Digital India Reality Check

What exactly will push the Broadband Highway?

By Gagandeep Kaur

The Digital India initiative by the Government of India has the potential to provide the much needed push to the mobile broadband ecosystem in the country.

Recently launched with the mission of providing digital empowerment to every citizen of the country, Digital India is envisioned to build the backbone of broadband highway and mobile telephony in the country.

With an investment overlay of Rs 1.13 lakh crore over the next three years, the initiative seeks to harness the power of connectivity and information technology to establish a digital platform to deliver government programs and services to citizens across the country.

“Digital India has been envisioned as an ambitious umbrella program to prepare India for knowledgebased  transformation. The project is a game-changer, from the perspective of delivery of pro-citizen good governance, with synchronized and coordinated engagement of the entire government. India is sitting at the cusp of an IT revolution,” says Minister of IT and Communications, Ravi Shankar Prasad in a recent interview, published in an English language daily.

Since connectivity is at the crux of the project, it has the potential to provide much-needed push to the mobile broadband technologies like 3G and 4G and thus leading to overall ARPU improvement for the service providers and better monetization of the available spectrum.

“The biggest impact [of Digital India] for the telcos is in the expansion of the data markets. There will be a huge growth of traffic and data consumption and it would need to be carried by the telcos,” says Mahesh Uppal, Director, ComFirst and a well-known telecom consultant.

Though 3G was launched around three years back, the technology started witnessing traction only in the last one year. Digital India can play the role of a catalyst in telcos going in for expansion of 3G and 4G networks, which will in turn push the consumption of mobile broadband services.

The expansion of the network and growth in subscribers and traffic would benefit the vendors as well since it will lead to growth of business for them.

“The vendors will also have a significant role to play given the considerable landscape of equipment required for such a pan-India rollout. Any use of spectrum resources will require mobile network equipment including BTSs, antennae and microwave dishes, further adding to equipment demand,” says Rohan Dhamija, Partner Head – India and South Asia, Analysys Mason.

The Grand Vision
Digital India brings together a number of programs, which are already underway. Broadly, it seeks to create a digital platform to serve nine verticals: e-governance, e-kranti, Public Internet Access Program, broadband highway, early harvest programs, IT for jobs, electronic manufacturing, information access for all and mobile connectivity.

One of the primary pillars of Digital India, the Broadband Highways demands a nationwide National Information infrastructure and extensive coverage in both rural as well as urban areas by 2017. Under the project, connectivity is to be provided to more than 42,300 villages so that there is no coverage gap in administrative implementation by the Government.

Besides, Common Service Centers (CSCs) will be made available across 250,000 villages by March 2017 and 150,000 post offices will be connected as Multi-service Centers to serve the citizens.

“Since this is an umbrella program the real benefit is that of branding and it is going to be transformative for all the associated program,” says Dr Prashant Pradhan, Director – Smarter Planet Solution, IBM India. The company is part of consortium of experts created by Ministry of Urban Development for consultation on Digital India.

The Rural Inclusion 

The private telcos have traditionally shied away from expanding in the rural areas because of the lack of sustainable business case due to high cost of rollout and expected slow adoption due to affordability constraints, lack of relevant content, etc. However, this project might inspire them to offer connectivity in the rural segment. Digital India is likely to help them in developing business case for the rural areas.

“Though the business model offered by the government to private telcos is not yet clear, if an external stimulus can strengthen the business case, it will be a great opportunity for telcos to penetrate the rural market with mobile broadband services,” says Rohan Dhamija, Partner Head – India and South Asia, Analysys Mason.

As of now more than 60 percent of broadband subscribers are from top 10 metros or tier 1 cities and more than 75 percent connections are from top 30 cities, according to COAI. The number of broadband subscribers is clearly skewed in favor of urban cities. This can change dramatically as the penetration areas of the telcos move towards the rural side.

“The low broadband penetration in non-top tier areas itself is a market opportunity, provided systematic imperatives are made to fuel demand so that telcos have demand-led reasons to provide coverage rather than fulfilling an obligation,” says Rajan Mathews, Director General, Cellular Operator’s Association of India.

