two channels of 12 MHz each instead of two channels of 6 MHz each. Ibid., 15.

[3]. Ibid.,28.

The National Optic Fibre Network (NOFN) is a project launched by the Government under their 'Digital India' initiative. Implementation of the project is being undertaken by Bharat Broadband Nigam Limited (BBNL), a Special Purpose Vehicle (SPV) created for the project. ^[1] The project, launched in 2011, has seen multiple delays. The recent Expert Committee report on the project has now set an end-date for December 2016. It has also proposed an increase in the funding from 20,000 crore to 72,000 crore approximately. This is greater than a threefold increase.^[2] The Universal Service Obligation Fund (USOF) provides all the funding for the implementation of the project under an agreement between them and BBNL. ^[3] The close relationship between the two entities through their parent entity, however, can lead to a lax oversight of the entire process.

Universal Service Obligation Fund

USOF, established in 2002, provides effective subsidies to ensure telegraph services are provided to everyone across India, especially in the rural and remote areas. It is headed by the USOF Administrator who reports to the Secretary, Department of Telecommunications (DoT). ^[4] Funds come from the Universal Service Levy (USL) of 5% charged from all the telecom operators on their Adjusted Gross Revenue (AGR) which are then deposited into the Consolidated Fund of India, and require prior parliamentary approval to be dispatched.^[5] The USOF works through a bidding process, where funds are given to the enterprise quoting the lowest bid. However, the funds for NOFN were made an exception to this process since BBNL was the sole party involved in the implementation having being specifically created for it.^[6]

Agreement to Transfer Funds between USOF and BBNL

The agreement^[7] between USOF and BBNL provided for USOF to cover all the expenses of BBNL undertaken while working on NOFN project. It empowered USOF, amongst other things, to:

• Revoke the Agreement in Public Interest within 5 years from signing; and to re-new the agreement or not to re-new it

• Enforce Operating and Technical Condition upon BBNL while implementing the NOFN project

• Have the Right to Inspect, Test and Monitor the enforcement of such Conditions so imposed

Conflict of Interest between both parties

The Administrator of USOF functions as an attached office to the Ministry of Dot, and is required to report to them,^[8] while BBNL is an SPV established under the DoT^[9] and has an Memorandum of Understanding ^[10] with them. Since the parent entity of both the parties is the same, there is a definite conflict of interest. An analysis of USOF's largest and most ambitious program for mobile provisioning in rural areas showed slow progress due to^[11]:

• Lack of Accountability arising from the relationship between the Government owned incumbent and the USOF Administrator

• No proper evaluation of USOF

• Non-ring fencing of the fund

• Poor quality project management

Lack of Review Mechanism with effective power

Similarly in NOFN, if no effective review mechanism is evolved to check the progress of the timeline and implementation of the projects, it may prove ineffective.^[12] 3rd party review mechanisms have been suggested as an alternative to USOF mechanisms to ensure neutrality and efficiency^[13] since the the agreement gives USOF the Right to 'Inspect, Test and Monitor', but there is no effective Review Mechanism available with the USOF to actually undertake the task. The ones available would also be working under the DoT and hence operate under a conflict of interest which may be misused to disburse funds even though they are not being used efficiently or in a timely fashion.

Other Funding Options - Private Actors and State Govts.

The Expert Committee also looked into two other funding options. Bringing Private Actors on Board in implementation of Phase II of the Project was the first.^[14] This has been criticized as being unfair to Public Enterprises since they have been allotted the 'hard' areas while the Private Actors will get the 'soft' ones. ^[15] The abysmal record of Private Actors in Rural Areas has also been mentioned as a factor against them.^[16]

The second suggestion is to bring in State Governments. Andhra Pradesh has already decided to opt for its own SPV to implement NOFN while Kerala and Tamil Nadu are considering it.^[17] The problems with having multiple implementing bodies are:

• Transferring Funds to multiple bodies

• Having to track their work separately

• Lack of accountability for work done by them individually

Since a criticism of the current implementation mechanism has been based on the fact that 3 PSUs (BSNL, RailTel and PowerGrid) have been involved, having multiple SPVs would only add to the woes.^[18]

The project, having been delayed multiple times, is now set for a December-2017 end. The funding for it has also been tripled. Hence, when we see that the funds are being given away so easily to BBNL and without any effective procedure to maintain the efficacy of the work done, it raises questions on the accountability of the Government regarding the fund which has been collected through revenue from all telecom operators (via USL). Therefore, a more open mechanism has to be ensured to reduce chances of bias towards BBNL by USOF, both having the same parent entity leading to conflict of interest between the two. This should be the focus right now, rather than introducing new funding options.

The article was originally published by Business Standard on July 1 and also mirrored in Organizing India Blogspot on July 2.

Many of our politicians and bureaucrats and a large proportion of the public seem oblivious to how cash flows affect our political economy. This apparent absence of understanding (or flouting of fundamentals by opportunists who understand them but act in their own interests) shows up in many ways among all political parties in their approach to the basics: the provision and pricing of essential services such as security and law-and-order, electricity, broadband communications, transport, water, sanitation, and waste disposal. Without an understanding and acceptance of how essential cash flows are for providing these services, we can't realistically aspire to better living conditions. No matter how well or wealthy you may be, you still have to pick your way gingerly through the mess and the stench of your environs when you step out.

Cash flows are at the crux of the problems our governments face at the Centre and states, and that society is up against. They include all the legacy issues mentioned above of the inadequate infrastructure services that we endure, and extend even to problems such as the defence services pensions. While the National Democratic Alliance is not blameless, there are egregious instances among other political parties, such as the Aam Aadmi Party's (AAP's) actions on waste management and electricity supply in Delhi. The essential sticking points have been delayed (obstructed) cash flows, whether in paying sanitation workers or electricity distributors. These instances are mentioned only as indicative examples, as their processes hark back to the habitual practice of governments at the Centre and the states of delaying payments, whether it is fertiliser subsidies to manufacturers (a central government "habit" for decades), or setting realistic tariffs and making prompt payments to electricity distribution companies, as in the case of state governments running Delhi. Various parties - the Congress until 2014 and the AAP thereafter - have themselves been victims of the structural constraints of electricity generation plants with antiquated, inefficient equipment, as in the old coal-based plant at Badarpur, or efficient, modern plants using gas caught in an upward price spiral with domestic gas not being available, such as at Bawana.

In the communications sector,constrained cash flows limit services. One rough estimate is that cumulative charges for spectrum amount to about Rs 1.8 lakh-crore ($30 billion), roughly equal to the total amount invested in networks and equipment. In other words, operators could have invested double the amount in networks and equipment if it had not been paid in government charges. Operators had to take on significant debt for prior payments, thereby hampering their ability to invest in extending and upgrading their networks.The operators' financial constraints constitute one major reason that a market hungry for data services is starved. (Another major reason is the technology constraint of narrow, noncontiguous bands of spectrum, but that is another tale).

The situation in electricity supply is much worse, because of the high and still growing level of stressed assets of the state electricity boards. Press reports estimate that as much as Rs 53,000 crore may possibly become non-performing assets (NPAs) by the end of September.

There is a view that stressed assets and NPAs need not be a problem, because they can be readily sold to new owners who could reorganise the undertakings, which could succeed or go out of business if they fail. While this is theoretically possible, in practice, this is quite difficult and impractical to carry out, especially in hard times. Banks typically are not equipped to take over a number of non-performing businesses and run them until they can dispose of them. Secondly, considering the problems of being profitable in bad times combined with generating cash for operations in downbeat markets, it is unlikely that there will be acceptable buyers willing to pay reasonable prices for loss-making assets.

One difficulty in addressing such issues is that the basic concepts - of cash flows, of numbers from operations in the profit-and-loss statement in tightly coupled lockstep with the balance sheet, which leads to the cash flow statement, require a level of effort to understand that many are unwilling to put in. Cash flows are measurements of flow, whereas profit-and-loss and balance-sheet items are accumulated over specified periods such as a month or quarter, i.e., statements of stock,with no easily discernable relationship to actual cash movements in those periods. There are additional complexities in delving deeper, e.g., in considering the similarities with the flow of liquids. As cash flows are in some ways comparable to liquid flows, there is research from the perspectives of fluid dynamics that requires an understanding of more complex mathematics, physics, or engineering. For those interested in exploring these aspects, further readings are suggested here.

Put intuitively, the key is in setting up and/or taking corrective action to facilitate smooth flows, with the recognition that disruptions create turbulence. Smooth flows are laminar, as the layers or lamina of fluid move easily without mixing (see diagram). Once turbulence sets in, it takes time and often additional effort (resources) to revert to smooth flows, because the obstacles have to be removed or worked around, and the vortices and eddies created by disruptions have to be stabilised and smoothed out.

The article was published in the Business Standard on June 3, 2015 mirrored in Organizing India Blogspot on June 4, 2015.

We want reforms, but don't want to pay for them. For instance, coal-based power needs additional investment to lower emissions. While beneficial, it will not be popular. Worse, sometimes even the path to resolution may not be clear, yet new ways have to be found, because business-as-usual along the paths taken is unsustainable going forward. This becomes evident in considering issues such as electricity distribution, where states have key responsibility and authority for some of what needs to be done. Concerning spectrum and coal allocation, there's widespread mistrust about operators getting something for nothing, sort of an East-India-Company syndrome, despite user benefits from lower rates and better services if there is appropriate regulation. We'll have to get over this mindset to stop doing ourselves in. This holds regardless of which party rules and at what level - the Centre, state or local government - or what their philosophy might be: rightist, leftist, something in between, or simply pragmatist.

The most prominent category of stranded capacity is where capital has been invested, but the capacity is unusable for some reason. Examples abound in infrastructure, in manufacturing, and in residential and commercial development, as detailed in the Economic Survey. But there are other categories of stranded capacity which are more difficult to address, because they are in the nature of opportunity costs rather than invested capital. They deserve equal attention because an opportunity loss, or benefit foregone from paths not taken, can result in as much detriment as from a stalled investment. But before we get into examples of opportunity costs, consider the more straightforward case of investments in power generation that are infructuous.

Stranded Power Generation

An estimated Rs 60,000 crore is unproductive in stranded power generation projects which stopped operating because fuel was unavailable. About a quarter of this relates to 31 gas-based plants of over 14,300 MW, nearly 60 per cent of the total gas-based capacity of 24,150 MW. Another 23 per cent or 5,500 MW is operating at below the 30 per cent plant load factor required to just cover costs. The government has devised a scheme using the Power System Development Fund to import liquefied natural gas to run some of these projects at 30 per cent capacity. Operators must compete through reverse-bids with a fixed tariff of Rs 5.50 per unit. The lowest bidders win PSDF support, which will be paid to distributors. There is a ceiling of Rs 3,500 crore to gas-based projects, and plants aggregating 8,000 MW had submitted bids by early May.[1]

Regarding electricity distribution, press reports suggest that states buy only 20-30 per cent of their requirement at the prevailing low spot rates in the last three months,ranging from Rs 2.56 to Rs 2.82 per unit. This is because of the distributors' committed power purchase agreements as well as their weaker finances. In some cases as in Delhi, some old plants incur highoperating costs, and power from clean, gas-based plants costs more.[2]

Another serious problem is that of "regulatory assets" in Delhi. This euphemism covers under-recoveries because tariffs were set too low for years in response to popular demand. There was a crisis last year when NTPC refused to supply power until the distributors paid their dues, while the state owed the distributors Rs 20,000 crore. The problem is ongoing; meanwhile, the regulator has increased tariffs, but not enough to recover past losses. While a number of states have begun transmission and distribution reforms,[3] it's already evident with rising generation that unless financial and distribution capacity are built on sound principles, electricity supply cannot stabilise for users. We must grasp the nettle of a disciplined, responsible approach.

On a broader front, the government has been coordinating meetings between government officials, banks, and the RBI, seeking to resolve problems affecting some Rs 3.51-lakh crore in stressed projects in steel, cement, power and transport.

Opportunity Losses (or The Road Not Taken)

The regulations on radio frequency spectrum show how administrative rules can deprive us of readily available benefits. The most glaring example is the prevention of roaming using 3G spectrum. The resource was available, and was allocated to operators for various locations, but their roaming agreements were disallowed. This doesn't help us, whether from the perspective of government's increased share of revenues from greater usage, or the denial of user benefits from a better service offering. Instead, this approach constrains capacity by an arbitrary rule. Such issues need to be reviewed and rationalised to unfetter latent capacity towards attaining Digital India.

Another instance is that of limitations imposed on spectrum sharing which have nothing to do with technology. The reason exclusive spectrum allocations were introduced years ago was to prevent radio frequency interference. Now, imposing arbitrary limitations on spectrum usage results in denying ourselves available capacity. More radical and complex alternatives like pooling spectrum and facilities, and common carrier access for certain services, deserve consideration for exactly the same reasons: increased productivity and benefits from investments already made. Otherwise, it is like stranded capacity in stalled projects.

The same issues apply to the auction of mineral rights for core industries in domestic manufacturing. Any ingenuous fascination with free-market principles in allocating resources that overlook the fundamental requirements of a strong manufacturing base in a large country, or that don't comprehend the realpolitik of how free-market dogma is selectively argued, will leave us farther behind on the road to prosperity.

This note sets out the law in relation to the unauthorized disclosure of personal information. Many thanks to Bhairav Acharya for his inputs on this.

Subsequently, on April 27, 2015, TRAI made all responses received by it public, including personal information like email addresses along with any information contained in email signatures, which invariably include a phone number or address. While disclosure of names was needed to ensure transparency in the consultation process, disclosure of personal information gave rise to criticism and questions around the legality of such disclosure.

This note sets out the law in relation to the unauthorized disclosure of personal information:
Section 43A of the IT Act provides for subordinate legislation to govern the manner in which sensitive personal data is collected and processed. The governance of personal information is dealt with under the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 (“2011 Rules”). The 2011 Rules are made to give effect to Section 43A of the IT Act.

TRAI is a body corporate as per Section 3(2) of the TRAI Act. Hence, TRAI’s collection, storage, and disclosure of personal information is governed by the 2011 Rules. Rule 5(8) requires personal information collected to be held securely. TRAIs publishing of email addresses is a violation of Rule 5(8).

Rule 4 of the 2011 rules requires a body corporate to have a privacy policy. On its website, TRAI publishes a Privacy Policy. However, the Policy speaks of information gathered from the TRAI- Website. Even the wording on the Home Page of the TRAI website (that links to these policies) says “Website Policies”. It is unclear therefore, whether the Privacy Policy applies ONLY to the collection of information over the TRAI- Website or whether the Privacy Policy applies to TRAI overall.

Either way there is an argument to be made. TRAI has failed to draft and publicize a privacy policy for the personal information it collects directly. Without prejudice to the above, if the privacy policy on the TRAI website governs this collection of email addresses, then its unauthorized disclosure is a contravention of its own Privacy Policy, specifically paragraph 2.

Since the IT Act does not enact a specific penalty for contravention of section 43A in respect of personal information, TRAI’s unauthorized disclosure will be penalized through the residuary penalty contained in section 45 of the IT Act.

Hence TRAI is liable under Section 45 of the IT Act read with Rules 4 and 5(8) of the 2011 Rules. Section 45 provides a “residuary penalty”; for those provisions under the IT Act or Rules for whose contravention no other penalty has been prescribed. For this contravention, TRAI would have to pay a compensation of 25,000/- to the affected persons or a penalty of 25,000/- rupees.

TRAI may argue that it disclosed that personal information would be disclosed/published. However, the Call for Comments Press Release says that Comments will be published. Email addresses are not comments, and therefore TRAI did not issue a prior disclaimer for the publication of this personal information – hence the disclosure of e-mail addresses is still a violation.

The remedy for violation of Section 43A of the IT Act is the Adjudicating Authority appointed under Section 46(1), which requires a person not below the rank of Director in the appropriate government to receive complaints. Since TRAI is a body corporate as per the Act, it is unclear as to who the adjudicating officer in the present case should be; and is the matter of a separate research question.

The Appellate authority is the Cyber Appellate Tribunal constituted under Section 48 of the IT Act . It is not known if the tribunal has been constituted, and if it has; it is unknown whether it is staffed.

In the absence of clarity with regard to statutory authorities, a citizen whose personal information has been disclosed by TRAI without authorization may file a writ petition in the Delhi High Court under Article 226, or in the Supreme Court under Article 32 for issue of a writ of mandamus or prohibition, for appointment of the first adjudicating officer and also for issuance of directions in lieu of such an officer.

The post was published in Organizing India Blogspot on May 8, 2015. It was earlier published on May 6 in the Business Standard.

The remarkable change in expectations from last May that the National Democratic Alliance (NDA) government achieved appears to be giving way to closer scrutiny based on actual performance. Meanwhile, the wait for significant economic reforms is excruciating.

A couple of indicators of uneasiness: foreign institutional investors (FIIs) have turned watchful, with investments in equity and debt slowing after sustained inflows. (See Chart 1).

Also, while some leading businessmen have been saying everything is on track, industry credit growth is slowing relentlessly, as is to be expected when demand is muted, infrastructure is dysfunctional and credit is expensive. (See Chart 2).

The flurry of claims, accusations, rebuttals and counter-claims about earlier growth rates dwell on reclaiming the past, with little evidence of seeking clues to generate momentum and confidence. This may be attributable partly to the curse of our times: a penchant for headline-grabbing or headline-making. There is scarce interest in less flamboyant, fact-based presentation - whether it is politicians, TV and print media, or the audience, the general public. This may also be partly attributable to inept communication, a malady that seems to plague this regime despite its vaunted communication skills as much as it did the United Progressive Alliance (UPA) before it. Perhaps the Web can be better used to not only organise and coordinate within and across ministries, but also to disclose information while building convergence and confidence.

Consider some points that stand out from the clamour. One is that insufficient attention is directed towards cohesive policies, processes and institutions. On the face of it, there do appear to be several efforts at policy reform, for instance, in land and labour legislation, as well as in judicial reforms. There are critiques, however, suggesting that these stand-alone efforts suffer from insufficient resource allocation and ineffective implementation. The implication is that there is an absence of overarching vision and flowing from that, a lack of direction and integration.

Are constructive alternatives possible?

Last week's observations by former NDA minister Arun Shourie highlighted this apparent lack of vision, and how the government seemed to be dealing with the many problems like pieces of a jigsaw puzzle without an appreciation of the big picture. For example, the government's actions relating to coal and spectrum auctions are merely in line with court orders. There is no apparent effort to develop constructive alternatives in the public interest.

From a societal perspective, surely the government, the courts and the public need to ask: for whose benefit and at what cost? For instance, how are upfront government revenues from auctions beneficial to the public if they result in non-delivery or a slowdown of requisite services, compared with much larger collections over time from enterprises that deliver services after criteria-based allocations?

Note: revenue sharing can also be transparent. For transparent allocations, one alternative is to draw up technical and financial shortlists with integrity, followed by a lottery (with equal integrity). Another possibility is merit-based, open criteria judged by individuals with understanding and integrity - as was done to affect a breakthrough for land acquisition for the Calcutta Metro in 1982 and for part of the Bengaluru Metro in 2006. Both were achieved effectively without controversy by officials (or, to use the customary pejorative, "bureaucrats") entrusted with the responsibility. These individuals could be consulted.

