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Drivers of Telecom in India

Drivers of Telecom in India. Ashok Jhunjhunwala, TeNeT Group, IIT Madras, ashok@tenet.res.in Pan-IIT Conference - March 03. India’s Imperatives. India has 1000 million people 180 million households

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Drivers of Telecom in India

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  1. Drivers of Telecom in India Ashok Jhunjhunwala, TeNeT Group, IIT Madras, ashok@tenet.res.in Pan-IIT Conference - March 03

  2. India’s Imperatives • India has 1000 million people • 180 million households • 40 million fixed line telephones,12 million mobile and four millionInternet connections • Upbeat Mood as Indian Telecom Poised for Growth • 100 million lines by 2005 • 200 million lines by 2010 • Customers Start to benefit • long distance cost tumbles from Rs 30 to Rs 5 per minute

  3. Primary Bottleneck • Affordability • Telephone infrastructure cost (Capex) about Rs30K per line a few years back • Finance Charge : 15% • Depreciation : 12% • Operation and Maintenance : 13% • License fees, WPC charges, service tax: 10% • 50 % of Rs 30,000 required as yearly revenue to break even • revenue of Rs 1200 per month • What percentage of Indian Households can afford this?

  4. Urban Household Affordability Vs Monthly Telecom Spend* * For year 2002-03 at 25% unreported income & 3% income spend on telecom

  5. Rural Household Affordability VsMonthly Telecom Spend* * For year 2002-03 at 25% unreported income & 1.75 % income spend on telecom

  6. India Requires • Telecom Infrastructure at a Capital Expenditure (CAPEX) of under Rs 10,000 per line • Not a problem of the West, as affordability there is much higher • a task of scientists of Developing Countries • In doing so and serving the large potential market of India and other Developing Countries • we can be amongst the world leaders in telecom technology • CAPEX cost has fallen to about Rs 16000 per line • can get to Rs 10,000 per line in a few years

  7. Telecom Network Technology • Contribution to CAPEX from Network Elements for emerging market • Backbone Network (contributes to 10% of CAPEX) • Fibre, WDM Networks, SDH Networks • Backbone Switches and Routers (contr. 5-10% of CAPEX) • Access Network (contributes to 60 to 65% of CAPEX) • Mobile, Fixed Wireless and Fibre Access • Service Platforms (contributes to 10 to 15% of CAPEX) • OMC, Customer Care & Billing, NMS, IN Services and ISP platforms

  8. Backbone Network • BSNL has fibre going to most taluka (county) headquarters • Reliance, Bharati and Tata laying fibre feverishly • Technology • WDM Network • mostly obtained from Lucent, Alcatel, Nortel, Sycamore etc. • SDH Network • Hwawei, UTStarcom, ZTE, Tejas Network dominate • Chinese and Indian cost-effective technologies India has a fibre 10 km from almost any village in 85% area

  9. Access Network • Contributes to 60 to 65 % of per line CAPEX • Mobile Cellular : GSM/GPRS and IS-95/3G-1X • costs have significantly come down : rapid expansion likely • technologies dominated by Ericcson, Nokia, Siemens, Lucent, Qualcom etc. • Korean companies enter via IS-95/3G-1X • Fixed Wireless : providing fixed telephone and Internet to homes and offices • Fibre Access Network : dominate urban centers

  10. To PSTN 35 kbps Internet(premium rate of 70 kbps) plus simultaneous telephone at Rs 8K per line To Internet Fixed Wireless:dominated by corDECT WiLL

  11. Fibre Access Network • Emerging as best option to connect dense urban areas • For Residential Areas • Fibre to the street corner with POTS, DSL or Ethernet on Copper for 500 m • combined with 802.11 wireless tomorrow • may replace coaxial based cable TV tomorrow • For Commercial Areas • Fibre to the Building with Ethernet in Building • Technologies dominated by Indian and Chinese companies • Huawei, ZTE, UTStarcom, Midas

  12. Rural Opportunity • India has 600,000+ villages • 650 million people, Rs 600,000 Crores Rural annual GDP • Can we double the Rural GDP in the next ten years….

  13. Connecting Rural India • BSNL’s Contribution: on the average one fibre connected rural exchange for every 150 sq km • a wireless system with 10 km range at existing fibre connected exchange would cover 80 - 85% of villages in India • India need a communications company which would focus and operate only in Rural Areas • looks at rural areas as large potential business and provides wireless Internet connectivity in villages • thinks and acts rural

  14. Innovative Technologies& Business Models • N-Logue : A Rural Service Provider • aggregate demand into a kiosk using • corDECT Wireless in Local Loop • ISP in a box : Minnow • Reliable power back-up • Rs 50,000 (including taxes) per Kioskproviding telephone, Internet, multimedia PC with web-camera, printer and 4 hour power back-up for PC • plus Indian language software • set up by a village entrepreneur on the line of STD PCOs • needs Rs 3000 per month to break even

  15. n-Logue Deployment Strategy Telephone Backbone Application & Content Providers Internet Backbone • Scope: • 1 –3 Talukas • 25 Km radius, 2000 sq km • 4 – 5 lakh population • 2 - 5 towns • 300 -400 villages 500 + Connections (at least 1 in each village) ACCESS CENTRE • Connections: • Individuals • Government • schools and PHCs • Kiosks LSP Banks Rs. 50,000 / Kiosk KIOSK OPERATOR Banks Micro Finance Organisations

  16. What is the monthly income? • STD PCO Rs 500+ • Children learn typing • all kinds of on-line and off-line education Rs 500+ • Kiosk is a photography shop Rs 300 • also a video parlour on weekend evenings Rs 300 • email and browsing • voice mail and video mail Rs 500+ • e-governance access • connect to taluka Government office for services Rs 200 • and much more

  17. Word-processor in Indian Languages

  18. IITM - Chennai Kavigal Multi-lingual Office Package

  19. Mailclient in Tamil

  20. Mundi . . . . • A 60 year old from a village near Melur • Palaniamma had lost vision in both eyes since 2 years • through the Aravind process Doctors confirmed that vision can be restored in at least one eye • IITM trying to develop Remote Diagnostic tools • Blood Pressure, Sugar & Iron, ECG Monitor, stethescope • at total cost of Rs 10,000

  21. Crop Consultancy • Top: Ladies Finger Diseased with yellow mosaic • Below : Post treatment • Saving of Rs 140,000 for the farmers • Cost of information Rs 20

  22. Can Kiosks become Micro-banks? • TeNeT and n-Logue working with ICICI • Remote Bill Payment • Rural ATM • Micro-finance • Remittance • better credit assessment • Credit and Product Marketing is one of the biggest requirement of Rural India

  23. Do we have a model for sparser areas? • Fibre not available in 15% of areas • Only about 50 to 100 villages in 20 Km radius • less population per village • less available money • Technology Intervention • Business Intervention • finance and buying/selling may make even larger sense

  24.  15 -20 Kms with 100 connections ISRO-IITM For inaccessible Rural Areas <-- 64 Kbps 2 Mbps --> 128 Kbps --> 3.8 m antenna 2.4 m antenna PSTN • 8-10 voice channels + 64/128 kbps Internet satellite backhaul • Each hub supports 16 to 20 remote sites with 2 Mbps downlaod • Rs 10,000 corDECT + Rs 10,000 backhaul cost per connection Internet

  25. To Sum Up • Telecom will take off in a major way in India in coming years • most regulatory hurdles crossed • focus on reduction on CAPEX • Can Telecom help in Doubling India’s Rural GDP • will change India • Internet is Power • can we have a micro-bank in every village in the next five years

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