The Hindu Business Line : A base for rural connectivity

THE VASTLY NEGLECTED rural telephony market in India is at last getting the attention it deserves from the Telecom Regulatory Authority of India. A latest paper by the telecom regulator recommending a package of measures to boost rural tele-density and bridge the communication divide between Urban and Rural India is welcome. The fact that the urban-rural tele-density gap is widening, with the former at 31 per cent compared to just under 2 per cent for the latter, remains a real cause for concern. And unless the Government wholeheartedly accepts and implements the TRAI recommendations, the overall growth of the telecom sector will become unsustainable sooner than expected.

With the success in hooking up Urban India, there is now a greater recognition of mobile telephony as the technology medium for rural connectivity. In the circumstances, the regulator's latest proposal of `infrastructure based' subsidy support to telecom operators, as an alternative to individual fixed line subsidy, has come not a day too soon. The Government has for long been stuck on providing individual fixed lines to households in the six lakh villages and the progress on this front was stymied by the subsidy crunch. TRAI has recommended offering infrastructure-based partial support to operators interested in installing about 20,000 base stations covering over 80 per cent of the rural population. This makes sense, as the biggest advantage of mobile telephony is that the base station infrastructure can be widely shared by the rural masses, unlike fixed line telephony. As the incumbent, BSNL, and private sector operators are likely to derive a subsidy component of Rs 8,000 crore from the Universal Service Obligation Fund, rural telephony investments may become an attractive proposition for them. Since the subsidy element is also likely to come down drastically under this proposal compared to the projected USO inflows of Rs 25,000 crore by 2010, TRAI has suggested that, over a period, this levy also be cut from the current 5 per cent of an operator's revenue.

TRAI has done the right thing by offering a slew of incentives and concessions to keep open multiple technology options for rural connectivity in the years ahead. Mandating the leasing of optic fibre infrastructure by different telecom operators with appropriate incentives is expected offer a significant push to avoid wasteful duplication of infrastructure. The recommendation to delicence certain spectrum bands for Wi-Fi and Wi-Max and lower the licence fee for VSAT connectivity are the right moves to make rural telephony attractive to as large a constituency of operators as possible. Given the growing purchasing power of the rural households, the success of BSNL in building the subscriber base in C-class towns, and the proliferation of low-denomination prepaids, the telecom revolution may be set for takeoff in Rural India. The TRAI recommendations need to be acted on quickly.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
India's vote on Iran at IAEA — National interest versus foreign policy

The value of share buybacks

A base for rural connectivity

Too important to be left to political compulsions

Presentation of financial instruments

On corruption and its `sister activity' — taxation

Are tax lures to woo investment passé?

Making sense of the Sensex

Rural lending