Cohesive Leadership

An elephant in the room is the NDA's socially divisive stance. If the goal is high achievement, the need for convergent effort from our diverse, vast population is a no-brainer. Strong leadership resulting in cohesive effort is essential. The misgivings created so far must be addressed and reversed. If not attempted now, it will be a tremendous opportunity squandered.

There will be, of course, many impediments to achieving convergent efforts. And the dissonant legacy structures - such as realigning the judiciary and executive to constructive engagement, a constructive welfare net in place of Mahatma Gandhi National Rural Employment Guarantee Act, formulating truly beneficial policies for our needs instead of aping detrimental auction models - will be difficult to replace.

It is likely that we will continue in our shambolic ways, depriving ourselves of the gains of organisation and productivity. Yet there is the tantalising possibility of great gains if we were to have the right leadership, and if we could ourselves rise to the occasion.

Infrastructure

Another elephant in the room is our atrocious infrastructure. Successive governments and all parties have foundered on this. Empty talk of "second-round" reforms and so on betray a complete lack of understanding of the elements of essential, enabling infrastructure. At the most basic level, electricity, communications, transport and logistics, water and sewerage/waste disposal are fundamental requirements for productive living. These must be the relentless focus of end-to-end delivery systems.

The reforms in power and communications since 1991 were encapsulated sub-processes, as in Chart 3. Each of the boxes is a complex process in itself, and each has its position in the process flow as shown. Electricity reforms relate to fuel, generation, transmission, distribution and cash collection. Unless all steps in the chain are completed, we will be left with stranded capacities in one or more of these "boxes", like stranded generation plants, as we have been so far.

For broadband communications, the areas are the access, aggregation and the core or backbone networks. The most difficult are the last-mile links in access networks. Elements like the National Optical Fibre Network (NOFN) backbone are stranded unless they are connected with aggregation networks that lead to last-mile access, which could be a wireless, cable, telephone wire, or an electricity link. The system must be designed in its entirety to deliver.

What began the information technology services revolution was facilitating every link in the chain from one end to the other, with permissions, incentives and tax cuts, even if it was only a "thin pipe", 64 kbps link that bypassed initial hurdles for a start. The government could consider variants that could work for each infrastructure sector.

Executive Summary

The principle objective of net neutrality is that “all the Internet traffic has to be treated equally without any discrimination”; but this has had different interpretations over varied contexts. While the discourse in India has often treated net neutrality as a singular policy construct, we break down net neutrality to its various components. We then individually contextualise each component to the unique characteristics of the Indian telecommunications industry such as dependence on wireless internet access, the fragmented and non-contiguous distribution of spectrum, high competition between TEL-SPs and low digital literacy. The evolving nature of markets and networks are also considered while taking into account various public policy perspectives.

In this submission, we also argue for the need to introduce reasonable regulatory parity between functionally equivalent communications services provided by OTT-SPs and TEL-SPs. We compare the regulations for OTT-SPs under the Information Technology Act 2000 (as amended) with the regulations for TEL-SPs under the Telegraph Act 1885 (as amended), the license agreements (UL, UASL, ISP-L) and TRAI Regulations. Based on an analysis of the current laws and regulations, we suggest how TRAI needs to intervene to create this regulatory parity (for example in areas such as privacy, spam/UCC, interception etc.).

Through the above analysis, we recommend an overall regulatory framework that should be adopted by the Government. The framework takes a nuanced approach to various components of net neutrality, contextualised to India, and also attempts to bring reasonable regulatory parity. Instead of compartmentalising TEL-SPs and OTT-SPs as two distinct actors, the recommended framework considers a two-layered approach which recognises that there is an overlap between TEL-SPs and OTT-SPs. The first layer comprises of network and infrastructure (collectively called the network layer) and the second layer comprises of services and applications (collectively called the service layer).

The framework further divides the service layer into “Non-IP Services”, “Specialised Services” and “Internet Based Services”. The concept of “Specialised Services”, which is borrowed from the European Union, refers to traditional services that have migrated to an IP architecture such as facilities-based VoIP calls to PSTN and IPTV, and are either logically distinct from the Internet or have special needs which the “best efforts” delivery of the general Internet cannot satisfy. This concept helps in applying different evaluation criteria to functionally equivalent “Non-IP Services”, “Specialised Services” and “Internet Based Services”. In the framework, “Specialised Services” are also recognised as an exception to net neutrality. The concept of “Specialised Services” also helps to create an incentive for continued investment in underlying infrastructure by TEL-SPs.

This framework has helped us to bring a more balanced approach from the perspective of both TEL-SPs and OTT-SPs, while also taking into account technological convergence. It has also helped us to bring a more nuanced approach to various issues comprising net neutrality such as zero rating, paid prioritisation etc. We have considered best practices from different international regimes and the pros and cons during implementation in order to determine the exceptions and boundaries of net neutrality that should be adopted in India.

Download the full text of the Response

The Op-ed was published in the Business Standard on March 4, 2015 and mirrored on Organizing India Blogspot on March 5, 2015.

Last week's Railway Budget is the first indicator of possibly better days, after all the rhetoric. Perhaps the reservations of some former railway ministers and excoriating comments such as "dreams without substance" have a basis. But in my reckoning, there's a sense of coming to grips with reality based on a rational evaluation, and a systematic approach through problem solving. This was backstopped by a finely balanced Union Budget that supports infrastructure and growth.

Going forward, we need more explicit articulation of detailed steps for execution and inter-sectoral linkages, which would be highly beneficial for the overall economy as well as for the Railways. For example, on how aspects of the Budget relate to stalled and stranded power generation, how these relate to electricity transmission and distribution, and the resolution of non-performing assets (NPAs) of banks. Additionally, the financial discipline of cash flows could be extended to substantially benefit other sectors. As for the financing relating to the Railways, the expectation that the details will be worked out needs to be met soon to establish credibility.

Setting aside all normative criticism, however, what's most important now is that the Railways delivers on this Budget. This will require more resolute coordination and emphasis on implementation than in the past, for example, in contrast to the poor implementation of the Electricity Act of 2003, a good piece of legislation that's unfulfilled.

Extending the approach of realistic goals with explicit action plans and execution could benefit other areas of the economy and infrastructure. The elements include:

1. Toning down the rhetoric, avoiding grandiose statements and instead, defining realistic objectives. It may be argued that realism and understatement are difficult, even counterproductive, when political rivals indulge in a race to the bottom in terms of giveaways. This is true of state elections, as in Delhi, and at the national level, in the confusing if not irresponsible allocation of substantial funds to the debatable benefits of the Mahatma Gandhi National Rural Employment Guarantee Act. The difficulty is that it needs responsible voters to act against opportunistic populism to discourage such gaming strategies in favour of better governance, but it will also need credible candidates with sound party positions and sustainable policies.
2. A willingness to depart radically from past practices for better results. For instance, no new trains were announced in this year's Railway Budget, a major, responsible departure from an otherwise pernicious customary indulgence.
3. An effort to develop a user-centric, outward-oriented strategy for improving services. This is the opposite of a department- or ministry-centric approach, emphasising the "scheme"-driven perspective of the department/agency for limited, piece-meal targets, as against an overall system in the interests of users.

Extending these principles to Digital India

Consider how these might apply to another flagship concept - Digital India - in telecommunications and broadband. Networks and their elements, including projects like the National Optic Fibre Network, would be treated as integral components - stepping stones or links in a chain, and not the ends in themselves - of a systemic delivery process for what users need: a broadband connection to the internet, which becomes the goal. In addition to the access to general information, telecommuting, entertainment and e-commerce through the internet, additional content relating to government, educational and health services would also need to be made available over time. Viewed from this perspective, the requirement changes from achieving targets for the installation of "x" km of fibre or "y" pieces of customer equipment, or the auction of "z" megahertz of spectrum, some of which may be stranded or not working, to achieving targets for end-to-end connectivity with high-speed access to the internet at reasonable prices for the population of users. A classic example of dysfunctional targets was the subscriber-based spectrum allocation rule, which sought to cram the most users on the least spectrum - akin to stuffing a highway with vehicles, instead of getting them to their destination.

From this vantage, it becomes clear that policies should facilitate users' access and connectivity to the internet. Therefore, systems and methods for access through elements that provide connectivity - spectrum, fibre-optic cable, coaxial cable, or "twisted-pairs" for ADSL - must be devised in an integrated manner and made available at low cost.

Networks are useful only if they are accessible to end-users. Here's where the analogy of no new trains applies: for broadband, it could mean giving up spectrum auctions that fragment delivery capacity while draining away potential capital that could be invested instead in networks. Bundling spectrum and other last-mile access technologies with stranded backbone networks seems the obvious way to reach end-users. Where fibre can't be laid and maintained economically, the intermediate linkage over several kilometres could be through reasonably priced wireless, with technologies such as microwave links in the six-gigahertz, 11-GHz, 18-GHz bands and so on, local multipoint distribution systems in the 28-32-GHz bands, TV white space (unused broadcast spectrum, for example, in the 600-MHz band), satellites, or 4G (LTE). For India with its present state of infrastructure, governments must choose to favour delivery to end-users, collecting tolls and taxes at the back end, after the revenues and profits are made. This is how mobile telephony succeeded in India. Broadband can succeed in the same way.

Another concept applicable from the Railways (and roads) is common-carrier access: all trains have access to common rail networks, just as all licensed vehicles have access to road networks, with additional tariffs for high-speed links like expressways or for captive rail. This is the way to achieve Digital India quickly, by adopting common-carrier principles on payment, whereby people in cities as well as the countryside can study, telecommute and conference for work anywhere, get health care, information and entertainment, sell their produce and artefacts, vote, and access government services.

The wisdom of the Railway Budget approach needs to extend to Digital India.

Under this policy, usage of VoIP services would henceforth be excluded from standard data usage packs and would instead be charged at standard data rates (of 4p / 10KB on 3G and 10p / 10KB on 2G).^[1] Alongside this modification to 2G and 3G packs, a separate data pack exclusively for VoIP services was to be introduced. ^[2]

The flurry of activity the announcement precipitated included widespread consumer and civil society outrage^[3], a statement by the Union Minister for Telecom^[4], a justificatory counter-statement by Airtel itself^[5] and ultimately, a statement by TRAI. ^[6] While it remains to be seen whether this was a calculated move by Airtel to kick-start the neutrality discussion in India (as some suspect^[7]), the implementation of the new policy/pack was deferred pending TRAI's proposed consultation paper on OTT services. ^[8]

In the context of the impending (though seemingly delayed^[9]) release this paper, we take this opportunity to study TRAI-linked output on network neutrality in the past. This study was carried out using RTI requests [Part I] and targeted keyword searches of the TRAI website [Part II].

Information received through RTI requests

We had filed the following request under the Right to Information Act, 2005 on the subject and net neutrality and any material available with them generated in the course of internal or other discussions:

____________________________________________________________________________________________________________________________________________________________________________________

In response to the same, we received the following reply which smacked of non-application of mind by the concerned officer to the request:

____________________________________________________________________________________________________________________________________________________________________________________

Targeted Keyword Searches of the trai.gov.in website

The article by Shyam Ponappa was initially published in the Business Standard on December 3, 2014 and mirrored in Organizing India Blogspot on December 4, 2014.

Comprehensive, Integrated Strategy & Execution

India has been coasting along on a post-feudal-colonial mélange of currents and tides, with the brigandage of opportunistic politics fed by our (the voters’) greed for short-term benefits. The result is grotesque populism and corruption in lieu of the deferred gratification of pleasing cities and countryside with the appurtenances of proper governance: sidewalks and drains, toilets, transport, administration and order, hospitals and schools.

We have to organize and manage ourselves, “engineer” our way ahead, taking active steps to build and develop our solutions, building systems and processes, and not just wait for things to happen. We need a comprehensive and integrated, systemic, silo-busting, problem-solving approach.

This applies across the board in the broadest “spatial planning” sense that integrates housing and land use at all levels with commercial, industrial, cultural, scientific and educational activity, transportation, and all governance and infrastructure: water, sewerage, energy, communications, basic health and education. Infrastructure being the first level of enablement is the essential starting point.

The 2014 Election - National Democratic Alliance II (NDA II)

Until the sweeping change resulting from the general election in 2014. The Modi-led BJP-dominated NDA government swept away the previous Congress government decisively, and seems set on making development the centrepiece of this stint in governing India.

Previously, India’s leaders acknowledged repeatedly that infrastructure is India’s great need. Yet, they took no steps [Addendum: see below for the exception: NTP-2011 in October, 2011] to marshal forces to draw up a credible strategy and execution plan. This is what needed doing. Only good intentions and/or money won’t do, because delivery systems and processes have to be developed, i.e., planned, then built from scratch.

It looks like the NDA II will seriously address the development of enabling infrastructure.  A beginning on a long way ahead.

The article published in Organizing India Blogspot on August 7, 2014. It was earlier published in the Business Standard on August 6, 2014.

An uneasy sense of drift has set in after the anticipation that accompanied the swearing-in of the National Democratic Alliance government. Surely, the government understands that its real task is to build on hopes and expectations, to channel energies, to organise and coordinate for results, even perhaps try bipartisan teams? The opportunity is to overcome factionalism and harness people's energies, instead of floundering in disunity. We need transformative policies, programmes and incentiveswith purpose.

Resolute efforts in specific sectors can change this sense of the same old same-old. Two aspects of infrastructure that need early attention are: first, solar power, and second,digital infrastructure (see "A great start by Modi government", June 5, Business Standard).

Solar power, critically important in its own right, is essential for digital infrastructure because of the poor grid supply. Disappointingly, the steps taken are more of the same. For instance, the renewal of the national solar mission. for an increased 1,500 megawatts, is on the same lines as before - that is, a 30 per cent subsidy for solar farms, accelerated depreciation and renewable energy credits (RECs) that provide subsidies for a fixed period. While the target is higher, it is minuscule compared to the potential, and relative to other energy sources. For distributed user installations, interest-free loans seem ineffectual, because the high prices are unchanged, although payable in instalments - hardly ground-breaking.

Could the government try a more radical incentive of zero tax on equipment in addition to a 30 per cent subsidy, with immediate reimbursement and stiff penalties for misuse? Lower capital costs would probably induce much more extensive deployment, spurring manufacturing and innovation through sheer volume. This is likely for solar farms as well, and these incentives could be made available if such farms are really desirable. The government would lose upfront taxes on equipment, but avoid the cost and complexities of the RECs and accelerated depreciation, while gaining taxes downstream from increased productivity.

Similarly, in communications, we need countrywide access to broadband at reasonable prices. Users could benefit from applications such as education at all levels, from secondary school to college to continuing education for adults, healthcare; e-commerce; remote working/telecommuting; government services, information; and entertainment. Of course, once we have broadband, we'd need the range of useful, attractive content and services that result in improved user satisfaction, as well as productivity. These "supplementary effects" will undoubtedly take time to develop and play out, but the prerequisite is the access.

On this score, the much-awaited spectrum sharing recommendations are sorely disappointing. Their intent is puzzling because they are so restrictive, limiting sharing to two operators who have acquired frequencies in the same band in the same manner, with a cap of 50 per cent.

Build and Run Communications Networks Like Roads

Perhaps the telecom regulator's recommendations on spectrum sharing are an opening gambit to explore active network sharing. The logic for network and spectrum sharing is compelling. With India's self-created spectrum constraints and genuine deficiencies of capital and network coverage, the rational approach for our developing economy would be to optimise their use, as with roads. For this, active network sharing, including radio access networks and spectrum, is the most efficient solution, as is the case for roads.

Unfortunately, our policies are at the other extreme, of spectrum auctions and exclusive networks. This is least efficient for extending underdeveloped infrastructure services, as building and operating multiple exclusive networks requires the most resources, including capital. Auctions may be a reasonable alternative where there's existing infrastructure, and the issue is of allocating resources to whoever can make the best use of them. In our situation and given our needs, the way we build and operate roads may be a better alternative to achieve coverage.

To see why, compare the contrasting approaches of building communications networks with highways and roads. Road developers not only don't have to pay auction fees for the right to build roads, they are paid periodically for the construction of the assets. Ownership of the assets is then transferred to the state or other agency, and all road tax and toll payers may use the facilities. Similarly, all licensed operators could have access to communications networks on payment. While payback periods are often longer for roads, the nature of the financial flows are the same: capital must be invested in building the network before revenues are generated from users. People need to be informed and educated about this inescapable process.

Sparsely populated rural areas have lower revenue potential than urban areas. Hence, communications networks and services in rural areas lag because of commercial considerations. This deprivation is aggravated by front-loading auction fees for spectrum, which curtails investments in the networks and services in areas with lower potential. Also, unless operators pool resources, exclusive usage militates against full utilisation of the infrastructure. Our policies should reflect all this, instead of restricting spectrum access and sharing, including for 3G.

The real irony is that the pay-for-use principle is well accepted for roads; yet the opposite principle of auctions is used for communications networks. This is the unintended consequence of accepting auctions without thinking through what we need in our circumstances compared with advanced economies, and how to achieve those objectives.

Our spectrum policies have resulted in small bands of non-contiguous spectrum holdings that severely restrict capacity. Besides, operators have to invest heavily simply to protect the assets built. Yet countrywide broadband services need more spectrum to be used much more effectively to facilitate last-mile access. The kind of solution we need is for all remaining spectrum to be used for a common-access network, owned by a consortium of operators, including state-owned Bharat Sanchar Nigam and Mahanagar Telephone Nigam as "anchors". Once integrated with existing networks, operators can commercially deploy services with enhanced capacity, for which they pay as they use, and get paid. Broadband can be revolutionised by setting this up and converting spectrum fees to pure revenue sharing, as happened for mobile telephony with licence fees years ago. With the benefit of hindsight, the fees can be set low from the start, with regulatory oversight to avoid predatory pricing, and growth will most likely explode.

On Tuesday, the Telecom Regulatory Authority of India (TRAI) held a seminar to initiate discussion on potential regulation of “over the top” services (OTTs) in India. TRAI organized the seminar to “understand perspectives of all stakeholders involved”, following grievances of telcos that OTTs are eating into their revenues and free-riding on their networks. In fact, a letter from the Cellular Operators Association of India (COAI) to TRAI outlines these concerns excellently. The letter, which I had the opportunity to see in print, objects that telcos take the trouble of laying and maintaining networks, while rapidly mushrooming OTTs eat into their revenue. Whatsapp, Skype and alternatives to paid text-and-call find particular mention in the COAI’s letter, and the COAI President Vikram Tiwathia was vociferous in his iteration of operators’ concerns. With VOIP and other OTTs replacing telco services, telcos are rapidly losing large parts of their revenue, he said.

I don’t mean to brush their concerns aside, of course. However, there is a need to consider in depth certain questions with statistical, regulatory and principled exploration. As Dr. Rajat Kathuria of ICRIER said at the Seminar’s first session, we need to evaluate whether there’s a need for regulation in the first place. This includes exploring whether the answer lies in deregulation, as Suhaan Mukerji of PLR Chambers and Subho Ray of IAMAI emphasized separately. Our solution, as Mr. Ray said, should not be to chain the free OTTs just because we are in chains ourselves. Unchaining telcos from their stringent licensing and other regulations may be more appropriate.

