The Hindu Business Line : A worrisome disconnect in the telecom story

While impressive growth has been observed in the cellular phone sector, there is very little indigenous R&D happening in the larger telecom sector, says T. H. CHOWDARY.

Selling more sophisticated cell phones in ever larger numbers isn’t enough. If India is to become a knowledge society, R&D infrastructure for mobile networks must be indigenised aggressively.

Even as World Telecom and Information Society Day was observed on May 17, the outstanding developments in recent times in telecommunications and how they are promoting the emergence of an information society in India merit close study. More than half the world’s population has a mobile phone. Telephone exchanges were first placed in public service in 1878 in the US, and in 1882 in India. One hundred and thirty years after their introduction, wired telephones are a little more than one-third of the world’s’ cell-phones.

Not only are fixed telephones not growing, their numbers are also declining as more and more people, especially in developing countries, opt for the mobile telephone.

Mobiles everywhere

Mobile telephones are incorporating an ever new variety of services; not only telephony but pictures, text, data, geographical positioning, broadcast radio and Internet TV. The cell-phone is a multimodal communications terminal.

Its price and weight are continuously coming down, its versatility and multi-functionality continuously increasing. Because of de-monopolisation and competition in the provision of network services all over the world, including India, newly discovered technologies are brought to the market immediately with the result that the capital cost for building and extending the network has come down.

In our country, till the mid 1990s, it required Rs 40,000 to extend the network capacity by one line; now it is Rs 3,500! Privatisation and competition and letting in foreign direct investment (FDI) have brought in Rs 1,20,000 crore of new investment into this sector in the last 13 years. This is in addition to what BSNL and MTNL are investing.

Currently, investment in Indian telecom is about Rs 40,000 crore a year, an unprecedented sum. Fierce competition has been bringing down prices for customers to astonishingly low levels. The average spend on a year’s cell-phone service is now about Rs 3,500, which is less than one-tenth of the per capita income (PCI). This contrasts with Rs 10,000 in 1994, when the National Telecom Policy (NTP) was drawn up to end the monopoly on provision of telephone services.

At over 270 million mobile telephones, India has the second largest such phones, after China, which has more than 550 million. India have overtaken America, which has about 240 million cell-phones. Currently, India’s growth is the highest in the world, higher even than China’s. We are adding over 80 million cell-phones in a year.

Troubling trend

While it is a welcome sight that today, even plumbers and carpenters, electricians and masons, and vegetable vendors carry cell-phones, it is extremely worrisome that all the network equipment is of foreign technology, some of it developed by Indians but owned by foreign companies. Indigenous R&D in telecommunications and production based upon our R&D are almost dead. Neither the ITI (Bangalore), founded in 1948, nor the researchers of the Department of Telecommunications (DoT) have any product that is designed and produced in India.

In contrast, institutions similar to the ITI that China established 40 years later, Huawei and ZTE, are leaders in the creation of intellectual property and technology for present-day telecommunications networks. They are now more or less dictating global standards and capturing markets in Europe and North America.

There are a few doughty and proud young Indian private companies that dared to take up R&D. One company in Hyderabad has designed, developed, and is delivering XDSL equipment; electronics that can be impressed upon the wires in underground cables to get broadband for high-speed data and video transmission.

Another private company in Bangalore is delivering deep-wave division multiplexing (DWDM) Optical Fibre (OF) equipment to our telecom companies. While this is welcome, the crucial network equipment — radio base-stations and mobile switching centres — still use foreign equipment. If these are only of a few millions dollars worth, the lack of effort on R&D may be excused but about Rs 25,000 crore a year is spent on such equipment manufactured abroad.

As the number of automobiles in India increases, facilitated by retail financing, our consumption of imported oil is increasing phenomenally. Similarly, as cell-phones come into mass use, the amount to be spent on foreign technology and foreign manufactured telecom network equipment is increasing. While automobiles and telephone services are good for the economy and masses, the import costs are detrimental to the country’s financial health.

Apply PURA model

With the extension of the broadband telecom network and deployment of wireless to connect users to the network, not only is employment created in Chennai, Hyderabad and Bangalore but even small towns and villages are becoming homes to BPO outfits, call centres and software companies.

But if broadband connectivity is extended to villages, then graduates in those villages could undertake such work even from their areas. This would pave the way for Providing Urban Facilities in Rural Areas (PURA). An example of this is Satyam Computer Services serving some of its foreign clients from villages around Bhimavram, in Andhra Pradesh. Our governments and companies should extend the PURA concept not only in telecommunications but airports, roads, housing, schools of higher learning and healthcare. We are seeing the beginning of this in the movement of IT & ITES companies towards second-tier towns such as Visakhapatnam, Coimbatore, Mangalore and Nagpur.

Along with the telecom network expansion, the Internet is also being extended but its full capability is not exploited because broadband has not yet been deployed extensively.

The Government of Korea wisely involved itself in extending broadband connectivity to all the homes in that country. So did the Nordic countries. If India is to become an information and knowledge society, the government must involve itself in pushing the extension of this infrastructure. The Government is building up a Universal Service Fund by a levy of 5 per cent on the revenues of telephone companies. This amounts to about Rs 8,000 crore per year. Although we have a USF Administrator and well-thought-out implementation policies, the utilisation of this fund is uninspiring.

We need a dynamic and mission-oriented implementation programme so that every school and college, every library and primary health centre (PHC) is connected to that broadband network through the USF. The example of the US during Mr Bill Clinton’s Presidency should inspire us. By imposing what came to be known as e-rate (education cess) on telecom companies’ revenues, the US has connected all its classrooms to the Internet.

It is not impossible to achieve such a state in the country if we go by what we did while preparing to stage the Asiad in 1982 — we commissioned one TV transmitter (equipped for colour transmission) every day for over a year and achieved over 90 per cent territorial coverage for the television network.

(The author is Director, Centre for Telecom Management and Studies.)

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