Breakthroughs Needed For Digital India

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 whats 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 its the lack of basic access, of the “pipes” and “plumbing” for connectivity, thats 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 dont 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. Its time the government accepts that Digital India is too distant, and theyd 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 doesnt 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, theres 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 isnt, 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, theres 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. Theres a disinclination to evaluate policies objectively because of recent scams. It is increasingly obvious that plugging away at legacy plans with their failure rate wont 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.