The Seminar was attended by telcos, OTTs, civil society and other stakeholders, and the frank exchange of views at the PHD Chamber of Commerce was heartening. While telcos in the room were broadly open to OTT innovation upon their networks (Mr. T.V. Ramachandran of Vodafone was particularly vocal on this), there exists a broadly reactionary loss-of-footing and apprehension over their current and projected revenue loss. Mr. C.S. Rao of Reliance was spot on when he said that telcos are afraid that what’s worked for them so far may not work in the future.

We’ve seen examples of such fear of incumbent operators before. In the early 1990s, the invention and spread of the Internet displaced appliancized, bundled models of telco services, and telcos were similarly unwelcoming. Indeed, AT&T went to court to fight the introduction of the Carterfone. In India, the falling demand for VAS today, and OTT-response to consumer demand, fosters such fear.

But accounting for OTTs’ lack of consumer servicing or responsibility for monetization models, what was of chief concern at the TRAI Seminar was the predominant focus on revenue. Telco profitability and their incentives for investment are important. Increasing supply side costs, with the government seeking to maximize revenue from spectrum allocation and demands of lower consumer prices, might be throttling current telco business models. We’d need to analyse data usage charges and projected mobile broadband penetration, in comparison with voice penetration, to be clear about the extent of such strangulation. But if the answer to failing telco business lies in further regulation and potential strangling of innovation, that’s a concern.

That’s in two ways. First, it isn’t merely the NetFlix or Google or Apple that populate the app economy. Raman Chima (ironically of Google) offered the example of Slideshare in Okhla, Delhi as one of the many successful Indian micro-multinationals. There are many others across India. Second, India’s current telecom regulatory model is unfit for a data/Internet content model. There’s a need, Suhaan Mukerji and Mahesh Uppal of ComFirst pointed out, to rethink our strict telecom licensing regime. We should begin to think, at least, of a vertically integrated layered model of telecom regulation that regulates on the basis of function.

These layers are integral to Internet architecture: network, transport, application. OTTs lie at the application layer, while telcos operate at the network and transport layers. It may be inefficient to utilize failures at one layer to regulate or share revenue of companies at other layers – that would stunt competition and innovation. A reconfigured licensing regime, permitting telcos to innovate more (someone at the Seminar said security clearances take years, while OTTs need no such clearance) might be more efficient and beneficial for all stakeholders involved – not least the disempowered individual consumers.

That’s my sense of the Seminar. Profitability and incentives are crucial. But they are crucial insofar as they benefit consumers – with access, choice, freedom of speech, security and privacy. Revenue sharing or partnership models, which were mentioned far too many times by multiple speakers without sufficient justification or elaboration, may not be ideal for any of us in the long term. But these are issues we – and TRAI – should consider while debating a regulatory framework.

Underlying infrastructure has an impact on our fundamental freedoms such as speech – the Supreme Court’s decisions in Sakal Papers and Express Newspapers makes that clear. Fast-paced innovation and the boundary-less benefits of a single, interoperable Internet have pushed us to favour security against freedoms. But every model we consider today – ad-based monetization, big data analytics – have implications that the NSA’s mass, cross-border surveillance has highlighted. Since TRAI is rethinking our regulatory framework for telecom and the Internet – and I envisage this going into a constructive consultation in the near future – these issues must inform its analysis and conclusions.

For more, read Nikhil Pahwa’s report over at MediaNama.

The article by Shyam Ponappa was published in the Business Standard on June 5, 2014 and mirrored in Organizing India Blogspot.

With such an unequivocal mandate, it would have helped to avoid jarring notes like the appointment of the principal secretary to the prime minister through an ordinance. Besides, the government has already shown wisdom in its actions in not rolling back the previous government's good schemes and in extending senior administrators' incumbencies.

If this wise approach continues to show in their thinking and action, greater support is likely from civil servants, citizens, and perhaps even opposition politicians, resulting in better outcomes. It's a question of pulling together towards common goals, or pulling in different directions. Think of the indecisive second term of the United Progressive Alliance (UPA), and recall that it was the Bharatiya Janata Party that stalled the functioning of Parliament on many occasions, including measures such as the induction of the Goods and Services Tax (GST). The general perception, however, was of a dithering UPA unable to coordinate and achieve results. In other words, impressions are more important than the reality of untidy facts.

This is why it's important that the PM and his team consciously create a good impression and carry people along. If they can do that, they are likely to achieve a great deal for us all. Instead, if they are perceived as heavy-handed, roughshod, and not going through due process, the salutary effects of exemplary leadership and governance are likely to be lost. The two-thirds who voted for others recently might well begin to converge, so that an opposition that is currently non-existent because it is dispersed, begins to coalesce. This could obstruct a high-handed government, or even try to pull it down. The result, as before, is likely to be irresponsible shouting matches and disruptive behaviour in Parliament that have stymied efforts to improve our lot.

The Tasks Ahead

• The need to build electricity generation from all sources;
• The supply of fuels, including the mining, transportation and pricing of coal, the development and pricing of hydrocarbons, hydroelectricity, nuclear fuel, and alternative energy sources;
• The requisite transmission and distribution systems, and their finances; and
• Issues related to retail pricing and collection in the context of our difficult legacy of unsustainable giveaways.

In addressing these, there are a couple of priorities suggested for the new government:

1. Infrastructure & Digital Access
The government seems serious about infrastructure. The PM's 10-point guidelines to his ministers begin with infrastructure reforms, mentioning health, water, education, roads, and energy as priority areas, with a separate mention of e-auctions for transparency.[1] Given this, one would expect that digital networks are an integral aspect of desirable infrastructure that provide people access to e-governance services.  However, if digital networks are not mentioned specifically among the government’s priorities, their importance is likely to be lost in the ensuing activities.  Meanwhile, the situation in the sector is complex and confusing, with conflicting demands from private sector contenders, state-owned operators MTNL and BSNL, I&B, and the Finance Ministry’s need for short-term revenues.  This is why issues relating to communications infrastructure deserve to be addressed and resolved with high priority, and the government needs to explicitly recognise this.

2. Solar Power: Incentives & Promotion
A baffling aspect of our energy policies is why solar power has not become a centrepiece of our daily energy use. Much of the country gets so much solar radiation for most of the year that it should be an obvious focus for an energy-hungry developing economy. It should be possible, one would think (without knowing how simple or complex it would be to engineer the solutions), to use solar power when it is available, and grid power when it is not. The ministry of new and renewable energy had a scheme for partial capital reimbursement and soft loans for individuals and groups until the end of March 2014.[2] It doesn't appear to have been particularly successful.

Surely our priority should be to devise and implement schemes that actively encourage individuals and groups to invest in distributed solar generation for themselves? A long-term approach may require feed-in tariffs and grid modifications, as well as changes in administrative policies including taxes, to ensure (a) a significant increase in solar power (b) with more locally manufactured equipment. In the short term, an appreciable increase can result from enabling changes in rules and procedures, and the reimbursement of some capital costs combined with reduced excise and taxes.

The scope at the macro and micro levels is immense, encompassing multiple ministries that add up to a vast tangle, like an immense Gordian Knot. Add the other aspects of infrastructure, and the list seems endless: networks that are essential to enable e-governance and productivity through communications, transportation - e.g., rejuvenating the railways, disentangling the stalled process of building highways and roads, air and water transport, water supply and sewerage, and so on. All these have to be addressed within the constraints of the fiscal situation, inflation, restrained economic momentum, employment generation, budgetary limitations, and the reconfiguration of asset pricing to make financial returns attractive relative to property and gold without disrupting property values and the banking system. It will certainly help if our energies converge on the tasks focussed on realising the requisite goals, instead of being frittered away on disunity and fratricidal skirmishing.

Despite the daunting tasks ahead the prospects are solidly encouraging, because of a clearly mandated government. Another positive factor is the swing in votes favouring development over regressive caste and religious affiliations or hand-outs. This happened abruptly, without warning. If such tremendous change is possible so quickly, imagine what good leadership and honest governance could pull off with an inspired and supportive citizenry.

The article was first published in the Business Standard on April 30, 2014 and in Organizing India Blogspot on May 1.

Comprehensive, Integrated Strategy & Execution

Let's hope a newly elected government has the coherence and leadership to begin to deal right away with the mess in infrastructure, learning from what has gone wrong before. There are problems galore with our infrastructure, but a couple of examples stand out for what to look out for and avoid in future initiatives. There's little doubt that we must improve our approach to projects and undertakings in terms of functionality and efficiency, and that digital infrastructure is a key requirement.

While this article is on prioritising digital infrastructure, let us not underestimate the problems of deficient infrastructure. For sustained high growth, equally critical needs relating to power and logistics, with its interdependent linkages between transportation - by road, rail, air and water, and the associated holding/staging areas of terminals, airports and ports - need to be addressed with organisation and capital for capacity and de-bottlenecking.

One example is the multiplicity of schemes to register individuals, including the Unique Identification (UID) orAadhaar scheme, the National Population Register (NPR), the multipurpose national identity card, the voter identification card, and so on1. Another example is the National Optical Fibre Network (NOFN) by Bharat Broadband Network Limited (BBNL). Accepting for the moment that these projects are well intentioned, there seem to be flaws right from the design stage, and on through execution. While the fallout from past errors has to be dealt with, it's most important to avoid these mistakes in fresh initiatives.

The UID and NPR projects apparently began without sufficient care in defining their purposes; they did not mesh seamlessly with each other and with other objectives and processes. This disjunction has carried through in implementing their design and execution2.

The NOFN aims to extend a countrywide network on the foundation of the existing fibre networks of state-owned entities Bharat Sanchar Nigam Limited (BSNL), RailTel and PowerGrid. This was to link over 245,000 village panchayats by the end of 2013, but is still undergoing limited trials. Given its magnitude, this requires vast capital investment that is unrelated to likely revenue generation in the short run. This critical infrastructure project is apparently behind time and over budget despite its reduced scope3. That said, such monumental undertakings and changes can't be expected to go like clockwork, and the considerable efforts being made should eventually contribute to positive outcomes. For instance, a Confederation of Indian Industry report prepared with the help of KPMG in 2013 outlines possible business models and ecosystems in four areas, namely, education, health care, banking and agriculture4. It's just that a thorough, comprehensive approach from the outset would be most beneficial.

In hindsight, what's lacking in both instances is proper organisation and co-ordination, the discipline of sound project management; and this is a missing piece in most areas of deficiency in governance, including infrastructure development. While a great deal of opprobrium is directed at corruption, there's little focus on these disciplines related to competent design, execution and delivery. Both depend on digital infrastructure. This is where real efforts must be focused to fix things, quite apart from dealing with corruption.

The "plumbing" of hardware, software, communications lines, and systems that enables effective use of information and communications technology is a critical necessity for our economic growth and well-being. While a balanced availability of energy, transportation and water supply/sewerage is required, in the short run, it is ICT that is likely to yield the broadest overall benefits and economic returns through multiplier effects, provided the others come up to minimum requirements. According to the World Economic Forum's (WEF's) Global Information Technology Report 2014 issued last week, the top 10 countries embracing information technology are Finland, Singapore, Sweden, the Netherlands, Norway, Switzerland, the United States, Hong Kong, the United Kingdom, and South Korea, in that order. The report includes a "networked readiness index" that ranks countries based on an assessment of their digital infrastructure and ability to use information and communications technologies to grow, foster innovation, and improve the well-being of their citizens.

Between 2012 and 2014, India dropped in networked readiness from 69th to 83rd out of 144 countries. By comparison, China dropped from 51st to 62nd, and Brazil from 65th to 69th. The WEF report says that India continues on its declining trajectory - and, among other things, that despite competitive markets (24th) and the availability of the latest technologies (58th), its difficult business environment and lack of digital infrastructure (119th) reflect in deprivation in education, resulting in limiting the creation of a wide skill base (101st). Our information technology and business process management (IT-BPM) sector is still largely oriented to external markets. For the financial year 2014, export revenues are expected to have grown 13 per cent to $86 billion. This is almost five times domestic revenues, estimated to have grown at 10 per cent to Rs 1.15 lakh crore (just over $19 billion).

Clear, convergent objectives and task-oriented processes and systems are not really part of our culture or vocabulary, barring sectors oriented to external markets like IT-BPM, and some corporations and professionals. There are, of course, rare individuals who excel, such as the former head of Delhi Metro, E Sreedharan, who maintained his reputation from the Konkan Railway and before that, Indian Railways. But it's not as if getting it right is a foregone conclusion for countries with a far better record of good systems and high-quality delivery - as evidenced, for instance, by Germany's increasing problems after turning away from nuclear energy. So, the incoming government needs to focus on starting to do things right, and that is the best way to create opportunities that can make the most of our demographics, and the potential of our large and increasing markets. It must view any scheme as part of an integrated, overarching system, and apply itself from the very beginning with care and understanding to defining the aims, objectives, and detailed processes so that they mesh and converge with what else is there.

1. An explanation of Aadhaar and NPR: http://egov.eletsonline.com/2012/04/there-is-actually-no-conflict-between-uid-and-npr/
2. A discussion on systems aspects such as authentication and data security: "Do we need the Aadhaar scheme?", February 1, 2012, Business Standard (http://goo.gl/j3P5vf)
3. "Reality check on the broadband dream", April 27, 2014, Business Standard (http://goo.gl/C9h4im)
4. "Creating viable business models for inclusive growth through the National Optical Fibre Network": http://www.kpmg.com/IN/en/IssuesAndInsights/ArticlesPublications/Documents/KPMG_CII_Broadband_Report_Final.pdf

The article published in the Business Standard on March 5, 2014 was mirrored in Organizing India Blogspot on March 6, 2014.

spectrum auction last month ended with over Rs 61,000 crore (about $10 billion) bid for the 900 MHz and 1800 MHz bands. Everyone seems upbeat: the government at high bids, and operators at staking out spectrum so that they can continue offering their services. The public at large seems enthused. Is there reason for good cheer? Consider some of the outcomes and the likely consequences.

Outcomes

• Dominant operators, namely, Bharti Airtel, Vodafone and Idea, have won enough spectrum to continue building their businesses. So has a new potential contender, Reliance Jio.
  
• Winners must pay the amounts they've bid, in addition to making further investments in networks. Their financial compulsion will be to increase prices to amortise a payment of nearly Rs 18,300 crore, followed by the remainder to be paid in 10 annual instalments after a two-year moratorium. Competition will provide a countervailing effect against price hikes. The annual payment by all operators after two years will amount to about Rs 4,400 crore. To put this in perspective, Bharti's profits for FY 2013 were around Rs 5,000 crore and Idea's around Rs 800 crore.

• This perpetuates the approach of operators paying first for the right to use spectrum, then dividing available spectrum for their mutually exclusive use. The corollary is that unless operators choose to share some of their infrastructure, as some do for mobile towers, each operator must invest in its own infrastructure. In the absence of voluntary infrastructure sharing to the extent permissible, multiple investments are needed to build parallel networks. This is comparable to railways or transportation companies setting up multiple countrywide railroad and road networks, each for their own exclusive use. The result is a very capital-intensive approach requiring much more investment, while not being sufficiently remunerative.

Consequences

• To the extent that there are front-loaded government charges, operators have less capital for network investments.
  
• Resource constraints result in service deprivation in low-potential areas, as is prevalent now. In other words, urban areas may be well served, but not less densely populated rural areas where the majority reside. It is for the same reason that metro cities are better served by airlines or transportation services: the profit potential is higher.
  
• The lack of amenities in rural areas means there is continuing demographic pressure to migrate to cities. The overwhelming societal need for the provision-of-urban-amenities-in-rural-areas ("PURA") is entirely sidelined. Yet, these are the amenities people need most for economic empowerment, productivity and better living conditions.

Contrast this with Sweden's approach to broadband, for instance. Sweden is a pioneer in the use of 700 MHz for broadband. A loosely translated quote from Sweden's information technology minister reads: "A hundred years ago, it was the ability to build good railways, good roads and good physical infrastructure that laid the foundation for jobs and growth. Today it is also about fast enough build-out of good mobile telephony." [1]

Another instance of constructive intervention, and that too in a developed metropolis, is the London Enterprise Panel's approach, because London's broadband is considered insufficiently competitive. Funds "will be invested where the market is failing (particularly where this is proving a barrier to business growth)".[2]

In India, the efficient 700 MHz and 800 MHz bands have not yet been assigned except for limited 800 MHz spectrum for CDMA. These bands are most effective for broadband in rural and semi-urban areas. However, auctions and high reserve prices militate against their effective deployment at low cost, thwarting an apparent remedy for our deficient coverage. Also, GSM operators have just bid aggressively in the recent auction to survive, and are loaded with debt. Only the financially strong Reliance Jio, which has not bid as much, can offer high bids. Vodafone may also be able to do so. So, one problem is reduced bidding capacity, but a bigger problem is reduced investment capacity: the higher they bid, the less likely they are to provide countrywide broadband quickly at reasonable prices.

Petroleum Levies

Petroleum levies comprise another range of high government charges on critical inputs. In 2006, the taxes on petrol amounted to 52 per cent of the retail price, and on diesel, 30.4 per cent with Rs 45 to the dollar, (Delhi price: Rs 45/litre when Brent crude was $65/barrel). Tax collections now amount to around 30 per cent for petrol and 18 per cent for diesel, with Brent crude at around $110/barrel, and petrol in Delhi at Rs 74/litre. While the percentages collected are lower, the amounts collected are about 70 per cent higher than in 2006 because of the increase in the price of crude oil at a time when the economy is slumping.

There is a rationale for collecting reasonable charges to cover construction and maintenance, environmental impact mitigation and waste disposal (clean-up), and to provide incentives. But it's time our governments stopped being extractive, and rationalised charges based on objectives and policies in the public interest. Governments and politicians should be addressing these, instead of doles and giveaways. The aim should be to maximise life-cycle benefits, which can be optimised by reducing short-term capture in favour of longer-term accruals from growth, and from policies designed to deploy productive infrastructure including applying the principle of common carrier access.

[1]. "Digital TV [700 MHz band] will now provide frequencies for cell phones", writes IT Minister Anna-Karin Hatt - Dagens Nyheter, February 27, 2014: http://www.dn.se/debatt/digital-tv-far-nu-lamna-frekvenser-till-mobilerna/

[2]. London Enterprise Panel - 2014-2020 European Structural & Investment Funds Strategy for London, January 2014: https://www.london.gov.uk/sites/default/files/London LEP ESIF Strategy 2014-20 (1).pdf

Day One

February 11, 2014

This year’s Internet Institute, hosted by the Centre for Internet & Society (CIS), kicked off in Pune to put a start to a week of learnings and discussions surrounding internet usage and its implications on individuals of society. Twenty two attendees from all over India attended this year, from backgrounds of activism, journalism, research and advocacy work.

