Under the able leadership of the PM of India Shri Narendra Modi, government has recently launched a Digital India program to co-ordinate between the building of digital infrastructure and broadening technology reach. However, we think implementation is crucial along with addressing key bottlenecks including spectrum availability, limited fibre connectivity, right of way regulations, and high taxation / government charges.
National Optical Fiber Network Connectivity
The National Optical Fibre Network (NOFN) scheme was launched in 2011-2012 with a view to connecting over 250,000 Gram Panchayats (village authorities) in the country with over 500,000 km of optic fibre by December 2016. In order to accelerate connectivity, we highlight a few key factors such as clarifying right of way for laying fibre, providing more backhaul spectrum, incentivizing operators to share infrastructure, promoting capital expenditure and incentivizing local manufacturing of network equipment.
Wireless Spectrum – Hurdle Cleared
We believe that timely availability of spectrum to the sector could go a long way in accelerating adoption of new technologies and lowering the overall spectrum cost to operators. We believe that spectrum auctions are a fair way to allocate spectrum and while the new government has taken some measures to make more spectrum available, a clear timeline for various spectrum bands to be auctioned, say over the next 10 years, would help operators to budget for resources and plan roll-outs accordingly.
Governance and Empowerment
While providing connectivity is only a part of the Digital India scheme, the other two areas for improving transparency digital governance and digital empowerment—could become effective tools for accelerating technology adoption and incentivizing the broader population to use data connectivity, in our view.
Finally, Effective utilisation of funds collected by the government from the operators to develop the sector’s infrastructure / services is key as more than 50% of the Universal Service Obligation Fund (USOF), a charge levied on telecom operators, is unutilized.