Govt wants 50 mbps broadband for all, but no one knows who'll pay for it

Govt hopes the national digital communications policy will generate fresh investments of $100 bn in the digital-telecom space

The national digital communications policy, which comes six years after the previous one (then termed the national telecom policy), is not short on ambition. The department of telecommunications (DoT) has set some stiff targets. It wants to provide universal broadband coverage at a speed of 50 mbps to every citizen in 2022 (over five times the average current data speed at around 9.14 mbps) and fixed broadband access for half the country's households in the next five years.   

At the same time, it is determined to ensure that there are as many as five million public wifi hotspots by 2020 and plans to double it within the next two years. And finally, the policy is also looking at enabling the backhaul network, or the intermediate network linkages, to be connected by fibre in at least 60 per cent of the country's mobile towers as opposed to the current practice of microwave links.  

Achievable targets or fanciful goals? First, some perspective. Despite the hoopla of the data revolution kicked off by Reliance Jio, mobile broadband penetration at the end of 2017 was 31 per cent, half the global average and lower than even Vietnam (36 per cent), Nigeria (42) and Indonesia ( 53), according to a GSMA Intelligence-Analysys Mason study. In rural India, where the bulk of the population lives, internet penetration is a woeful sub-15 per cent. To ensure that broadband will reach them would mean making enormous investments in areas where the private sector has not found it viable to put in large amounts of money.

Certainly, the telecom companies (telcos) see the new policy target as out of sync with reality. "To offer broadband access at 50 mbps to all, telcos would require over 400 MHz of spectrum each, ten times more than the average spectrum they have currently. And with the huge base price tag fixed for spectrum by Trai (Telecom Regulatory Authority of India) and the industry's financial debt overhang, there is no question anyone will be able to put in the money to make it happen," says Rajan Mathews, director general of the Cellular Operators Association of India (COAI).

Based on member data, Mathews says telcos are collectively carrying a debt burden of Rs 7,500 billion on their books on revenue of $33 billion (Rs 2,084 billion). Trai's spectrum base price would require the industry to fork out Rs 5,000 billion more. This level of investment does not gel with the government's new goal of "optimal spectrum usage' in place of the previous goal of "revenue maximisation".

Yet, even if spectrum prices were cut, the bigger challenge lies elsewhere. Universal broadband access across the country by 2022 demands lots of fibre, first, to backhaul data from the towers and, second, to connect half the households in the country with fixed broadband, and set up five million wifi hotspots within two years. "We now have enough spectrum available to push mobile broadband. But the key challenge for broadband is the need for fiberisation, without which broadband cannot grow. Also, we have to make a huge push towards setting up of public wifi to make broadband available, where again our record is very poor," says T V Ramachandran, president of the Broadband India Forum (BIF), which has telcos and technology companies as members.

Indeed, fiberisation in India lags far behind other countries. To be fair, some of the projects, despite the initial hiccups, have taken off -- so the Bharat Net programme, which aims at connecting 150,000 village panchayats with high-speed broadband, is expected to be completed ahead of time by December. Further, state-owned BSNL has floated a tender to roll out over 38,000 wifi hotspots that will connect the panchayats with police stations, health and education centres around the village. The plan is to up the number of wifi hotspots in the country to 0.5 million by the end of this financial year.   

Yet, this is woefully inadequate. The total fibre-to-population ratio in the country is merely 0.1 compared to China's 1.8. Or simply put, India, with a mere 99 million km of fibre, has a tenth of what China has put on the ground, according to BIF data.      

That is clearly reflected in the fact that only 30 per cent of the towers currently are connected with fibre, the rest are backhauled through microwave communications that will not sustain 4G for long and certainly not 5G. Clearly, the goal of broadband for all cannot be sustained. Further, with a bill of around Rs 10 million for every km of fibre put in, this means a lot of money.  

Poor fiberisation also means the public wi-fi target is near impossible to reach. Currently, the country has 36,000 commercial hotspots, or one hotspot for 37,500 people, against 1 for 13,800 for Nigeria and 1 for 3,600 for South Africa. In other words, the government would need to ensure that this number goes up over 138 times in just two years.

COAI also points out that telcos together have already invested Rs 10,440 billion in their business and are putting in $6-7 billion additionally every year. "If you take network expansion, the payment of additional spectrum and fibre, to achieve the objectives would require $50-60 billion. Where will so much money come from if the policy does not address this key issue?" Mathews asks.  

Asked why a policy was needed at all, a senior DoT official said candidly that it was aimed at sending out a clear signal of the government's intent. It hopes that the new document will generate fresh investments of $100 billion in the digital-telecom space. The question is: Who will foot the bill?