Attendees were welcomed by Dr. Ravina Aggarwal, Program Officer for Media Rights & Access at the Ford Foundation, the event’s sponsor, who started off the day by introducing the Foundation’s initiatives in pursuit of bridging the digital divide by addressing issues of internet connectivity.

Internet Governance & Privacy, Sunil Abraham The Institute’s first session was led by Sunil Abraham, Executive Director of CIS, and engaged with issues of internet governance and privacy with reference to four stories: 1) a dispute between tweeters from the US and those in South Africa over the use of hashtag #thingsdarkiesays, which is said not to be as racially derogatory as it is in the US; 2) Facebook’s contested policies on photos featuring users breastfeeding, 3) a lawsuit between Tata and Greenpeace over the organization’s use of Tata’s logo in a video game created for public criticism of their environmentally-degrading practices, and lastly, 4) the case of Savita Bhabhi, an Indian pornographic cartoon character which had been banned by India’s High Court and which had served as a landmark case in expanding the statutory laws for what is considered to be pornographic.

Each of these stories has one major thing in common: due to their nature of taking place over the internet, they are not confined to one geographic location and in turn, are addressed at the international level. The way by which an issue as such is to be addressed cuts across State policies and internet intermediary bodies to create quite a messy case in trying to determine who is at fault. Such complexity illustrates how challenging internet governance can be within today’s society that is no longer restricted to national or geographic boundaries.

Sunil also goes on in explaining the relationship between privacy, transparency, and power, summing it up in a simple formula; privacy protection should have a reverse relationship to power—the more the power, the less the privacy one should be entitled to. On the contrary, a direct correlation goes for power and transparency—the more the power, the more transparent a body should be. Instead of thinking about these concepts as a dichotomy, Sunil suggests to see them as absolute rights in themselves—instrumental in policies and necessary to address power imbalances.

The Web We Want, Bishakha Datta
The Institute’s kickoff was also joined by Indian filmmaker and activist, Bishakha Datta, who had delivered the keynote address. Bishakha bridged together notions of freedom of speech, surveillance, and accessibility, while introducing campaigns that work to create an open and universally accessible web, such as the Web We Want and Sexuality and Disability. Bishakha stresses how the internet as a space has altered how we experience societal constructs, which can be easily exhibited in how individuals experience Facebook in the occurrence of a death, for example. Bishakha initiated discussion among participants by posing questions such as, “what is our expectation of privacy in this brave new world?” and “what is the society we want?” to encompass the need to think of privacy in a new way with the coming of the endless possibilities the internet brings with it.

Histories, Bodies and Debates around the Internet, Nishant Shah
CIS Research Director, Nishant Shah, led a session examining internet as a technology more broadly, and our understandings of it in relation to the human body. Nishant proposes the idea that history is a form of technology, as well as time, itself, for which our understanding only comes into being with the aid of technologies of measurement. Although we are inclined to separate technology from the self, Nishant challenges this notion while suggesting that technology is very integral to being human, and defines a “cyborg” as someone who is very intimate with technology. In this way, we are all cyborgs. While making reference to several literary pieces, including Haraway’s Cyborg: Human, Animus, Technology; Kevin Warwick’s Living Cyborg; and Watt’s small world theory, Nishant challenges participants’ previous notions of how one is to understand technology in relation to oneself, as well as the networks we find ourselves implicated within.

Also brought forth by Nishant, was the fact that the internet as a technology has become integral to our identities, making us accessible (rather than us solely making the technology accessible) through online forms of documentation. This digital phenomenon in which we tend to document what we know and experience as a means of legitimizing it can be summed in the modern version of an old fable: “If a tree falls in a lonely forest, and nobody tweets it, has it fallen?”

Nishant refers to several case studies in which the use of online technologies has created a sense of an extension of the self and one’s personal space; which can then be subject to violation as one can be in the physical form, and to the same emotional and psychological effect—as illustrated within the 1993 occurrence referred to as “A Rape in Cyberspace.”

Attendee Participation
Participants remained engaged and enthusiastic for the duration of the day, bringing forth their personal expertise and experiences. Several participants presented their own research initiatives, which looked at issues women face as journalists and as portrayed by the media; amateur pornography without the consent of the woman; study findings on the understandings of symptoms of internet addiction; as well as studies looking at how students engage with college confession pages on Facebook.

Day Two

February 12, 2014

Day Two of the Institute entailed a more technical orientation to “internet & society” across sessions. Participants listened to speakers introduce concepts related to wired and wireless internet connectivity devices and their networks, along with the network of internet users and how one may secure him or herself while “online.” Wireless & Wired Technology, Ravikiran Annaswamy Senior industry practitioner, Ravikiran Annaswamy had aimed to enable the Institute’s participants to “understand the depth and omnipresent of telecom networks” that we find ourselves implicated within. Ravikiran went through the basics of these networks—including fixed line-, mobile-, IP-, and Next Generation IP-networks—as well as the technical structuring of wired and wireless broadband. Many participants found this session to be particularly enriching as their projects aimed to provide increased access to internet connectivity to marginalized areas in India, and had been without the know-how to go about it.

Network, Threats and Securing Yourself, Kinglsey John
An instructional session on how to protect oneself was given by Kingsley John, beginning with a lesson on IP Addresses—what they are and the different generations of such, and how IP addresses fit into a broader internet network. Following, Kingsley demonstrated and explained email encryption through the use of software, Kleopatra, and how it may be used to generate keys to encrypt emails through Thunderbird mail client.

Evening Discussion

A handful of participants voluntarily partook in an evening discussion, looking at the role of big players in the global internet network, such as Google and Facebook, how they collect and utilize users’ data, and what sorts of measures can be taken to minimize the collecting of such. Due to the widely varying backgrounds of interest among participants, those coming from this technical orientation towards the internet were able to inform their peers on relevant information and types of software that may be found useful related to minimizing one’s online presence.

Day Three

February 13, 2014

The third day of the Internet Institute incorporated themes presented by speakers ranging from free software, to freedom of expression, to copyright.

Free Software, Prof. G. Nagarjuna
Chairman on the Board of Directors for the Free Software Foundation of India, Professor G. Nagarjuna shared with the Institute’s participants his personal expertise on software freedom. Nagarjuna mapped for us the network of concepts related to software freedom, beginning with the origins of the copyleft movement, and also touching upon the art of hacking, the open source movement, and what role software freedom plays in an interconnected world.

Nagarjuna looks at the free software movement as a political movement in the digital space highlighting the user’s freedoms associated to the use, distribution, and modification of software for the greater good for all. This is said to distinguish this movement from that of Open Source—a technical and more practical development-oriented movement. The free software movement is not set out to compromise the fundamental issues for the sake of being practical and in that sense, ubiquitous. Instead, its objective is “not to make everybody use the software, but to have them understand why they are using the software,” so that they may become “authentic citizens that can also resonate why they’re doing what they’re doing. We want them to understand the ethical and political aspects of doing so,” Nagarjuna says.

Open Data, Nisha Thompson
Participants learned from Nisha Thompson on Open Data; what it is, its benefits, and how it is involved in central government initiatives and policy, as well as civil society groups—generally for uses such as serving as evidence for decision making and accountability. Nisha explored challenges concerning the use of open data, such as those pertaining to privacy, legitimacy, copyright, and interoperability. The group looked at the India Water Portal as a case study, which makes accessible more than 300 water-related datasets already available in the public space for use from anything from sanitation and agriculture to climate change.

Freedom of Expression, Bhairav Acharya
Bhairav Acharya, a constitutional lawyer, traced the development of the freedom of speech and expression in India. Beginning with a conceptual understanding of censorship and the practice of censorship by the state, society, and the individual herself, Bhairav examines the limits traditionally placed by a nation-state on the right to free speech.

In India, modern free speech and censorship law was first formulated by the colonial British government, which broadly imported the common law to India. However, the colonial state also yielded to the religious and communitarian sensitivities of its subjects, resulting in a continuing close link between communalism and free speech in India today. After Independence, the post-colonial Indian state carried forward Raj censorship, but tweaked it to serve to a nation-building and developmental agenda. Nation-building and nationalism are centrifugal forces that attempt to construct a homogenous 'mainstream'; voices from the margins of this mainstream (the geographical, ethnic, and religious peripheries) and of the marginalised within the mainstream (the poor and disadvantaged), are censored.

Within this narrative, Bhairav located and explained the evolution of the law relating to press censorship, defamation, obscenity, and contempt of court. Free speech law applies equally online. Broadly, censorship on the internet must survive the same constitutional scrutiny that is applied to offline censorship; but, as technology develops, the law must innovate.

Copyright, Nehaa Chaudhari
CIS Programme Officer, Nehaa Chaudhari examined the concept of Copyright as an intellectual property right in discussing its fundamentals, purpose and origins, and Copyright’s intersection with the internet. Nehaa also explained the different exceptions to Copyright, along with its alternatives, such as opposing intellectual property protection regimes, including the Creative Commons and Copyleft. Within this session, Nehaa also introduced several cases in which Copyright came into play with the use of the internet, including Hunter Moore’s “Is Anyone Up?” website, which had showcased pornographic pictures obtained by submission bringing rise to the phenomenon of “revenge porn.” Instances as such blur the lines of what is commonly referred to as intellectual property, and what specific requirements enables one to own the rights to such.

Day Four

February 14, 2014

Day Four of the Internet Institute introduced concepts of eAccessibilty and Inclusion on the internet for persons with disabilities, along with patents as an intellectual property right. Participants were also assigned a fieldwork exercise as a hands-on activity in which they were to employ what they’ve learned to initiate conversation with individuals in public spaces and collect primary data while doing so. eAccessibility and Inclusion, Prashant Naik Prashant Naik started off the day with his session on E-Accessibility and Inclusion. Prashant illustrated the importance of accessibility and what is meant by the term. Participants learned of assistive technologies for different disability types and how to create more accessible word and PDF documents, as well as web pages for users. Prashant demonstrated to participants what it is like to use a computer as a visually impaired individual, which provided for an enriching experience.

Patents, Nehaa Chaudhari
Nehaa Chaudhari led a second session at the Internet Institute on intellectual property rights—this one looking at patents particularly and their role within statutory law. Nehaa traced the historical origins of patents before examining the fundamentals of them, and addresses the questions, “Why have patents? And is the present system working for everyone?” Nehaa also introduced notions of the Commons along with the Anticommons, and perspectives within the debate around software patents, as well as different means by which the law can address the exploitation of patents or “patent thickets”—such as through patent pools or compulsory licensing.

Fieldwork Assignment, Groupwork
Participants were split into groups and required to carry out a mini fieldwork assignment in approaching individuals in varying public spaces in Pune in attempts to collect primary data. Questions asked to individuals were to be devised by the group, so long as they pertained to themes examined within the Internet Institute. Areas visited by groups included the Pune Central Mall, MG Road, and FC Road.

Day Five

February 15, 2014

Day Five of the Internet Institute brought with it sessions related to themes of e-governance, market concerns of telecommunications, and so called “Digital Natives.” eGovernance, Manu Srivastava Vice President of the eGovernments Foundation, Manu Srivastava led a session on eGovernance—the utilization of the internet as a means of delivering government services communicating with citizens, businesses, and members of government. Manu examined the complexities of the eGovernance and barriers to implementation of eGovernance initiatives. Within discussion, participants examined the nuanced relationship between the government and citizens with the incorporation of other governing bodies in an eGovernance system, as well as new spaces for corruption to take place.

Market Concerns, Payal Malik
Payal Malik, Advisor of the Economics Division of the Competition Commission of India shared her knowledge on market concerns of the telecommunications industry, and exclaimed the importance of competition issues in such an industry as a tool to create greater good for a greater number of people. She demonstrated this importance by stating that affordability as a product of increased access can only be possible once there is enough investment, which generally only happens in a competitive market. In this way, we must set the conditions to make competition possible, as a tool to achieve certain objectives. Payal also demonstrated the economic benefits of telecommunications by stating that for every 10% increase in broadband penetration, increase in GDP of 1.3%. She also examined the broadband ecosystem in India and touched upon future possibilities of increased broadband penetration, such as for formers and the education sector.

Digital Natives, Nishant Shah
Nishant Shah shed some light on one of the areas that the Centre for Internet & Society looks at within their research scope, this being the “Digital Native.” As referred to by Nishant, the Digital Native is not to categorize a specific type of internet user, but can be said for simply any person who is performing a digital action, while doing away with this false dichotomy of age, location, and geography.

Nishant examines varying case studies in which “the digital is empowering natives to not merely be benefactors of change, but agents of change,” from the Blank Noise Project’s “I NEVER Ask for it…” campaign in efforts to rethink sexual violence, to Matt Harding’s foolish dancing with groups of individuals from all over the world.

As occurrences in the digital realm, however, these often political expressions may be rewritten by the network when picked up as a growing phenomenon, in order to make it accessible to online consumers by the masses. In doing so, the expression is removed from its political context and is presented in the form of nothing more than a fad. For this reason, Nishant stresses the need to become aware of the potential of the internet in becoming an “echo-chamber”—in which forms of expression are amplified and mimicked, resulting in a restructuring of the dynamics surrounding the subject—whether it be videos of boys lipsyncing to Backstreet Boys in their dorm room going viral, or a strong and malicious movement to punish the Chinese girl who had taken a video of her heinously and wickedly killing a kitten after locating her using the Human Flesh Search Engine.

Fieldwork Presentations, Groupwork

To end off the day, participant groups presented findings collated from the prior evening’s fieldwork exercise, in which they were to ask strangers in various public places of Pune questions pertaining to themes looked at from within this year’s Institute. Participants were divided into four groups and visited Pune’s FC Road, Mahatma Gandhi Road, and Central Mall.

Groups found that the majority of those interviews primarily accessed the phone via the mobile. There was also a common weariness of using the internet and concern for one’s privacy while doing so, especially with uploading photos to Facebook and online financial transactions. People were also generally concerned about using cyber cafes for fear of one’s accounts being hacked. Generally people suspected that so long as conversations are “private” (i.e. in one’s Facebook inbox), so too are they secure. Just as well, those interviewed shared a sense of security with the use of a password.

Day Six

February 16, 2014

As the Institute came closer to its end, participants got the opportunity to hear from speakers on topics pertaining the Wikipedia editing in addition to Open Access to scholarly literature.  Participants also worked together in groups to examine specific case studies referenced in previous sessions, and then presented their conclusions.

Wikipedia, Dr. Abhijeet Safai
The Institute was joined by Medical Officer of Clinical Research at Pune’s Symbiosis Centre of Health Care, Dr. Abhijeet Safai, who led a session on Wikipedia. Having edited over 3700 Wikipedia articles, Dr. Abhijeet was able to bring forth his expertise and familiarity in editing Wikipedia to participants so that they would be able to do the same. Introduced within this session were Wikipedia’s different fundamental pillars and codes of conducts to be complied with by all contributors, along with different features and components of Wikipedia articles that one should be aware of when contributing, such as how to cite sources and discuss the contents of an article with other contributors.

Open Access, Muthu Madhan
Muthu Madhan joined the Internet Institute while speaking on Open Access (OA) to scholarly literature. Within his session, Muthu examined the historical context within which the scholarly journal had arisen and how the idea of Open Access began within this space. The presence of Open Access in India and other developing nations was also examined in this session, and the concept of Open Data, introduced.

Case Studies, Groupworks

Participants were split up into groups and assigned particular case studies looked at briefly in previous sessions. Case studies included #thingsdarkiessay, a once trending Twitter hashtag in South Africa which had offended many Americans for its use of “darkie” as a derogatory term; the literary novel, The Hindus, which offers an alternative narrative of Hindu history had been banned in India for obscenity; a case in which several users’ avatars had been controlled by another in a virtual community and forced to perform sexual acts, referred to as A Rape Happened in Cyber Space; and lastly, a pornographic submission website, Is Anyone Up?, for which content was largely derived from “revenge porn.” Each group then presented on the various perspectives surrounding the issue at hand.

The Cyborg, Nishant Shah
Nishant Shah led an off-agenda session in the evening looking more closely at the notion of the human cyborg. Nishant deconstructs humanity’s relationship to technology, in suggesting that we “think of the human as produced with the technologies… not who produces technology.” Nishant explores the Digital Native as an attained identity for those who, because of technology, restructure and reinvent his or her environment—offline as well as online. Among other ideas shared, Nishant refers to works by Haraway on the human cyborg in illustrating our dependency on technology and our need to care for these technologies we depend on.

Day Seven

February 17, 2014

The last day of the week-long Internet Institute examined concepts of Internet Activism and Domestic and International Bodies. Some participants led presentations on topics of personal familiarity, before a final wrap-up exercise, calling upon individuals to share any new formulations resulting from the Institute.

Internet Activism, Laura Stein

Associate Professor from the University of Texas, Laura Stein, spoke on activism on the internet. Laura examined some grassroots organizations and movements taking place on the online and the benefits that the internet brings in facilitating their impact, such as its associated low costs, accessibility and possibility for anonymity. Despite the positive effects catalyzed by the internet, Laura stresses that the “laying field is still unequal, and movements are not simply transformed by technology.” Some of the websites exemplifying online activism that were examined within this session includes the It Gets Better Project, which aims to give hope to LGBT youth facing harassment, and the national election watch by the Association for Democratic Reforms. Additionally, Laura spoke on public communication policy, comparing that of the US and India, and how this area of policy may influence media content and practice.

Domestic and International Bodies, Chinmayi Arun
As the Internet Institute’s final speaker, Research Director for Communication Governance at National Law University , Chinmayi Arun, explores the network of factors that affect one’s behavior on the internet—these including: social norms, the law, the markets, and architecture. In referring to Lawrence Lessig’s pathetic dot theory, Chinmayi illustrates how individual’s—the pathetic dots in question—are functions of the interactions of these factors, and in this sense, regulated, and stresses the essential need to understand the system, in order to effectively change the dynamics within it. It is worth noting that not all pathetic dots are equal, and Google’s dot, for example, will be drastically bigger than a single user’s, having more leveraging power within the network of internet bodies. Also demonstrated, is the fact that we must acknowledge the need for regulation by the law to some extent, otherwise, the internet would be a black box where anything goes, putting one’s security at risk of violation.

Hot Question Challenge
The very last exercise of the Institute entailed participants asking each other questions on demand, relating back to different themes looked at within the last week. Participants had the chance, here, to bridge together concepts across sessions, as well as formulate their own opinions, while posing questions to others that they, themselves, were still curious about.

The Current Scenario – Wi-Fi, GSM and CDMA: A Primer from the Perspective of Spectrum Coordination

Sharing spectrum is not a radically new idea: it's probably being shared in many places in your living room. Your family's phones could be communicating with your laptops using Bluetooth; your Wi-Fi router is sharing Wi-Fi spectrum with your next door neighbor's. There is no central brain that tells each device how to share spectrum, but each device pair (phone+laptop, for example) has some unique identifier (a code) that enables them to hear each other over the “noise” created by the other devices, as though they were speaking different languages. Each device can access the same frequencies at the same time and place, but does not know in advance which other devices are going to use them, and as long as there aren't too many such devices close to each other, the scheme works well.

