India’s mobile operators have achieved exemplary success in delivering traditional telephony at some of the lowest prices in the world. However, India’s users have been less lucky when it comes to broadband services such as high speed Internet and support for multimedia — which are essential for business and entertainment. Even a modest target — nine million broadband users by 2007 — is nowhere in sight. With the guidelines for auction of licences for 3G broadband wireless services now imminent, it is time for the government and the regulator to remove the other impediments to the growth of broadband services. The government and telecom regulator Trai (Telecom Regulatory Authority of India) are currently deliberating on two important services — Internet telephony and mobile television (TV). If they can give these services the priority they deserve, it can work wonders: for the growth of broadband as well as the economy.
Illustration: Malay Karmakar / Mint.
Experience in the EU, US, Korea, Singapore, among others, demonstrates what regulators and policymakers can do to expand broadband access. A critical lesson is that broadband growth has been driven by services of immediate interest to the people at large, not just the geeks.
Trai has played a stellar role in expanding mobile access. However, when it came to opening Internet telephony, consumers have been let down repeatedly. Across the world, businesses — from small street-corner stores to major multinationals — offer Internet telephony so that users can make cheap long-distance calls. Not in India.
In 2005, perverse rules for Internet telephony announced by former minister for communications Dayanidhi Maran allowed only telecom operators (telcos) to provide the service. Ordinary Internet service providers (ISPs) could become Internet telephony service providers (ITSPs) but could offer only a restricted service after a hefty payment. With? huge mark-ups on long-distance calls — despite the recent cuts in long-distance rates — it was evident telcos would have little incentive to provide Internet telephony. Predictably, telcos rarely offer Internet telephony and ITSPs have made little headway.
Internet telephony has been available internationally for more than a decade. Given the market failure, the regulator has an obligation to facilitate the service without further delay. In the past, it supported entry of CDMA fixed service players into mobile telephony on exactly these grounds. Internet telephony merits similar treatment.
However, Trai has opposed unrestricted Internet telephony by ITSPs on the grounds that this would give ITSPs unfair advantage against telcos, which pay much higher licence fees. This ignores the disadvantage ITSPs face in competing with telcos since ITSPs can provide a small fraction of services provided by telcos who own the physical infrastructure to carry the calls. Besides, telcos have received numerous direct and indirect concessions in recent years. The revenue share, which telcos pay as licence fees, has fallen substantially over the years. The network roll-out obligations have been diluted. The two concessions alone — there are many more — are worth several billion dollars.
Trai must treat Internet telephony in line with international best practices and remove all entry barriers, e.g., licence fees. Cheap long-distance calls will encourage people to buy PCs and mobiles, subscribe to broadband Internet and drive usage of the Internet for other services which, though important, is often insufficient to justify the cost of an Internet subscription.
Mobile TV services are equally important for India. Like Internet telephony, most users otherwise not keen on data service will value one that delivers TV images on mobile phones or other hand-held devices. Bureaucratic inaction and the commercial interests of state-owned Doordarshan have come in the way of timely action on Trai’s recommendations, submitted several months ago.
Bollywood and cricket are obvious drivers of mobile TV in a large market such as India, if the service providers can get the pricing and related issues right, as they have so spectacularly for mobile voice. Mobile TV will provide new incentives for subscribing to 3G services as well as for operators to expand broadband coverage. The latter can support services way beyond mobile TV. Our experience of the coming Commonwealth Games in 2010, can be transformed by mobile TV — in much the same way colour TV sets did for the Asian Games in 1982.
Mobile TV services would be relatively easy to offer on the coming 3G networks and could provide a perfect platform for demonstrating the many features of a powerful technology. The eventual sustainability of new 3G services will depend on the availability of applications such as mobile TV with wider appeal. More so since the government’s plans to auction the 3G spectrum may remove the huge hidden subsidy in the existing spectrum charges and raise costs.
Policymakers and regulators designing licensing rules must recognize this larger context: There are important issues beyond traditional voice and stakeholders beyond voice operators. Indians have a demonstrably higher stake in data services. A policy priority for introduction of full-scale Internet telephony and of mobile TV in time to exploit the huge opportunity offered by the coming Commonwealth Games could be invaluable. It could provide major economies to broadband wire line and wireless providers and services, not just for nerds, but also for the average citizen.
Mahesh Uppal is director, Com First (India) Pvt. Ltd. He consults on regulatory issues. Comment at firstname.lastname@example.org