Indian Broadband Policy and Regulatory Resources

INDIA

Telecommunication Regulatory Environment Results for India

India 1
Some observations from the survey result those are noteworthy are as follows: (i) The perception of the survey respondents points out to the success of the regulatory environment in voice with the data i.e. broadband having very poor outcomes on almost all the dimensions other than market entry and tariff regulation (ii) The Indian telecom sector growth can be attributed to successful market entry in all the segments, which in turn provided a base for competitive tariff regulation (iii) Universal service is still a concern with wide disparities in rural and urban access. The digital divide in the broadband segment is reflected in the poor scores for USO (iv) the quality of service seems to be compromised with low scores both for mobile and broadband (v) Last, but not the least the spectrum allocation especially 2G has resulted in very poor scores for access to scarce resources for mobile. The TRE report for India can be accessed here

BROADBAND IN INDIA

Broadband Operator Market Shares as of Sep 2010

India broadband

While India has achieved immense success in voice communication, the penetration of internet and broadband has remained low, mainly due to a limited spread of wireline telephones and nonavailability, so far, of mobile broadband technologies. China and USA had about 120 million and 85 million connections respectively by June 2010 in comparison to India’s 10 million. The Government formulated the Broadband Policy of 2004. In this policy, broadband was defined as an “always on” connection with downloads speeds of 256 kbps or more. There were 0.18 million broadband connections at the end of March 2005. This number has grown to 10.30 million by the end of September 2010. However, at the end of September 2010, broadband connections were 57.5% of the internet connections of 17.90 million.In the absence of computers and other devices for accessing internet, more and more Indians are using mobile phones to access the internet. A large percentage of mobile subscribers can access internet through their mobiles. However, most of these are on 2G mobile networks with limited data capabilities. This augurs well for broadband if the operators are able to replicate the business model that worked so well for the low Average Revenue Per User (ARPU) in the voice market in the market for data as well, where mobile will be the platform for internet access with 3G technology.

  • Anti Competitive Practices

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The low scores of the broadband segment are quite expected with the HHI numbers indicating concentration of market power. There are 105 service providers who are currently providing broadband services. However, top ten service providers have captured more than 95% of market and top 5 service providers have about 90% share. State owned companies BSNL and MTNL together have about 70% market share. This indicates that despite having license for provisioning of broadband services, majority of service providers are unable to penetrate into the market and the market is still dominated by few players only.

One of the comments to the survey points out to the anti competitive practices in the BB segment. …”there are some unresolved issues in the implementation of the Broadband Policy, 2004 such as the absence of a level playing field in granting unrestricted internet telephony amongst the Universal Access Service Providers (UASPs), the Cellular mobile Service Providers (CMSPs) and the Internet Service Providers (ISPs). The ISPs have already filed cases under Competition Act against the alleged discrimination by DoT in favour of UASPs and CMSPs and litigation is still on.”

  • Interconnection

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The Broadband Interconnection score has also reduced from 2007-2008. NIXI (Neutral Internet Exchange India) has not been effective as Internet Exchange Point despite various efforts made from time to time. Despite all the efforts optimal utilization of NIXI’s infrastructure has not been achieved. As on 12th January 2011 only 36 of the total 167 operational ISPs were connected to NIXI. The data available on NIXI website on this date indicates that the weekly traffic exchanged at all the seven nodes is approx 23 Gbps, which is merely 5% of the total national bandwidth of 483 Gbps reported by ISPs at the end of September 2010. Presently NIXI is not a telecom licensee and therefore is not under the purview of TRAI & DoT. There is clear resistance of the service providers to join NIXI which cannot be mandated as NIXI is not a service provider. NIXI being independent agency cannot be regulated in terms of QoS, tariffs and infrastructure.

  • Market Entry

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Broadband Market Entry score has slighted improved from the 2007-2008 TRE survey though still at 3. While broadband has been deployed using Cable Modems, xDSL technologies, fiber and wireless, in India xDSL has been predominantly used. The neglect of the broadband segment has been pointed out by many respondents. TRAI itself admits that with the auctioning of 3G and BWA there will be alternate technologies available for broadband. The spectrum for 3G and BWA technologies for provision of high speed data services has been allocated recently. It is expected that wireless broadband will be available to subscribers from early 2011.

  • Quality of Service

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TRAI looks at various parameters to define quality of services by the operators. These include accessibility of call centres, response time to the customers, call drops, voice quality and network congestion. According to the latest QoS survey the percentage of offenders for the following parameters of QoS (wireless) (i) Worst affected cells having more than 3% TCH drop (call drop) rate (15.7%) (ii)Point of Interconnection (POI) Congestion issues (12.3%) (iii) Metering and billing credibility – pre paid (17.8%) (iv) % age of calls not answered by the operators (voice to voice) within 60 seconds (37.3%). Poor customer accessibility in the customer service call centre is a major reason for poor QoS scores (figure 25). While the QoS surveys report does not show very poor QoS parameters for broadband, the perception and LIRNEasia research shows that QoS is unsatisfactory in terms of promised and actual speeds.

  • Scarce Resources

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Broadband Access to Scarce Resources as been scored lower compared with the 2007-2008 survey (down from 2.8 to 2.5).  the government is thinking of creating a nationwide optical fibre network, but a large amount of fibre network is lying unused and unlit and BSNL’s record of active infrastructure sharing is not good. BSNL has been chosen to provide the optical fibre network under the National Broadband Plan.  However, the most blatant act of the government in the allocation of 2G spectrum vitiated the regulatory environment of this dimension. By allocating 2G spectrum to 9 companies in January 2008 at an arbitrarily decided price of 1651 crores (the price paid by the fourth cellular operator way back in 2001), the then minister violated all the principles of efficient allocation of this scarce resource.

  • Tariff Regulation

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Broadband Tariff Regulation Score has improved from 2.8 to 3.1. The results show that the TRE for Tariff Regulation was the best performing dimension in India for the third time in succession. Though the regulator has forborne from tariff setting, various regulations have been passed in the recent times to address the tariff concerns, the most important being the regulator slashing of roaming rates as the operators seemed to be exploiting some market power. Although broadband penetration is low in India, the entry level tariff for broadband services has come down drastically from Rs. 500 a month in 2004 to Rs. 200 a month in 2007. Most of the providers are charging broadband monthly rental between Rs. 200 to Rs. 1600 and providing various options for data transfer.

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Source: India