From a technological standpoint, this is one of two kinds of spectrum coordination that's currently in wide use: the second is where each device is given a narrow sliver of frequency to itself for a specified period of time.[1] This is what happens with GSM cellphone technology: the service provider's tower allocates frequency — from the pool of frequencies available — to users on a per-call basis: this is called Frequency Division Multiple Access, or FDMA. GSM further divides access between different users in the same frequency channel in the time domain with bursts of data of the order of milliseconds, something called Time Division Multiple Access or TDMA; you'd be sharing your frequency channel with up to seven other people[2] and your content would be sent in sub-millisecond bursts approximately every five milliseconds.

Code Division Multiplexing, or CDMA, Is concept that assigns a user a 'code' for the duration of her call that effectively makes interference from other users, with other codes, appear as noise. The following picture illustrates FDMA, TDMA and CDMA:[3]

The preceding discussion would suffice for a single cell tower, alone in a desert. In the real world, there's more than one tower, so we'll have to create a system so that no two adjacent towers end up allocating the same frequency at the same time. The simplest way to do that, and the only one currently used, is splitting the available spectrum such that the range of frequencies available to a tower does not intersect with that available to any of its neighbors, ever – that way, a tower can only allocate from its own set of frequencies, but it need not concern itself with what its neighbors are doing. If adjacent towers were to share spectrum, then the preceding condition only needs to apply at that exact moment in time – at that precise instant a tower should be aware of the frequencies being used by all towers that are close enough to interfere with it, and pick a frequency outside that set, which it can use for the duration of a call.

Frequency Reuse

When there weren't so many cellphones crowding up the spectrum, it did not make economic sense to invest in the extra infrastructure required to make neighboring towers  'talk' to each other with low latency, so the solution we have now, even within the towers of a single service provider, is that any tower's neighbors do not intrude upon the spectrum assigned to that particular tower — what a neighbour is in this statement is qualified below. To start with, let's look at how towers could ideally be placed. We want to place towers on the ground in some regular pattern that makes them end up equidistant from each other: there are as many ways of doing that as there are of tiling a plane, which you can think of as tiling a bathroom with regular shapes (called 'regular polygons' by the pedantic).

Starting from the simplest, we can do it with tiles shaped like triangles, squares or hexagons, and a little thought will convince you that these are the only choices. Since a tower's signal would be 'strong enough' only up to some maximum radius, we'd ideally like to tile our plane with circles, but if we settle for the next best thing, the closest shape to a circle with which to tile the plane is a hexagon, in a honeycomb pattern; if you're looking at it from above, the towers would be placed as in the diagram below.[4]

This is just a part of a much larger honeycomb on the ground; the towers go in the center of the hexagons, where the numbers are; why the numbers are as they are will become clear in a couple of lines. Let's focus at tower 1 in the center of the diagram for our example. If the signals decay slow enough — so that the signals radiated from the nearest neighbors (towers surrounding 1, i.e. 2 through 7) and the next-nearest neighbors (towers two steps away from 1, with numbers from 2 through 7), interfere significantly with tower 1 in the center, but the next-to-next-nearest neighbors (three steps away from 1) do not, then the frequency reuse pattern can be like what we see in the diagram above, with towers denoted by the same number (and only the same number) using same exclusive set of frequencies. In this example, the closest towers with the same frequency as the central tower are the 1's in the hexagons at the edge – the frequency reuse factor is 3 (see footnote). In this diagram, the ordering of the numbers makes no difference – the situation would be the same if we exchanged the position of every, say, 1 and 3.

In reality the grid of towers of a particular operator covering a city is rarely hexagonal, due to local constraints, so what needs to be taken care of is not to use the frequencies that the nearest neighbors, next-nearest neighbors and so on are using depending upon the frequency reuse factor.[5] It's clear that without the towers being able to communicate in near-real time, with and FDMA/TDMA system like GSM, this is the optimal — and, in fact, the only — way to go.

Neighbouring towers sharing spectrum

Everything changes, though, if the towers can communicate and coordinate fast enough — in theory, at least, all the service provider's towers could pick spectrum from a common pool.[6] In fact, every service providers could put their spectrum into a common pool from which frequencies can be allocated to users as before. This would increase trunking efficiency and thereby the maximum number of users per tower dictated by quality of service limits (both terms are defined in the next section), making more efficient use of the spectrum.

The Current Trade-off between Trunking and 'Economic' Efficiency: The Principal Argument for (Inter-operator) Shared Spectrum

Imagine the following scenario:

• We have 5 MHz of spectrum split it into five channels of one MHz each;
• Five thousand people own cell phones and each is assigned a channel so that there are a thousand cellphone users per channel;
• People call infrequently: calls are randomly distributed but on average, in each channel, five people attempt to make a call every minute and each call is ten seconds long.

In this way, a lot of people can use a few channels with a reasonable hope that their calls will be connected, a phenomenon called 'trunking'. Chances are high, however, that at least one person's going to make a call before the previous caller on her channel is done, and end up being blocked. The probability that a call will go through is factored into the Quality of Service (QoS) through the Erlang B Formula; roughly speaking, the less chance there is of a caller being blocked, the higher your QoS. It's essentially a question of queuing: the same logic can be applied to beds at a hospital. The number of hospital beds in a town would be much fewer than the number of people, but it works because everyone's not sick all the time; if people are sick more often, or for longer durations, the chances that someone won't get a bed would be higher:[7]

Suppose someone own an Airtel phone and Airtel's channels are all in use, but Vodaphone has a channel free at the time. Let's look at two alternatives:

a) she's not allowed to switch, and cannot make her call;
b) she's allowed to switch to the empty channel, and her call goes through.

Clearly, the second choice is better — and it has greater trunking efficiency.

In the current scenario, service providers get exclusive rights to chunks of spectrum. Naively, the more competitors (in this case, service providers like Airtel and Vodaphone) you have in a market, the better the competition. This, unfortunately, leads to a decrease in trunking efficiency — it's inversely proportional to the number of players in the market because every chunk of frequencies split between two service providers (every successive split) increases the chances for an event such as the one described above happening. The question that logically follows is: what is the optimal number of service providers for the Indian market? This is hard to find, and differs depending on who you ask — incumbents, for instance, may quote a smaller number, whereas prospective new entrants may quote a larger one. The number is controversial within policy-making circles as well, and is being debated as this article is being written. We note in passing that the number of competitors — and thus fragmentation of spectrum — is higher in the Indian market than most others.

If spectrum were shared, however, all this would be moot. This, therefore, is the primary argument towards spectrum sharing: better trunking efficiency as well as more competition — you can , in this instance, have it both ways.

CDMA and Spectrum Sharing

GSM is a simple example, where both the difficulty and the benefits of intra-operator spectrum sharing are readily apparent. Things get more difficult conceptually if we talk about newer technologies, so we'll have to get a little deeper into the technicalities. Code Division Multiple Access, or CDMA, allows phones to communicate using the same frequencies at the same time and place, but differentiated by codes — similar to WiFi but using different encoding schemes and technology.  CDMA might look (from the analogy with Wifi) to require no central planning, but quality of service guarantees require that various phones in a 'cell' coordinate, and the coordinating agent happens to be that cell's tower. Two things need to happen: one, the code allocated to each phone needs to be sufficiently different,[8] at least with respect to other nearby phones, which means the tower has to allocate codes. Additionally, the distance involved between cellphone and tower (as against laptop and router) causes the near-far problem.[9]

For synchronous CDMA, the concept analogous to frequency reuse is code reuse — a tower needs to take into account the codes being used by its nearest neighbors, next-nearest neighbors and so on, which might be easier than coordinating timing in a TDMA system. For asynchronous CDMA (the most commonly used variant), even that is not required — the low cross-correlation pseudorandom codes that are used have so many possibilities that the likelihood of a collision would be small, though other users would appear as gaussian noise, so just like GSM, the number of users is limited by QoS limits. This makes intro-operator sharing of spectrum between adjacent towers easier and asynchronous CDMA ends up with a frequency reuse factor of 1, meaning that a tower can access the same set of frequencies as its (intra-operator) neighbor, hypothetically making it easier to use in a shared-spectrum system.

LTE

LTE uses Orthogonal Frequency Division Multiplexing, or OFDM, which can be – very roughly — thought of as combining ideas used in FDMA as well as CDMA, in that information is redundantly split between several frequencies ('subcarriers' in the literature) and each frequency can have more than one channel, using an orthogonal coding schemes like (synchronous) CDMA, where, as mentioned earlier, a mobile phone can distinguish its channel by its code. As it's an FDMA system, the benefits of frequency sharing for LTE can be inferred as above for GSM.

The Regulatory Perspective

The European Commission has this to say about shared spectrum:[10] “From a regulatory point of view, band sharing can be achieved in two ways: either by the Collective Use of Spectrum (CUS), allowing spectrum to be used by more than one user simultaneously without a license; or using Licensed Shared Access (LSA), under which users have individual rights to access a shared spectrum band”.

CUS is how unlicensed spectrum like Wi-Fi is currently used, which does not require a central 'brain' allocating spectrum to users. It requires no setup or organization before or during use. LSA is what shared spectrum would have to be like when used by service providers: it requires setup and organization but could offer better efficiency and quality of service because the central 'brain' — in this case the CPU at the cellphone tower — can figure out the most efficient way to allocate spectrum to users, just like a city's traffic lights coordinate the flow of traffic to prevent jams, and for that multiple towers — or multiple transmitters on a single tower — would have to coordinate somehow. In other words, you don't require approval before setting up your Wi-Fi router in your living room, but (depending upon the router, how many neighbors have routers, how close they are, and how far you are from your router) your connection might get dropped; this kind of thing is okay because there usually aren't that many people with routers living that close to each other, though that's fast changing. The 2.4 GHz Wi-Fi band is further crowded in by other microwave radio technologies, like Bluetooth and microwave ovens. Cellphones are a different thing altogether, because you wouldn't want your cellphone to stop working in the middle of a crowded bus if you're late en route to meeting someone at a coffee shop, or if you're being mugged and need to call the police. Therefore it is the service providers' and regulatory agencies' responsibility to provide a high (minimum) quality of service. This classification is symbolized by the following diagram:[11]

CUS falls on the left, being contention-based – that is, different user devices (eg, laptops) could contend with each other for the attention of the base station (eg, Wi-Fi router — random access, CSMA), whereas LSA is conflict-free (which would be the case if the router decides, period). The potential for conflict exists in CUS, there being multiple devices asking for spectrum, whereas for LSA, a central authority decides which device to allocate spectrum to at any particular point in space and time. CUS isn't total chaos, however: it would now be appropriate — taking a leaf from ex-FCC chief technology officer Jon M. Peha – to introduce the concepts of coexistence and etiquette.

In our Wi-Fi example, the Wi-Fi routers merely coexist, and the technological standard allows them to try and use the codes/spectral bands that are in their best interests, to best communicate with their client devices (though actual Wi-Fi routers also follow some sort of etiquette with other routers). One could additionally introduce some sort of etiquette into the equation by requiring that one router should, for example, “wait in the cue” for another — and vice versa — as and when required, as well as other requirements for cooperation depending upon the technology used. This minimal cooperation would be enough for them to, in Mr Peha's words, “greatly improve efficiency if and only if designed appropriately for the applications in the band” - depending upon the technology used, being too 'polite' could cause longer wait times that decrease efficiency. The situation is complicated by the existence of multiple technologies at the same spot – for example, your Bluetooth receiver, two-way radio and Wifi router working in the same room. If there is potential for interference, common communication protocols could be implemented to enable all those devices to 'talk' to each other and effectively follow some form of wireless etiquette so that they can cooperate and not get in each others way. This is all the more important as Wi-Fi will become an essential part of the cellphone communication network for 4G.

To conclude, there are many ways shared spectrum technology could hypothetically work, and in practice the core technologies that are used would dictate the details of the spectrum sharing solution. Spectrum sharing would reduce the regulatory conundrum that is spectrum allocation, and make more efficient use of spectrum — most obviously through trunking efficiency, though there may be other technological benefits depending upon the core technology used. For maximum efficiency and robustness, there would have to be some kind of rules followed, so that devices apply for spectrum like people in a cafeteria queue as opposed to the scrum you might find trying to get into an Indian bus; the etiquette we were talking about earlier should be baked into the design of the communication infrastructure. Some services (like voice calling) by their nature, need a guaranteed high QoS — need to be conflict-free — and therefore need Licensed Shared Access. Others need a minimum of regulation — but with the movement of what used to be CUS-appropriate devices (In many plans for 4G LTE-Advanced, specifically Wi-Fi) towards LSA-appropriate applications, a careful optimization needs to be done in deciding where to draw the line.

The Big Question: Infrastructure Sharing

We've gone through a thought experiment on intra- and inter-operator sharing of spectrum for the particular case of mobile towers in adjacent cells, and come to the general conclusion that the solution is in principle a question of fast and efficient coordination between the geographically separated towers, toward which there are two driving forces at present: the demand for more efficient use of spectrum by a growing body of users with growing data needs, and the supply of low latency, cheaper and higher bandwidth communication options using fiber-optic cables.

There are essentially two parts to the big question we're going to ask: one, what happens when there are multiple operators serving the same geographical area, and two, is it necessary to have multiple towers standing right next to each other for multiple operators?

To answer the first question, one could have a 'roaming' agreement between multiple operators at the same spot: if all the channels of one operator are busy, the user just has to switch to a channel of an operator which isn't. For the second, a single tower (the physical tower structure as well as the transmitting equipment on it) could serve any operator, who could rent it's usage on a per-call basis. That, in fact, already seems to be the case: Airtel and Vodaphone, for instance, each own a 42% share in India's largest tower corporation Indus Towers, the remaining 16% belonging to Idea Cellular.

Infrastructure sharing will be explored further in a forthcoming post.

Coarse-grained Spectrum Sharing

For completeness, we should point out that there are more course-grained (simpler but less efficient) means of sharing in time as well as geography: the appropriate thought experiment is to imagine a radio station at the base of a hill that only has two shows, one for breakfast and one for dinner. Using its radio spectrum on the other side of that hill, or beyond the area it serves, would be fine at anytime; using it's spectrum in between the morning and evening shows would be fine anywhere.

Caveats

It must be emphasized at this point that the above is a purely hypothetical scenario, and not a prescription. Getting this to work would involve technical hurdles that a brief overview such as the one above could not bring up, that could only be discovered in the process of bringing the technology to market. Each technological solution – GSM, CDMA and LTE – would present its own difficulties, which may become apparent only when the product is shipped, so to speak. Fine technical judgments would need to be made: an example of the difficulty involved could be gauged from the early debates comparing the first CDMA standard (IS-95) with GSM at the time.

The economic model to use for shared spectrum and shared infrastructure is also something under intense discussion right now, and a number of scholarly papers have already been written up.

[1]. This is what you'd get in your first few Google search results when you look for “shared spectrum”, because the former has become so widely accepted that it's now part of the linguistic background.

[2]. Explained on http://www.radioraiders.com/gsm-frequency.html, referring to 3GPP spec http://www.3gpp.org/ftp/Specs/latest/Rel-7/45_series/45005-7d0.zip

[3]. From http://www.umtsworld.com/technology/cdmabasics.htm

[4]. From Mike Buehrer, William Tranter-Code Division Multiple Access (CDMA)-Morgan & Claypool Publishers (2006).

[5]. There are multiple definitions; the simplest one is “how many steps (in cells) that you have to walk from the tower before you can reuse the frequency”, which will suffice for us.

[6]. Of course, it's going to be messier in practices.

[7]. From http://www.vumc.com/branch/PICA/Software/

[8]. Orthogonal for synchronous CDMA, or 'sufficiently' orthogonal for asynchronous CDMA

[9]. Remember that the receiver on the tower has to demux (split) the signals received from many cellphones, and while a Wifi router would perhaps service multiple laptops in the same building, a CDMA tower has to work for a couple of hundred phones at varying distances – some a building-length away and some, many kilometers away. Every receiver has its own maximum signal to noise ratio, where the strength of the signal received has to be more that a certain fraction (which can be quite small, for a good receiver) of the strength of the electromagnetic (radio) noise it receives from other sources; cellphone towers have to deal with much larger signal to noise ratios than Wifi routers. For an FDMA or TDMA system, different users' data arrives at different frequency or time-slots, so as long as those slots are properly differentiated, one user's signal won't be another user's noise. For the commonly used asynchronous CDMA system, however, this is not the case, so at a receiver on a tower, the signal transmitted by a distant cellphone could be swamped by that from a much closer phone. The way this is dealt with is to have phones closer to the tower decrease their transmission power. So even in CDMA, the tower is still telling the phone what to change, only in this case it's the transmission power as opposed to the exact frequency and time.

[10]. http://ec.europa.eu/digital-agenda/en/promoting-shared-use-europes-radio-spectrum

[11]. From Mike Buehrer, William Tranter-Code Division Multiple Access (CDMA)-Morgan & Claypool Publishers (2006)

Shyam Ponappa's article was published in the Business Standard on February 5, 2014, and in Observer India Blogspot on February 7, 2014.

There are opposing views on the merits of centrally driven development compared with states developing on their own approach. At one level, some corporate leaders as well as politicians and members of civil society exhort states to compete for capital investment. This debate extends beyond states going their own way, to community-level local government, as in the Aam Aadmi Party's (AAP's) "Swaraj" through mohalla sabhas (town-hall meetings or open assemblies) for local government.

Basic Weakness: Lack of Organization & Coordination

While the benefits of community-led initiatives for local issues are indisputable, advocates emphasising decentralisation perhaps overlook some fundamental aspects of our reality. These are the extent of the inadequacies in our infrastructure networks, our organisational set-up, and in our ability to achieve effective coordination. Years ago, when Swaran Singh was food and agriculture minister in 1964, he reportedly said that one of our basic weaknesses was "lack of adequate administrative coordination and absence of a unified set-up at different levels" and that it should be "possible to achieve more rapid and lasting progress through a comprehensive and integrated approach than through uncoordinated and isolated efforts of different agencies and organisations operating at different levels…." [1] He couldn't have been more right, even today.

Result: Poor Infrastructure

The lack of unified organisation and effective coordination has a direct bearing on infrastructure. This is what people really need, no matter what else they might want. Take the current focus in Delhi on water and electricity. To these two, we must add roads, transport and communications as elements of essential first-order infrastructure services. People everywhere in the country need these services. Likewise, their second-order service needs include healthcare, education and finance. All these services are subject to network economics, and no local community can be self-sufficient without integration with external linkages. At the appropriate levels ("centres") of city, region, state and country (for example, for national highways or communications networks), these services need "centrally" organised supply and coordinated distribution for effective and efficient delivery. Aside from problems related to corruption, it is in ignoring organisation and coordination, or in handling them ineptly, that our governments fail. Centrally driven development is not just an option we fail at, mostly; it is an absolute necessity to empower ourselves, and until we get it right, we will be hamstrung by this deficiency.