However, no movement to the rural side is possible without innovative business models, which would need to be evolved so the private telcos are able to offer services in the rural segment in a commercially sustainable manner.

The Implementation case

Though the scope of the project is grandiose the implementation part is far from clear. The Government is yet to elaborate on how the project will be executed.

“We definitely want to support the project and look forward to collaborate with the Government of India for the same but we are still not clear about what needs to be done. The practical aspects are not clear. Once we know that we would be in a better position to see the areas where we can collaborate,” says Chris Houghton, Head of India region, Ericsson on the sidelines of a recent press conference.

Experts believe that the basic infrastructure is not ready and there are too many loose ends, which need to be tied-up before Digital India can be fully implemented.

“It will help to remain realistic about the scope of the initiative. Conceptually, it is a very strong initiative. However, it requires a fair amount of development because the infrastructure is not ready. The success of the project depends on how we address the infrastructure gap. The initiative is about electronic data services, beyond voice. However, these services need development and customization for end users and the physical infrastructure too is far from adequate,” says Uppal.

What really goes in favor of the project is that a number of initiatives have been already underway for quite some time and have now come under the aegis of Digital India, which is likely to help in their speedy execution.

“The implementation of this massive program, however, will depend on the creation of the enabling infrastructure. In order to facilitate country-wide broadband services, expansion of networks and service penetration of areas is imperative,” says Mathews.

There are a number of hurdles for the Government to cross before the vision of Digital India turns to reality. Probably the most important challenge is that the infrastructure needs to be developed at a break-neck speed to meet the deadline of the next three years.
On the infrastructure side the Government needs to accelerate the implementation of National Optic Fiber Network (NOFN) initiative. The project is already behind schedule by three years. NOFN will emerge as the key enabler of the Digital India and will provide the mainstay of the broadband connectivity across the country. “To expedite the NOFN, the government aims to rope in private telcos for faster fiber layout leading to speedier rollout of government as well as other services to the vast majority in rural areas,” says Dhamija of Analsys Mason.

NOFN itself will require more than 500,000 km of optical fiber and other associated equipment to connect 2.5 lakh villages. The project is already underway and is likely to get the required push now that it is under the aegis of Digital India initiative.

“NFON will be the main high-speed backbone network for delivery of all digital content. To date, about 10 percent of the 1,800,000 km of this project has been rolled out, so there is much scope for continued rapid roll-out,” says Anup Changorath, Director, Portfolio Marketing – Asia Pacific, Ciena.

Besides the implementation of various initiatives the Government would need to offer viable services and content to the prospective users. It would probably lead to dramatic change of their entire workflow.

“A lot of input sharing and engagement has to happen with the civic bodies. We anticipate a learning curve in the initial phase of the project,” says Dr Prashant Pradhan, Director – Smarter Planet Solution, IBM India. IBM’s global CEO, Virginia Rometty recently discussed Smart Cities and Digital India initiatives with Prime Minister Narendra Modi. The company is exploring collaboration areas with the Government of India and believes that it is already working with many state Governments and Central Government towards digitization programs.

The company believes that a lot of business generated for this would be incremental in nature. “The approach of the Government might be different in different states. Each state might pick up its priority area. For instance, a state, which is disaster prone might make that a priority,” says Dr Pradhan.

A number of foreign vendors are likely to be part of the digital India initiative even as the Government looks for ways and means to promote indigenous manufacturing. Besides IBM, Google has also made its intention clear to work with the Government of India on Digital India initiative.

The Digital India campaign is also supposed to push the domestic manufacturers. As of now, it is not clear how the Government will give preference to domestic manufacturers or companies, but the indications are that `Make in India’ will be synchronized with Digital India initiative.

“No doubt this project represents a great business opportunity for Indian domestic manufacturers. That said, in order to keep the Digital India project on-track in terms of utilizing the latest most cost-effective technology, as well as in terms of time-to-market, we fully expect significant opportunity for foreign suppliers,” says Anup Changorath of Ciena.
Increasing broadband penetration is the need of the hour and initiatives like Digital India will be successful when every citizen of the country will boast of connectivity and will be able to utilize that to his/her benefit. However,  infrastructure needs to be developed on war footing for this project to be truly successful.

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