Oblivious to Sewerage & Sanitation

As an aside, another major failure in not appreciating the systems required for basic infrastructure is in ignoring the linkage of water supply with sewerage and sanitation, historically and even now. Sewerage is concomitant with water supply; having water entails having to deal with sewage. Water and sanitation systems need significant "central" design - in the sense of overarching integrated systems at the appropriate level - with expert inputs in system development and implementation. This is usually not feasible at the local-community level alone. Ignoring this results in open sewage, polluted water bodies, unhygienic conditions and stinking surroundings. In this context, while building new smart cities is good, the dire need is to upgrade the systems in our existing cities, towns and villages, so that we live better. Such steps may not grab the headlines, but this is the stuff of our lives.

Virtual Mohalla Sabhas (Townhall Meetings)

Next, consider the approach to community participation in local government. There is certainly considerable potential for community participation, but not through methods like the "janata darbar" open assembly last month by the AAP in Delhi, or the Nationalist Congress Party's limited online interaction sessions. Doing so effectively and with efficiency is likely to require well-designed and deployed processes using Web-based technologies and methods, rather than, by way of example, the AAP's approach of live mohalla sabhas. Press reports suggest the AAP plans 2,700 mohalla sabhas in Delhi, the idea being that government representatives will attend these open assemblies, where issues will be discussed and resolved.[2] This seems like it would be very difficult, if not impossible, to achieve in practice. Instead, if the proponents of these ideas adopted the approach of online town-hall meetings or virtual mohalla sabhas, governments could design and implement Internet-based systems using asynchronous communications - eliciting inputs and recommendations from domain experts and discussion by citizens for decision making by authorised functionaries. Such systems could also allow for realistic project time frames and ensure follow-ups on water and sanitation, electricity, transport, health, education, or whatever else. If political parties, especially the experienced administrators and engineers/MBAs supporting these parties, bend their minds to these tasks, we are likely to have better systems with more impressive results on the ground.

For instance, take garbage clearing. This might well improve if ward committees oversaw the work of sanitation workers, as mentioned here [3]; but the prerequisite is a system-wide design in place with processes that work, as suggested in this broad critique. [4] These services need overarching system design and implementation far beyond the scope of any mohalla sabha, except at the local deployment level.

Internet-Based Systems & Procedures

Many political parties use Internet technology for fund-raising and membership mobilisation. It should be feasible for them to consider extending this to governance - although this will be quite a stretch in terms of their understanding and adopting the principles of organisation, logical processes and systems when compared with the relatively simple tasks of membership drives and fund-raising. But this is how our politics and governance need to evolve. We need systematic processes using the Internet. This could facilitate and channel discussions to explore and define objectives, generate and evaluate alternatives, make trade-offs, order priorities, and arrive at actionable decisions implemented over an extended period, with sound project management methodologies and tools. There's off-the-shelf software available, such as Microsoft's TownHall and others like OnlineTownHalls and MindMixer. Perhaps there's scope for systems developed specifically for our purposes. What's needed is to adopt this systems approach, regardless of the software.

[1]. Lack of coordination", Swaran Singh, 1964, The Hindu: http://www.thehindu.com/todays-paper/tp-miscellaneous/this-day-that-age-dated-february-4-1964/article5651028.ece

[2]. http://indianexpress.com/article/cities/delhi/aap-plans-2-700-mohalla-sabhas-in-city/99/

[3]. http://m.ibnlive.com/blogs/vivianfernandes/1878/64973/can-aam-aadmi-partys-mohalla-sabhas-work.html

[4].http://www.ndtv.com/article/opinion/op-ed-the-problem-with-aap-s-mohalla-sabhas-467074

This was published in Organizing India Blogspot on December 5, 2013. The article originally appeared in the Business Standard on December 4, 2013.

There are some major pluses: increased spectrum made available, and higher market shares allowed through acquisitions. Less constructive for the sector are decisions like acquirers having to pay for spectrum above a floor (4.4 MHz for GSM and 2.5 MHz for CDMA) at market rates unless the spectrum was won through auctions. While there are positive decisions, more are needed for true resurgence in this sector.

Perhaps there's also a need to curb the inappropriate application of direct-democracy to complex issues. This refers to choices influenced by uninformed but vociferous public opinion, whereas the requirement is for logical conclusions based on knowledge and understanding of the facts, domain expertise, and skill in problem formulation, solution design and implementation. The underlying constructs may include factors like technology; economics and its dissimilar sibling, finance; society's organisation, capacity and inclinations; and the law. This is especially true for infrastructure, a recognised weakness in our economy. The issue is that misdirected policies can result from the indiscriminate application of old frames of reference, customary practices, or just following the herd.

Consider the state of telecom and broadband: how bad our services are, and how badly the sector is doing, despite the enormous potential. Decisions on spectrum have profound effects on how these services affect productivity and living standards, with inappropriate policies resulting in impediments and misdirection. This is especially important in developing economies because the opportunity losses are unaffordable, and recovery is difficult in the absence of robust institutions and processes. Negative examples like the drive to refarm 900 MHz spectrum and maximising short-term government revenues from spectrum make a mockery of government-for-the-people. "Refarming" refers to mobile operators having to give up most of their 900 MHz band holdings for redeployment of newer technology, primarily because more developed economies did so. Existing operators would lose much of this spectrum, unless they win it back through auctions or acquisitions. This is like taking away captive mines from established steel manufacturers to create a "level playing field".

There are differences, of course, between spectrum and mineral resources. Unlike minerals, spectrum is not depleted by usage, the time taken to develop a new mine is usually more than to deploy a new network, and so on. But refarming will entail significant costs for new networks with many more base stations. This will take years, requiring interim arrangements to avoid service disruption to existing users. It seems like an enormous burden, in effect cross-subsidising newer technology for the high-end user segment.

How bad is the situation for the industry? Take indicators like profitability, debt, and spectrum costs. Chart 1 shows Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) as a percentage of revenue for mobile network operators in India, Indonesia, Malaysia, China, Thailand and Singapore, with India being lowest at 20 per cent.

Chart 1: Mobile Network Operators’ Profitability - APAC
Source - GSMA + BCG: http://www.gsmamobileeconomyindia.com/GSMA_Mobile_Economy_India_Report_2013.pdf

Regarding indebtedness, two Indian operators have Debt/EBITDA ratios at 4 and 6, well above acceptable levels. Others, whose debt is in line with Asian operators, are less able to service it because of lower revenues. While some urge that leveraged companies in difficulties be allowed to fail, the magnitude is such that there is a serious risk of destabilising the economy.

Spectrum reserve prices in India are much higher than in other countries (Chart 2), despite the average revenue per user (ARPU) being much lower in terms of purchasing-power parity (PPP), rendering investments unattractive.

Chart 2
Source - GSMA + BCG: http://www.gsmamobileeconomyindia.com/GSMA_Mobile_Economy_India_Report_2013.pdf

It is because of this stressed situation that the authorities, the industry, and the public need to reconsider their basic approach to spectrum needs. One reason for the forced refarming is supposedly that 900 mHz spectrum is needed for more efficient technologies. Another is that some operators with no 900 mHz spectrum are at a genuine disadvantage in terms of in-building coverage. Of course, the most compelling reason may be simply the government's need for revenues to cover its deficit, despite the enormous negative consequences to the long-term public interest. The question is whether there have been adequate efforts to explore less disruptive alternatives to achieve the objectives of reliable, inexpensive communication services.

Spectrum Bands & Ecosystems

As of May 2013, the prevalent frequencies in LTE networks in Asia were as shown in Chart 3.

Chart 3: Spectrum Bands in LTE Networks (Asia) May 2013
Source: Wireless Intelligence http://www.mobileworldlive.com/asias-apt700-band-plan-leads-the-way-to-large-scale-4g-lte-growth

The most common were 1800 MHz and 2.6 GHz networks. The 2.3 GHz band used in India (and China) is not very widespread, while 900 MHz is barely there. Bands that are not widely used are unlikely to benefit from scale economies. From this perspective, it is more logical to refarm 1800 mHz for LTE rather than 900 MHz, and the now widely adopted 700 MHz band.

The adoption of the APT700 band across Asia (including India), Latin America and Europe opens up the possibility of evolving into the largest LTE ecosystem with significant scale economies. As Verizon's established 700 MHz band in America differs from the APT700 band, the availability of devices may be a concern.

However, the fact that many countries have adopted the APT700 band improves the chances of quick development of equipment, starting with Telstra's planned trials in December 2013/January 2014.

For the resurgence of telecom and widespread access to broadband, the current positive moves to cut reserve prices somewhat, allow spectrum trading and consider uniform spectrum usage charges are not enough. Public opinion tends to view these steps as favouring telecom operators, or as sops to one operator or group. However, policies need to be formulated from considerations of the public interest, including that of users, the industry, and the government. Regarding auctions, there needs to be rethinking on the lines of the Swedish approach of bids for network investment and rollout, perhaps with incentives for faster delivery.

The article first appeared in the Business Standard on November 6, and was cross-posted in Organizing India Blogspot on November 10.

Problems related to projects in infrastructure and manufacturing are either predictable or unpredictable. For the type of problem that is more predictable, the "known known", we need to apply ourselves to facilitate productivity across sectors. An example of the unpredictable variety is in the developments dogging the erstwhile Dabhol project.

Until we plan and build infrastructure systematically, our current account deficit will continue to overshadow our economic prospects, including our ability to increase exports. The United States' easy-money policy is no more than a stopgap thumb-in-the-dyke. While unpredictable infrastructure problems require crisis management, no amount of clever short-term measures can substitute for timely, co-ordinated actions that are within the controllable domain. Whether it's power generation and distribution, telecommunications and broadband, the railways, or air travel, any form of infrastructure - apart from exceptions such as the Delhi Metro - suffers from our inability or unwillingness to plan and execute systematically.

The Unpredictable: Dabhol

Consider the continuing, unforeseen problems with the Dabhol project. This power plant with a separate liquefied natural gas (LNG) terminal nearby is going through yet another crisis. The owner and operator is Ratnagiri Gas and Power Private Limited, owned by public sector units, the state and banks. This joint venture - between the National Thermal Power Corporation (NTPC), Gas Authority of India Ltd (GAIL), the Maharashtra State Electricity Board, and some banks - was constituted to pick up the pieces after Enron. Yet, the Maharashtra State Electricity Distribution Company Ltd (called MahaVitaran), after taking most of the plant's output, is significantly behind on payments. Second, after the drop in gas production by the supplier, Reliance Industries' KG D-6, gas supplies have been reduced and are now cut off. The plant has been running well below capacity because of limited gas supply since 2012. Imported gas prices are so high that the Maharashtra State Electricity Distribution Company Ltd refuses to buy power at prices nearly double that of domestic gas, so the plant may have to be shut down.

There we have it: a potentially valuable asset providing a critical resource, electricity, with a substantial, untidy set of problems that have dragged on for a decade. It's ironic that desperately needed energy assets were shut down because the output was deemed too expensive at first and then restarted without the "rapacious" private sector - only to run short of fuel, with state payments in arrears, and now close to another shutdown. This kind of problem needs hard decisions like getting state entities to pay on time, and the capacity to devise creative solutions and co-ordinated execution to tide over the crisis in the long-term public interest. Unless we muster the resolve to deal with such unforeseen, unstructured problems through hard decisions, Dabhol will continue to sap national resources.

Yet, when Chandrababu Naidu as chief minister in Andhra Pradesh dared to attempt rational tariff increases in 2004, the electorate swept him aside for the populists, who gleefully reverted to unsustainable free electricity and other handouts. More recently, the Aam Aadmi Party's plank in Delhi's state elections included lower-priced electricity, triggering another unsustainable race to the bottom. But there is a public outcry against accepting hard decisions in governance - and a consequent political unwillingness to deal with them, or to display the leadership to create public awareness. Raucous public opinion is not a substitute for knowledgeable and informed inputs and judgement. Until we break out of this self-abasing, illogical spiral of seeking instant gratification or short-term gains over balanced, reasoned, deferred gratification, the race to the bottom will continue.

Predictable Infrastructure: Telecom, Power, Railways, Airlines…

There's the other kind of problem, the one that is amenable to forward-planning, but doesn't seem to get it. The kind that it is impossible to put in place without comprehensive, integrated planning and execution. The classic cases from the 1990s have been telecom and power.

In telecom, the recent emergence of three national operators with smaller, localised successes reaffirms the oligopolistic structure of this sector. Three operators account for 67 per cent of the market in India, 82 per cent in Brazil, 90 per cent in the US, and 98 per cent in the UK; in China, two operators have 99 per cent. If policymakers accept this principle regarding market structure, the refrain that more competition is always better can be jettisoned in favour of delivery and results, with the objectives of quality services at reasonable prices. Once the focus is on these objectives, the primacy of delivering services over collecting government revenues becomes apparent, except from narrow "fiscal deficit" considerations. The point is that planning and project management have to be done upfront to be effective, and are much less powerful when retrofitted to problematic situations, as in stranded power generation or telecom services.

However, even with the best of intentions and skills, there can be mistakes requiring course correction in predictable processes. A good example is South Korea's adoption of WiMAX and the attempted creation of their own standard, WiBro. While successful initially, it turned out to be inferior to a newer technology, LTE. What South Korea has done after evaluating its alternatives is to abandon WiBro in favour of LTE. This is the approach and capacity that we must strive to cultivate. To be unafraid to commit - but equally, unafraid to retract and change tack if and when a choice proves inappropriate.

By recommending reduced reserve prices in auctions, the Telecom Regulatory Authority of India has indicated for the first time that delivery and price may be acceptable as concomitant goals alongside government revenues. Meanwhile, the department of telecommunications is reportedly considering lower levies on operators, although insisting on higher reserve prices, perhaps because of the finance ministry and/or public opinion. What is unclear is how public opinion will react to the focus on delivery and price. Contrarily, it favours auctions of inputs like coal mines and spectrum, but lower tariffs for power and telecom/broadband; auctions will have the opposite effect. Populists are more likely to go with public opinion, instead of analysing and resolving logical contradictions.

Every situation need not result in a crisis and firefighting. Systematically addressing end-to-end processes beforehand with those involved and experts can help in the resolution of a large set of predictable processes in areas like infrastructure and manufacturing.

This article by Shyam Ponappa was originally published in the Business Standard on September 4, 2013 and mirrored in Organizing India Blogspot on September 6, 2013.

What are possible ameliorative steps for India's economy? Taking stock, are we overreacting to our economic woes? Second, do our problems have global origins? To the extent they are home-grown, what were the missteps? How can they be corrected?

The answers to the first and third (overreaction, policy errors) depend on whether one takes a "static" or "dynamic" view. Static views compare measures at points in time to arrive at an assessment of better or worse. Dynamic views, by contrast, emphasise system-wide flows and consequences, as in financial simulation models, with the focus on outcomes. The real question is whether we can grow sufficiently so that foreign and domestic funds cover imports and build manufacturing, or shrink and risk a deluge.

Risk assessment

From a static perspective, the present situation is nowhere near the dangers of 1991. Flows, however, highlight the potential for danger of slow growth: a demographic bulge with high aspirations and low opportunities; and a large, low-skilled population. What's worse is that foreign investment-fuelled growth rode a wave of imports without sufficient development in direct manufacturing. This imbalance is heightened by the stoppage of iron ore exports and the slump in coal production because of mining scandals, aggravated by high coal and gold imports. The problems - in telecom, mining, aggressive environmentalism, retrograde tax impositions, inadequate manufacturing - are all self-generated except for oil prices and the Syrian crisis. They stem from abdication of governance, overreach, or greed, compounded by judicial and citizen backlash. Only the triggers are external - from capital flowing in to the signal of a cutback.

Policy missteps 1: Interest and profits

The left side of the chart below shows interest expenses and profits for several thousand listed companies over the last four quarters. In terms of flows, higher interest rates curtailed demand as intended, so lower revenues and higher costs reduced profits - all while supply-constrained inflation continued.

Above: chart depicting the rising interest and declining profit. Picture by Organizing India Blogspot

Some experts maintain that rate cuts won't affect growth, citing the lack of a clear correlation; or the insignificant share of interest in total costs (reportedly three per cent); or that rates drive savings or consumption, but not investment. Clear correlations are unavailable because credible research must cover all major variables and interrelationships; simplifying them can distort conclusions. The research must also include how the effects of changes vary for rising or falling, large or small economies at different stages of development. The other reasons appear to ignore aspects of flows like momentum and turbulence - or even the data. And aggregates and averages can be misleading, as detailed below.

Interest costs in 850 non-financial companies went up by 40 per cent as a share of earnings before interest, taxes, depreciation and amortisation over three years. While Ebitda roughly doubled, interest costs nearly tripled(http://articles.economictimes.indiatimes.com/2012-10-25/news/34729789_1_inflation-control-potential-growth-rate-capital-formation).

Interest costs in 2,242 companies reportedly doubled from 2.3 per cent to 4.2 per cent of revenues over two years. Costs two years earlier were 16 per cent of Ebitda, whereas in the quarter ending December 2012, costs were 34 per cent of Ebitda. Analysts attributed this to low demand, and expect worse in 2013-14 unless demand improves (http://articles.economictimes.indiatimes.com/2013-02-18/news/37160258_1_interest-outgo-rise-in-interest-expenses-interest-cost).

In July 2013, earnings of 85 out of 600 listed non-financial companies did not cover interest payments, up from 61 the year before; another 43 were at risk compared with 36 a year earlier, and non-performing loans were increasing (http://www.thehindubusinessline.com/companies/debt-traps-india-inc-as-profits-fail-to-cover-interest-outgo/article4889184.ece).

Aggregate costs and averages sometimes conceal problems. Credit Suisse reports that the aggregate interest cover for 10 large, overleveraged industrial groups has dropped from 1.6 last year (borderline) to 1.4 (inadequate). For four of these groups, interest costs exceed profits. Rejoicing in the woes of "profligates" is inadvisable, however, because a collapse affects everyone.

Policy missteps 2: Sustainable profits and stability

Profits are essential for savings, investment, stability and order. This is why sustained profitability is of paramount importance for India. Provided industrial relations are harmonious and demand is resilient, that is, momentum is positive, lower interest costs within reason can sustain positive sentiment, resulting in higher profits up to a point (see chart - right). This has been a matter of incomprehension or denial for government (central and states), the Reserve Bank of India, the judiciary, and many citizens.

Instead, we have populist handouts to capture treasuries, and irresponsibility in replenishing them. What started with cheap rice in the 1980s has degenerated into a free-for-all, promising a distribution from the treasury contingent on capturing it for aspirants, or recapturing it for incumbents: vote us in, and you'll get these spoils.

Plausible remedies

• Lower rates: A number of experts in India and abroad recommend a reversal of monetary tightening and reduced interest rates. Some aver that the biggest risk is stifling growth by raising rates, eg, Paul Krugman and Ryan Avent (http://krugman.blogs.nytimes.com/2013/08/22/generation-b-for-bubble/). Others, unfortunately, suggest confusing strategies, including raising rates to contain inflation, despite this not having worked and been shown to be detrimental.
  
• Fiscal responsibility: A second requirement is fiscal responsibility in trade-offs for resources, betrayed by all parties in the impractical Bills on food security and land acquisition. This is a crucial requirement from both the government and the Opposition. For example, an effective step would be to raise diesel prices by Rs 5 a month for three months (which the government could evaluate using simulations).
  
• Manufacturing: Another requirement is action supporting manufacturing. A National Manufacturing Plan has been mentioned for years, but only coherent action will change the perception of yet another plan on the shelf. For instance, the government has resiled on the preferential marketing access for telecom equipment, which will increase imports.
  
• Stalled projects: There have been future-oriented announcements, eg, on fuel supply for power projects, but no demonstrable actions and results.

In sum, a rate cut combined with consistent actions on fiscal responsibility, disentangling projects, manufacturing, and stop-gap measures like swap facilities for oil companies and "stretching" imported coal may provide a breather. These could have a stabilising effect on the rupee, improve sentiment, and re-establish India's growth potential.

Q.1. What method should be adopted for refarming of the 900 MHz band so that the TSPs whose licences are expiring in 2014 onwards get adequate spectrum in 900/1800 MHz band for continuity of services provided by them?

Comments on Spectrum Refarming

1. Arbitrary Policies & Their Consequences
The proposed manner of refarming the 900 MHz spectrum is perceived to be as arbitrary as, for instance, the tax claims against Vodafone after the courts upheld its refutation of these claims.  Such actions contribute to India’s very low rating on contracts (184 out of 185 countries in enforcing contracts in 2013: http://www.doingbusiness.org/data/exploreeconomies/india/), and for being a very difficult place to do business.

2. Legitimacy Of Terminating 900 MHz Holdings Starting 2014
One question is whether a refusal to renew existing spectrum holdings in the ordinary course is legitimate, or if it needs to be tested for breach of contract in the courts.  This proposed manner of withholding access to assigned spectrum is also contrary to prevalent practice, as well as to the logic of spectrum being essential to the delivery of services of a wireless operator as a going concern.

3. Must All Spectrum Be Auctioned?
a) Another question is whether the Supreme Court order requires that all spectrum must in fact be auctioned.  If this is so, the auction of all spectrum is necessary when it becomes available.

b) This is so damaging to the public interest, however, that all reasonable efforts must be made once again to inform the Supreme Court of the facts, i.e., the technological reasons against splintering bandwidth, and the financial reasons against extracting payments that would otherwise be invested in the essential infrastructure of broadband.  If the facts are presented clearly and persuasively, there may be a reconsideration of the ruling to auction all spectrum in the light of these facts, as against continuing with this ruling based on miscommunication or misinformation.

c) If there is no alternative to auctions, to succeed, the reserve price needs to be relatively low, and bidders in difficult financial circumstances must be convinced they have no better option.  Perhaps one way of ensuring this is to auction for a shorter period, e.g., five years, while simultaneously laying out the path for transitioning to shared spectrum.  This is because parallel developments in spectrum sharing for Authorized Shared Access and Licensed Shared Access that are being pursued in the US and the EU are likely to be deployed by then.

4. Net Benefits of Refarming
Given the stage of evolution and coverage of networks in India, their technological level and usage, refarming should be held in abeyance until our markets are in a position to benefit from them.  This is because the detrimental effects if the 900 MHz band is cleared in the proposed manner are likely to far outweigh the benefits, as explained below.

5. Purpose of Refarming
What is the purpose of refarming?  If the answer is the potential benefits of services from 4G technologies and products, consider the likely nature of these benefits in India.  The purpose of refarming in OECD countries is to use 900 MHz for 3G and LTE for high-speed data.  This is appropriate for developed economies that have large numbers of data users.  In India, high-end users comprise only a niche segment (15.09 million broadband users in April 2013, despite over 725 million active wireless subscribers). Developed economies have refarmed the 900 MHz band because 3G and 4G assume widespread use of data services in the entire network.  In other words, if India had a large base of high-data users, 4G networks would be required to deliver high-speed traffic. Also, such users would presumably be (a) willing and (b) able to pay [for the expensive equipment required] for these services.

6. No Economic Basis for Refarming in India
a) The reality is that there are insufficient data users with the willingness and ability to pay for the higher level of throughput.  The present state of the economy and its trajectory pose additional constraints.  More important, existing technologies are capable of delivering data services at lower cost.  The priority is for access networks at lower cost, e.g., wireless middle-mile and last-mile that will enable large numbers of users to access data services at a reasonable price (“reasonable” in the cost structure of India comparable to TV services, and not in cents/minute comparable with OECD countries).

b) That said, a possible consideration is whether and how certain advanced technologies, such as “supplemental downlink” or “carrier aggregation” for augmenting capacity, may be made usable in our circumstances, and whether if certain bands are earmarked for them, such solutions can be introduced here.

7. Need: Low-Cost Last-Mile & Aggregation/Backhaul Capacity
How can networks be built at reasonable cost that have the capacity to deliver data services more comprehensively in India?  By providing much more wireless access for the last-mile, and more middle-mile capacity (in combination with existing wired networks).  This is where policies can facilitate network build-out and service delivery at lower cost.  The nature of required reforms are: reduced front-end charges for wireless last mile access; reduced microwave charges (administered prices) for aggregation and backhaul; incentives for broadband delivery, and perhaps higher incentives for rural broadband delivery.  Also, a whole host of initiatives can be orchestrated, as in South Korea, for instance, or Sweden, which contribute to the development of broadband services and usage.

a) South Korea*
South Korea’s digital economy resulted from a combination of macroeconomic, supply-side and demand-side policies and programs, with the government stimulating broadband adoption, particularly in the early years.  For example, Korea’s response to the financial crisis of 1997-1998 was to increase the export strength of key sectors such as electronics.  There was also a thrust on consumer credit, facilitating the purchase of consumer goods and electronics-related services such as broadband.  The initiatives to push broadband deployment and adoption included tax incentives, rural deployment and R&D grants, building certification incentives, and applications support.  There were also mistakes, as in the government’s choice of WiBro technology.

By way of illustration, a set of Korean initiatives are detailed below:

Table 5: Selected Korean Supply-Side Broadband Subsidy Programs

Infrastructure Deployment

• Tax benefits (credits, accelerated depreciation, exemptions, etc.) for broadband deployment

• Backbone provision or subsidy for broadband deployment (KII-Government program providing funding for operators to reach 40,000 govt. locations as well as rural districts)

Technology Support

• R&D grants and tax credits
• Applications support (KOREN—Korean Advanced Research Network or KII-Testbed) Building Certification & Codes
• Requiring or encouraging the pre-equipping of new buildings with fibre and/or broadband access points (e.g. DSLAM)
• Institution of certification programs for broadband readiness of MDUs (multi-dwelling units, based on three classes of transmission speed)

Source: Kalba International, Inc., 2012. Ovum Consulting, Broadband Policy and Development in the Republic of Korea

b) Sweden*
Sweden's regulator demonstrated a strong commitment to cover low-density areas, and one of the ways was to foster network sharing.  The government promotes a broadband strategy with incentives for all stakeholders.  State authorities are actively involved in the Digital Agenda for Sweden, a national initiative.  In education, for instance, about 25% of all students rely to some extent on distance education.  Open access policies and competition have had a significant impact on the development of broadband.

* Source: Digital Scotland 2020

Achieving World-Class Digital Infrastructure
21st December 2012
http://www.scotland.gov.uk/Resource/0041/00414982.pdf

8. Shared Facilities
One way that delivery costs can be reduced is if operators share networks, so that all operators can access these networks where they are licensed to do so.  This would be feasible if there were practical ways of structuring “common-carrier” or network-neutral access (as in roads, rail, flight paths and airports, ports, oil pipelines, etc.).  This would require a buy-in by service providers for radical changes in approach and policies, followed by radical changes in operating networks.  It is possible that open consultation with TSPs, other stakeholders, and specialists, done with the help of one or more expert facilitator/s, could yield such a solution.  If this were to happen, the process of organizing structures at (a) the wholesale (network services) level, and (b) the retail (user access level) could be addressed collectively.

9. Extend Voluntary Infrastructure Sharing to Mandatory Sharing
We already have consortiums for passive sharing of wireless towers.  This needs to be extended from voluntary commercial associations to mandatory, “common-carrier” access, after putting in place suitable commercial arrangements through negotiation.  Such commercial arrangements exist for oil pipelines and for oil exploration and production, and can be structured in like manner for facilities and spectrum.  They need the appropriate financial structuring with the help of financial specialists, in addition to the engineering solutions.

10. Shared Spectrum: Pool New Spectrum

a) An evolutionary step in this direction is to pool all available, unallocated [unassigned] spectrum, so that it can be shared by [existing] service providers.  This is being pioneered in the so-called TV White Space bands in the USA, the EU, the UK, and Singapore.  It can be extended to other bands here.  This could be a transitional step in evolving a shared facilities model.  Provided the stakeholders agree, and an equitable structure and process is devised, this will relieve the present constraints on spectrum availability by providing a common pool of spectrum.

b) Shared spectrum is an alternative that is technically feasible and economically far more viable than fragmenting available spectrum for the exclusive use of our many operators.  This also provides for complete transparency, as well as much lower capital and operating costs for society as a whole.  The implication is that broadband could be made available more widely at lower cost, leading to much better productivity and payoffs.

c) Many of the questions and associated problems would be resolved.  For instance, open access would allow for each operator to choose any technology that is compatible and that does not create interference.  Fees could be determined in the same manner as for taxes in inducing investment for manufacturing, as was done in South Korea.  It would need a whole range of supportive measures as in the case of South Korea, and if done right, could result in tremendous gains as an organizing force in society.

11. Some 900 MHz Access (Common-Carrier) For All TSPs
If a portion of the 900 MHz band is set aside for shared access, it may resolve one of the most contentious problems between the GSM and CDMA operators, of access to the highly advantageous 900 MHz for its low-cost equipment and ability to penetrate buildings, i.e., better delivery.  This step may create conditions that allow for stakeholder engagement for an overall resolution, including ultimately, shared infrastructure.

12. Revenue-Sharing & Consumer Surplus From Shared Spectrum/Networks
India’s experience with revenue-sharing after NTP-99 has shown that collections are far in excess of up-front revenues forgone.  Building a sound broadband service with a combination of incentives and forbearance will lead to much greater economic benefits overall, as well as much higher collections by the government over time.  The sector can once again prosper and be an engine of productivity.

Shyam Ponappa
Centre for Internet and Society
August 21, 2013

The article by Shyam Ponappa (originally published in the Business Standard on July 31, 2013) was cross-posted in Organizing India Blogspot on August 1, 2013.

There are compelling reasons for supporting domestic manufacturing capacity in India, and high-tech products deserve high priority. Examining the elements of the proposition for developing our high-tech manufacturing and the state of its capacity may help clarify where and how policies should be heading. If domestic electronics production does not increase significantly, India's electronics requirements will be choked by high imports in excess of even oil imports.

The Bogey of Protectionism

The aim of the PMA policy is to give technically qualified domestic manufacturers access to otherwise closed domestic markets. It only provides an opening, and does not provide any protection or price preference. The notification states explicitly that technically qualified domestic manufacturers are eligible only if they match the lowest bid; if there are no qualified local manufacturers, or if qualified vendors don't match the lowest bid, entire orders may be awarded to the lowest-priced vendor/s (from abroad). Perhaps there is some confusion arising from the nomenclature, as "PMA" usually refers to international vendor access to domestic markets. The notion that the PMA is protectionist and shields domestic suppliers from competition is incorrect.

Deferring PMA to Assess Domestic Capabilities

The government's deferral of the PMA pending assessment of domestic manufacturing capabilities appears unreasonable, as there are already qualified manufacturers in India, several of them transnationals, producing high-tech products for global markets. The top 10 global fabless design companies and the top 25 semiconductor companies operate in India. In 2010, revenues were estimated at $7.5 billion, and in 2012, over $10 billion. India is reportedly among the top countries for fabless design skills, and has the critical ingredients for the growth of fabless companies as start-ups slow in the West: design service companies, design engineering expertise and innovation, returning entrepreneurs, and educational facilities. What they need for scale is local market access, equity funding, good logistics, and effective infrastructure. These are the areas where the government can facilitate matters. Deferring access to local companies at a time of rapid growth in networks will entrench foreign products, providing them with an undue advantage against local producers. Instead, we should be capitalising on our domestic strengths.

Closed Circle of Buyers & Sellers

In high-technology procurement, large international vendors, of whom there are relatively few, form long-term relationships with the relatively few large buyers in oligopolistic markets in telecommunications or electricity. This holds whether the buyers are government entities, state-owned enterprises, or private sector companies. Often, the international vendors have strong home government support. This is why domestic manufacturers need mandatory access to break into a closed circle. There is no ambiguity in this, nor is it protectionist, and there are no price preferences - in contrast to the 15 per cent allowed by the World Bank, or 10 per cent for minority-owned businesses in the United States.

Markets & Demand

Of the many reasons for developing electronics manufacturing capabilities in India, a compelling one is our level of demand for electronics. A task force comprising government and industry participants estimated in 2009 that demand in 2009-10 was around $45 billion, going up to $70 billion in 2012, and projected at $400 billion by 2020 (see chart), with government's share being 40 per cent.

Source: http://deity.gov.in/hindi/sites/upload_files/dithindi/files/Task_Force_Report-new_21211.pdf

Domestic production was at $20 billion in the financial year 2009 while imports were $25 billion, projected to rise to over $300 billion by 2020 if domestic production maintained its trend to reach $104 billion. However, with appropriate policies including the PMA for local manufacturers, in the best case, domestic electronics manufacturing was estimated to increase to over $300 billion. If this could be achieved, India's electronics imports would amount to about $100 billion. Without it, imports of $300 billion may be needed, exceeding even estimated oil imports.

Security Screening/Auditing of Imports

High-security applications in the US, Japan, Israel and China are procured from trusted domestic manufacturers. The US Congress monitors high-tech imports for strategic reasons. The UK is conducting an investigation into whether its broadband networks have been compromised by foreign suppliers, although malware is very difficult to detect, and can be downloaded after security audits. High-tech supplies need to be from trusted sources.

Domestic Producers vs Other Lobbies

In effect, it would seem that the operators and foreign vendors have railroaded the government into perpetuating the status quo of foreign-dominated electronics suppliers in India. Facilitating access to local markets for domestic manufacturers is the kind of support that many governments provide. Take the case of the "Buy American" provisions of the American Recovery and Reinvestment Act of 2009. Recovery Act funds used for the construction, alteration, maintenance or repair of public buildings and public works must procure all iron, steel and manufactured goods produced only in the US, with a price preference of 25 per cent. The exceptions are non-availability, prices of over 25 per cent, or where applying the provisions is against the public interest. The objectives were to save and create jobs, to give relief to those affected by the recession, and to invest in infrastructure, education, health and renewable energy. The estimated cost is $831 billion between 2009 and 2019.

Remedial Action

What's needed is for the government to take unequivocal action without delay on enabling policies for domestic high-tech producers. The sooner this is done, and the more sustained support that is provided, the better. Too many confused signals are being sent out on investments.

A total of 20 participants spent the seven days in a residential institute, learning about the fundamental technologies of the Internet and topics on which CIS has expertise on such as Accessibility, Openness, Privacy, Digital Natives and Internet Governance.

The participants belonged to various stakeholder groups and it provided a common forum (first of its kind in India) to discuss and share ideas. Twenty-four expert speakers from various domains came to share their knowledge and speak about their work, so as to encourage activity in the field and supply resources from which participants could learn to increase their accessibility, range and funding possibilities, as well as network with the speakers and amongst themselves.

The Institute has triggered a  number of follow-up events — those that the participants organized themselves with the help of CIS staff, including Crypto Parties in Bangalore, Delhi and Mumbai, that taught netizens to keep their online communication private. In addition to that, the CIS Access2Knowledge (A2K) team could rope in eight new Wikipedians who will contribute to Wikipedia in Indic languages.

The day wise talks and activities that took place are listed below:

Day 1: June 8, 2013

The seven day residential Institute began on Saturday, the 8th of June with a warm welcome by Dr. Ravina Aggarwal and Dr. Nirmita Narasimhan. They outlined the purpose of the residential institute and briefly went over the topics which would get covered over the week long duration. This was followed by each of the participants introducing themselves briefly and also stating their expectations from the Institute, why they were attending the same and what they hope to get at the end.

Session 1: History of the Internet

(by Pranesh Prakash and Bernadette Längle)

After the Network Control Protocol (NCP, later replaced by the TCP/IP) was invented in 1970, the first applications were made: email (connecting people), telnet (connecting computers) and the file transport protocol (FTP) (connecting information) — all of these are still in use today. Participants were surprised to learn that the Web, most commonly used today, known to be invented by one single person in the 90's, actually existed for a long time prior to the '90s.

VIDEO

Session 2: Domestic Bodies and Mechanisms

(by Pranesh Prakash)
After lunch, Pranesh Prakash led the second session about Domestic Bodies and Mechanisms and he started with some of the problems associated with the Domestic Regulatory Bodies:

1. Lack of coherence and consistency in Internet related policies
2. Rather than co-operating, the different agencies compete with each other.
3. Communication with the public is of different degrees and openness of different agencies varies.

• Department of Electronics and Information Technology (DEITY), is one of the most important public agencies & the CERT-in focuses on issues like malware and content regulation. There is also the STQC (Standard Setting and Quality Setting Body).
• The work of these organizations is to govern the Internet, bring about better privacy policies and ensure freedom of speech.
• Other governing bodies include DOT (Department of Telecommunications) which governs the telecom and internet policies of India. In India, certain content regulation takes place under a notification as part of the IT Act, 2003.
• TRAI (Telecom Regulatory Authority of India) also looks into the tariff, interconnections and quality of telecom sector, spectrum regulation and so on.
• The USOF (Universal Service Obligation Fund) seeks to provide funds for setting up telecom services in rural areas.
• Ministry of Information and Broadcasting (MIB) has been extending copyright restrictions to online publications.

     VIDEO

Session 3: Emerging trends in Internet usage in India

(by Nandini C and Vir Kamal Chopra)
Emerging Trends in Internet Usage with specific focus on BSNL offerings (by Vir Kamal Chopra)
Some of the salient points discussed were:

• In 1995, the VSNL provided internet in 4 metros of India, by 1998 DOT had provided internet in 42 cities.
• Some of the facilities internet provides include Tele-education, Tele-medicine, mobile banking, payment of bills via mobile internet, etc.
• BSNL has got maximum broadband market share in India.
• Present Scenario, there are 900 million mobiles in India, 430 million wireless connections with capability to access data.
• The total broadband connections are 15 million in country, 10 million provided by BSNL.
• Total internet users are 120 million with a growth rate of 30%.
• Public access is not only about network intermediaries but about info-mediaries who understand internet.
• BSNL lost Rs 18,000 crores from 3G license.
• 2G to 3G shifting is not seamless and leads to lot of packet loss, and 3G coverage is not as extensive as 2G. Thus 3G is not efficient however; the government has made a lot of money from selling 3G licenses.
• Future trends include technology trends for internet access, optical fiber technologies, fiber to the curb, fibre to the home, metro Ethernet, etc.
• Internet has created an online Public sphere.
• In 2000 Parliament passed the Information Technology Act 2000 and the dot.com boom is seen.

Making internet access meaningful in the Indian Context (by Nandini.C)
(Click to see the presentation slides)
Some of the salient points discussed were:

• Status of internet access today sees low level of overall penetration of internet, high rate of household mobile penetration and huge rural-urban divide in internet access.
• Relationship b/w women and internet in India
• 8.4% of women in India have access to internet in India and 43% of women using internet in India perceived it as being an important part of their life.
• Some area of concerns include ensuring adequate access of internet for the women, entrenched patriarchies, contextual relevance, the imaginary of ‘public access’.
• The importance of an existing strong social support network, ITC itself cannot open up economic/social empowerment opportunities for women
• ICT-enabled micro-enterprises may also force the burden of double work on women, who undertake both productive activities for the micro-enterprise and re/productive activities for the household.
• The Internet today has created an online public sphere.
• Countering the threat of online violence.
• Censorship and content regulation.
• Women’s rights and the spaces of internet governance.
• Arbitrary censorship and self-regulation by the corporate and slide towards an illusory freedom; state is used as a bogeyman by corporate to create an online culture that is suitable to the corporate values.

 VIDEO

Day 2: June 9, 2013

The focus of the second day was more on the nuts and bolts behind the working of the Internet by Dr. Nadeem Akhtar, Wireless Technologies and a case-study in Air Jaldi by Michael Ginguld, Collaborative Knowledge base building by Vishnu Vardhan and Affordable Devices on the Internet by Ravikiran Annaswamy.

The salient points of each of the talks are listed below.

Session 1: How Internet Works

(by Nadeem Akhtar)
Click to read the presentation slides

• Internet structure and hierarchy:
  
  1. Data Networks comprise of set of nodes, connected by transmission links, for exchange of data between nodes.
  2. Some of the key principles which underpin data networks include digital transmission, multiplexing and data forwarding/routing.
• Data networks through ownership include public and private networks.
• Data networks through coverage include local area networks (small area), metro area networks (may comprise of a city) and wide area networks (wide geographic area across cities).
• Protocols include:
  
  1. Open systems interconnection (OSI) model divides a communication system into smaller parts. Each part is referred to as a layer. Similar communication functions are grouped into logical layers.
  2. OSI model defines the different stages that data must go through to travel from one device to another over a network & this enables a modular approach towards developing complex system functionality i.e. functionality at layer X does not depend on how layer Y is implemented.

  Above is a picture of Dr. Nadeem Akhtar speaking on the working of the internet on Day 2

• Internet networks or connections.
• Internet backbone refers to the principal data routes between large, strategically interconnected networks and core routers on the internet and these data routes are hosted by commercial, government, academic and other high-capacity network centers, the internet exchange points and network access points. The internet back bone is decentralized.
• Transit Service - Passing information from small ISP to large ISP.
• Peering Service - The passing of information between two similar ISP’s os similar size to let network traffic pass.
• Three levels of network Tier1, Tier2 and Tier 3. TATA Company is the only Tier 1 Indian Company.
• Backhaul- Transport Links which connects access edge networks with the ‘core’ network. The transmitters have to be mounted on a high level.

      VIDEO

Session 2: Wireless Technologies

(by Michael Ginguld)
Click to read the presentation slides

• We are surrounded by electromagnetic radiation
• All about transmission waves and there are both advantages and disadvantages of the same:
  
  1. Pros: higher reach for lower price, overcomes topographic challenges, lower maintenance, less to damage/lose
  2. Cons: limited resources, maintenance (energy), physical limitations to transfer rates.
• Satellite/VSAT is a very small aperture tech: a small satellite dish that connects to a geo-static satellite.
• Strength: globally usable, can connect from anywhere.
• Weakness: signal problems, relatively high installation charge, upstream connection is lower than the downstream, transmitter on satellite is extremely expensive, hence limitation on transmission capacity of the satellite.
• VSATs are not scalable. It is a dead-end tech for usages where data transmission volume is expected to grow.
• 2G Technology for mobile connection.
• Limitation in transfer of data, due to technology and encryption limitations but great availability and reasonable price.
• 3G Technology has a problem in India; low uptake, leading to low investment, leading to low speed, leading to low uptake. The technology allows for high-speed data transfer but the market condition in India still does not make adequate infrastructural support feasible.
• 4G license auction.
• A company bought the country-wide 4G license in the auction. Mukesh Ambani bought the company after some days.
• The present legislation does not allow for VoIP-based Telco operation but that is expected to change soon.
• Wifi technology is wireless technology. It is low cost wireless transfer of data.  The Public dissemination of the ranges in which data transfer using the WiFi protocol can take place.  It was made public in India in January 2005.
  
  1. Limitations: needs line of sight, limit to data transfer.
  2. Strength: cheap, de-licensed spectrum usage, easily deployable.
• 2G spectrum, 3G spectrum and now 4G spectrum all are part of the wireless technology.
• Air Jaldi started in Dharamshala; building wifi connection spanning campuses.
• Three types of consumer categories: (1) no coverage, (2) under-served, and (3) ‘deserving clients’. #2 is the most common group. #3 are people who should be served but cannot pay fully for the service, hence are cross-subsidised by group #2.
• Deployed and managed by local staff, trained by AirJaldi.
• Customer premise equipment: Rs. 3-4k.
• User charges: Rs 975 per month for 512 kbps, Rs 1500 per month for 1 mbps.
• Content: by and large, AirJaldi brings infrastructure on which content can ride on, teams with various content providers (like e-learning, rural BPOs, local e-banking etc) for the content side. The biggest drivers are local BPO, banking and retail. The next big driver coming up is entertainment.
• WiMax includes 4g spectrum.

        VIDEO

Session 3: Building Knowledge Bases and Platform via Mass Collaboration on the Internet

Click to read the presentation slides

The session started off with some physical activity in the form of "Kasa Kasa Warte, Chan Chan Warte" to break off the lunch induced sleep and a mental activity where the participants were divided into two groups and both the groups were asked to collect information on "Water". One group was left to itself while the other had some expert inputs from Vishnu Vardhan on how to collaborate and organize the data. After the activity, both teams presented the information that they had collected on "Water". The benefits of collaborative authoring such as "everyone's voice is heard", "various inputs leading to a multi-dimensional thinking" etc were evident as against a single dimensional thought process that was seen from the group that was un-assisted.

Given above is a picture of the participants involved in a group activity

Salient points discussed during the presentation:

• The Concept of Knowledge today is not something of modern phenomena, but it is something which has been existent since print culture was developed.  Print technology shapes what we consider as knowledge, and hence as knowledge platform
• Techno-sociality of knowledge production
• The Concept of Knowledge today is not something of modern phenomena, but it is something which has been existent since print culture was developed.  Print technology shapes what we consider as knowledge, and hence as knowledge platform
• Techno-sociality of knowledge production
  Examples of knowledge platforms:
  
  1. Baidu baike
  2. English wikipedia
  3. Hudong
  4. Catawiki
  5. Wikieducator
  6. Open street map
  7. Pad.ma
  8. Sahapedia
  9. Internet archive
  10. Jstor
  11. Dsal
  12. Dli
• In 1994 Cunningham developed the ‘Wiki Wiki Web’ also known as the ‘Ward Wiki’. Basically it is a knowledge platform.
• Internet since then has been used for dissemination of information especially in the education sector. Digital Archived have developed over the years which provide information across various platforms like Wikipedia.
• The spread of the internet has made possible the building of knowledge bases by seamless and mass collaboration.

Generic challenges for Wikipedia

• Quality, relevance, consistency of knowledge
• Suitable motivation of the contributors
• Another issue is the scalability

Some of the problems faced by Indian Wikipedian pages:

• Technical infrastructure for Indian languages
• Typing in the regional language
• OCR: complexity of Indian language scripts
• Various other technical troubles like browser compatibility, font display, etc., which deter new users
• Dearth of quality content available in digital format
• Different standards/formats/generations (gov.in/DLI)
• Relative lack of research/academic standards, which is transferred on to Indic wikipedias.
• Lack of knowledge sharing culture.
• Building a mass knowledge platform is the need of the hour.
• The platform should be user friendly, easily available and adoptable; offline outreach is key to effective use of online platforms.
• The programme  should have feedback loop key, behavior statistics data, reinvent and replicate the programme, multi-channel awareness, ‘user connect’ programmes.
• The people should communicate knowledge sharing objectives, make knowledge sharing fun, appoint ambassadors; virtual volunteer community building looks simple but its complex and leads to failure.

      VIDEO

Session: 4 Affordable Devices to access the Internet

(by Ravikiran Annaswamy)
Click to read the presentation slides

Given above is a picture of the speaker Ravikiran Annaswamy giving a demo of the low cost Akash tablet.

• Overview of Affordable Mobile Phones such as Lava Iris, Karbonn A1, Nokia Asha, etc.
• Overview of Affordable Tablets such as Aakash, Ubislate, Karbonn Smart A34, etc.
• The number of Internet users in India is expected to nearly triple from 125 million in 2011 to 330 million by 2016, says a report by Boston Consulting Group.
• How Internet Penetration impacts society.
• Demo of the devices.
• Need for Mobile Internet
• Sugata Mitra & Arvind Eye Care examples.

       VIDEO

Day 3: June 10, 2013

The third day of the Institute focussed on Wired means of accessing the Internet, the technology involved followed by an assignment time where the participants were introduced to 2 topics and asked to work on an assignment. This was followed by a site visit in the afternoon to MapUnity. MapUnity develops technology to tackle social problems and development challenges. Their GIS, MIS and mobile technologies are used mostly by government departments and civil society  organisations and in the R&D initiatives of commercial ventures.

Session 1: Wired Access Technology

(by Dr. Nadeem Akhtar)
Click to read the presentation slides

Some of the salient points discussed were:

Wired and Wireless

Wired:

• Separate communication channel for each users
• Low signal attenuation
• No interference
• Fixed point-of-attachment

Wireless:

• Shared medium of communication
• Signal is attenuated by a number of factors
• Interference between adjacent channels
• Points-of-attachment can be changed on-the-fly

Ethernet:

• A family of computer networking technologies for LANs which was Invented in 1973 and commercially introduced in 1980.  The systems communicating over ethernet divide a stream o data into individual packets called frames. Each frame contains source and destination addresses and error-checking data so that damaged data can be detected and re-transmitted.
• Ethernet, by definition, is a broadcast protocol
• Any signal can be received by all hosts
• Switching enables individual hosts to communicate

Digital subscriber line (DSL):

• DSL uses existing telephone lines to transport data to internet subscribers and the term xDSL is used to refer to a number of similar yet competing forms of DSL technologies which includes ADSL, SDSL, HDSL, HDSL-2, G.SHDL, IDSL, and VDSL.  DSL service is delivered simultaneously with wired telephone service on the same telephone line and this is possible because DSL uses higher frequency bands for data.

Asymmetric DSL (ADSL):

• ADSL is the most commonly installed technology and an ADSL tech can provide maximum downstream speeds of up to 8 mbps.

Modem and router:

• Modem is specific to a technology
• Modem is de/modulator, it takes bits coming from one protocol/technology, demodulates it (converts it into original data), and re-modulated the original data to another protocol/technology.
• Router allows creation of a local area network, allowing multiple devices to connect to the network and access internet together through the router. It has very high bitrate DSL (VDSL) and goes up to 52 mbps downstream and 16 mbps upstream. The length of the physical connection is limited to 300 meters and the second generation VDSL (CDSL2) provides data rates up to 100 mbps simultaneously in both direction, but maximum available bit rate is still achieved about 300 meters.

Cable:

• Cable broadband uses existing CATV infrastructure to provide high-access internet access; uses channels specifically reserved for data transfer
• Support simultaneous access to broadband and TV programs
• Cable access tech is built for one-way transmission; hence some congestion takes place for bi-way data transfer, leading to much lower upstream connection relative to downstream connection for data.

Fiber:

• It is a generic term for any broadband network architecture using optical fiber; fiber to the neighborhood; fiber to the curb;  the street cabinet is much closer to the user’s premises, typically within 300m, thus allowing ethernet or radio-based connection to the final users; fiber to the basement; fiber to the home (BSNL already providing); fiber to the desktop
• Passive optical networks (PON)

Advantages of fiber:

• Immunity to electromagnetic interference.
• Provides very high data rates at long distances.
• When network links run over several 1000s of meters (e.g., metro area networks), fiber significantly outperforms copper.
• Replacing at least part of these links with fiber shortens the remaining copper segments and allows them to run much faster.
• The data rate of a fiber link is typically limited by the terminal equipment rather than the fiber itself.

Assignment
Participants were given two options for an assignment to work on in the coming days and they could choose either one.

Assignment A
The Universal Service Obligation Fund of India has put out a Call for Proposals under two schemes:

• Mobile Connectivity and ICT related livelihood skills for womens’ SHGs (http://www.usof.gov.in/usof-cms/pdf21may/Concept_Paper.pdf), and

• Access to ICTs and ICT enabled services for persons with disabilities in rural India. (http://www.usof.gov.in/usof-cms/usofsub/Concept%20paper_USOF%20Scheme_PwDs_A.G.Gulati.pdf)

Your NGO is committed to the task of facilitating access to the Internet for women/ persons with disabilities in rural parts of Kerala and wishes to submit a proposal/ project idea in partnership with a service provider to the USOF.

Assignment B
You are a member of the ancient tribe of Meithis residing in Manipur. Over the years, there is a strong feeling in your community that although the Government has rolled out projects to connect the rural areas throughout India, these have not been successful for your tribe and there is still even a lack of basic fixed telephony, let alone mobile and broadband services. You have hence come to the conclusion that there is a need for focused efforts to target such communities as yours and have decided to submit a concept note to the USOF requesting that ‘ethnic and rural tribal communities’ be specifically included within the mandate of the USOF’s activities by defining them as an ‘underserved community’.

Given above is a picture of the participants engaged in a discussion.

Field Trip - Destination: MapUnity.
MapUnity develops technology to tackle social problems and development challenges. Their GIS, MIS and mobile technologies are used mostly by government departments and civil society organisations, and in the R&D initiatives of commercial ventures. MapUnity presented their product offerings to the participants.

VIDEO

Day 4: June 11, 2013

Session 1: Universal Access

(by Archana Gulati)
Click to read the presentation slides

Given above is a picture of Archana Gulati speaking on Universal Access.

Tuesday revolved around questions of access and openness. The day kicked off with Archana Gulati, a policy expert in access to ICTs for people with disabilities talking on Universal Access. Ms. Gulati stressed the importance of ICTs for social development. ICTs are a necessary aid in development structures including education, health and increased citizen participation in national affairs & they provide crucial knowledge inputs into productive activities. However, even with the Telecom boom, there still exists an access gap in India, which cannot be covered by commercially viable systems.

This 'actual access gap' exists because of geographic (scattered population, low income, low perceived utility of service, lack of commercial/industrial customers, lack of roads, power, difficult terrain, insurgency), economic (urban poor) and social inequality (gender, disabilities) differences. To achieve Universal Access or Universal Service, additional efforts must be made, so as to include these groups. However, Universal Access and Universal Service, while they may imply the same thing, are very different approaches to deal with the problematic access gap.

Universal service, a term coined by Theodore Vail, president of AT&T in 1906, argued that the government should enforce the usage of only one network. This approach suggests a monopolization of the market and goes against the liberal market principle.

Universal access on the other hand suggests cross-subsidizing the low and no profit service areas by high profit service areas. However, this results in the urban population to get over-charged while the rich rural areas benefit from rural subsidizing.

So how do we enable a fair and inexpensive network to be able to create access for a large number of people equally?
Ms. Archana Gulati went on to introduce the Sanchar Shakti scheme as a contribution to national access in India. It was initiated with the objective of improving rural SHG access skills, knowledge, financial services and markets through mobile connections and involved several stakeholders like NABARD, handset/modem manufacturers, DoT USOF, Mobile VAS Providers, Lead NGOs, Mobile Service Providers.

This scheme shows how important is, for the commercial, private and public sector to work together on obtaining accessibility to ITCs.

Session 2: Free and Open Internet

(by Pranesh Prakash)
The following session by Pranesh Prakash on Free and Open Internet showed how the internet can still be a restrictive place which does not allow for internet equality. His talk focussed on the concepts of free and open Internet. Prakash started by stating the Freedom of Speech and Expression Article of the Indian Constitution and in an interactive round it was discussed, how these articles are fundamental for securing other basic human rights. This was demonstrated by an example in which the distribution of food did not proceed equally, as misinformation and restrictions led to an inappropriate hoarding of goods. Therefore, it is important for everyone to have that right. In fact, the Indian constitution formulates Article 19 in a positive way, implying not only everyone should have that right, but that the government must promote the upholding of these rights.

However, in the case of Article 66a, the law actually caused a problem with freedom of speech in itself, as it penalizes sending false and offensive messages through communication services. This is a massive impediment on free speech, as outsiders decide upon what is offensive and what is false.

The other side of freedom of speech and expression is censorship. Online, the removal of websites and editing of content often happens quietly and obscures the fact that someone or something is being censored. Unlike book burnings in the past, which were always made a big political spectacle, often websites are simply removed without a trace, or one is faced with a 404 error, when trying to access it. Because of the offensive content law, journals and magazines are quick to remove supposedly offensive content, as it seems more difficult to engage in argument with the people claiming offense. The CIS proposed a counter-law to secure for this to happen less, as freedom of speech includes the freedom to receive that speech.

VIDEO

Session 3: Openness

(by Sunil Abraham)

Next to ensuring freedom of speech and access, the third session of the day focussed on Openness in terms of Open Source software. Sunil Abraham, CIS executive director, stated the importance of free software and open access of data, as they ensure what he called the four freedoms of internet usage, namely the freedom to use for any purpose, the freedom to study, to modify and to share (freely or for a fee). Proprietary software imposes on these freedoms, as it only has restrictive use and a strong copyright. However, there are alternatives that have moderate copyrights, or so-called copy centred perspectives, or even copyleft, including the above mentioned rights into the terms of the software usage.

Above is a picture of Sunil Abraham speaking on Openness

In alignment with Sunil Abraham’s talk Pranesh Prakash criticized copyright law cutting into accessibility rights, as copyright infringements include translation into other languages, audio versions and also integral parts of education. The key is not to have a "one size fits all" copyright solution, as it is impossible to treat twitter content the same as a blockbuster movie. However, the government of India is doing exactly that and needs to interlink questions of access with copyright law.

VIDEO

Session 4: Open Content

(by Prof. Subbiah Arunachalam)
Prof. Subbiah Arunachalam, who led the next session, discussed Open Content. He had seen during the course of his experience India's poor performance in Science & Technology and outlined the reasons for the same. The lack of access to information essential in scientific research and knowledge production, he said, was the major limiting cause.

VIDEO

Session 5: Quick Talk on Copyright Law and Access

This short session dealt with implications of copyright law on internet access.

Activity

The participants were divided into two groups, and they were asked build as huge a network as possible with their personal belongings and present their creations. The participants had good ideas. One group placed their mobiles and laptops into the network to have them as nodes. The other group implemented the re-routing around censorship.

VIDEO

Given above is a picture of the participants in an activity making the longest network possible with their personal belongings.

Day 5: (June 12, 2013)

Session 1: Privacy on the Internet in India

(by Sunil Abraham and Elonnai Hickok)