Home India 2006 Changing India – using the telecom edge

Changing India – using the telecom edge

by david.nunes
Amit SharmaIssue:India 2006
Article no.:6
Topic:Changing India – using the telecom edge
Author:Amit Sharma
Title:Vice President, South and South-East Asia
PDF size:320KB

About author

Amit Sharma is the Vice President for South & South East-Asia at Motorola Inc. Mr Sharma has been a member of Motorola’s Asia-Pacific Management Board since 1997. Prior to Motorola, he served asVice President – Strategic Planning & Business Development at GE Capital and at McKinsey & Company as a core team member of the firm’s Electronics and Marketing Practices. Mr Amit Sharma is the Co-Chairman of the Telecom Committee of the Federation of the Indian Chambers of Commerce & Industry (FICCI); he serves on the AmCham Board of Governors and is the Chairman of the its Telecom Committee; he is also a member of the CII – Confederation of Indian Industry’s Telecom Committee. Mr Sharma studied at the Indian Institute of Technology (IIT), Kharagpur; he has an MSE in Computer and Information Sciences from the Moore School, University of Pennsylvania. He also holds an MBA in International Business from Wharton School of Business, where he was on the Dean’s and the Director’s Honours Lists.

Article abstract

Telecommunications holds the key to India’s economic emergence. Contrasts in telecom usage, though, are great. India is the world’s fastest growing telecom market, but two-thirds of its population has no coverage and broadband usage is negligible. Nevertheless, countless urban and rural workers use mobiles to do business and thousands of people man the call centres, the hubs of the Business Process Outsourcing (BPO) industry, which has played such a key role in making India the world’s back-office.

Full Article

To understand how much the explosive growth in telecommunications has altered the lives of ordinary Indians, all you need to do is look around cities and the villages that lie close to them. In a growing number of India’s cities, particularly the metros, tradesmen and shopkeepers transact business over the phone, usually a mobile device. It is not unusual to see plumbers, carpenters, electricians and the like, handing out business cards with mobile numbers. Until a few years ago, this was unthinkable. Hop across to urban and semi-urban villages, and the picture is not very different; down in the muddy bazaars, vegetable and milk vendors in makeshift kiosks use mobile phones to take home delivery orders. Farmers use them to share news, check crop prices, learn about new agricultural programmes and talk to relatives in cities. This single device, a potent symbol of progressive de-regulation in India’s telecom industry from the early nineties, has expanded incomes of scores of people across the country, made lives easier and more convenient, and generally given the economy a push northwards. Well past midnight, high up in glittering glass and concrete buildings that dot Bangalore, Gurgaon (a Delhi suburb) or Hyderabad, thousands of young people chatter on phones, providing solutions to customers in distant US and Europe, in a 24 x 7 business that spans the IT and telecom convergence space. These are the hubs of the Business Process Outsourcing (BPO) industry, which has played such a key role in making India the world’s back-office. When travelling anywhere in this vast country you are likely to see people glued to mobile handsets. From mass-market or second-hand phones to the latest in design and applications, mobile phones have become ubiquitous. The telecommunications industry has been a showpiece of India’s economic reform process, demonstrating how a virtuous convergence of de-regulation, foreign investment and competition can transform an economy and empower people. With subscriber numbers growing at 5 million a month from less than 2 million just 10 months ago, the telecom industry remains one of the country’s fastest-growing sectors. According to the Telecom Regulatory Authority of India (TRAI), India currently has more than 48 million fixed-line users and 71 million cellular phone users. Tele-density, or the number of phones per 100 people, has increased from less than 1 per cent in 1991 to nearly 12 per cent today. Given the dramatic impact of early liberalization in the sector, it would be no exaggeration to say that telecommunications holds the key to India’s emergence as a leading global economy. Statistics cannot comprehensively capture the visible multiplier effect of telecom growth on the Indian economy, but they do show the expanded incomes, growing employment and a consumption boom that is powering India to 8 per cent GDP growth. Telecommunications growth Globally, the link between telecommunications growth and development is now well established. In general, studies have shown that a 2 per cent increase in tele-density can lead to a 3 per cent improvement in economic development. This linkage points to the direction India’s telecom policy should take. There is an urgent need to increase both the width and depth of the telecom revolution throughout all of India’s socio-economic strata and in rural India. Despite the rapid growth, India has many miles to go before it can take its place among the telecom-empowered nations. For one, tele-density may have risen 12-fold over the past 15 years, but it lags significantly behind China (51 per cent), not to speak of developed markets like the US (117 per cent). For another, the growth of the industry has been uneven; rural density is a paltry 2 per cent, in stark contrast to the urban tele-density of 31 per cent. The key lies in mass-market and rural connectivity. It is essential, for several reasons, to address this segment comprehensively. Our penetration may be increasing, India may be the world’s fastest growing telecom market, policies may be conducive, but the fact of the matter is that as much as two-thirds of the country’s population has no coverage – wireless or wireline! The telecom revolution is yet to happen for the majority of Indians. Mobile devices, though, hold the promise. Government policy has addressed some of these concerns. The government, for instance, raised limits on foreign investment in telecom services last year, paving the way for greater investment inflows in the sector. Heightened competition has already benefited the consumer significantly. India now enjoys tariffs that are among the lowest in the world – just a decade ago, they figured among the highest. The state-owned service providers’ recent move to cut all domestic long-distance calls to Re 1 per minute (roughly 2.2 cents) from March this year is expected to revolutionize the telecom market even further. This apart, the zero-duty regime has allowed telecom equipment manufacturers to provide handsets at ever-cheaper prices, providing a huge impetus for the low-end mass market that is bound to stoke growth. Today, mobile handsets are available for as little as Rs 1200 (or US$ 27), and a thriving second-hand market for mobile handsets is accelerating the velocity of growth. These trends are likely to influence urban India where connectivity is growing exponentially. To truly reap the gains of the telecom revolution, public policy and private initiative needs to be focused on leveraging technology to fulfil fundamental development needs in rural areas where 70 per cent of the population lives. In a country like India, community access to information and communication technology is an extremely effective way to facilitate universal access to education, healthcare and agricultural productivity. In this respect, there is huge potential to leverage broadband, both wireless and wireline, to play a key role in bootstrapping thousands of Indians out of poverty and illiteracy. Broadband services (in terms of mass usage) are virtually non-existent. Computers in rural areas, or as a mass phenomenon, are yet to appear. It is broadband, especially wireless broadband, which holds the key to connecting India in a very significant way. It leaps over the physical infrastructural hurdles to provide seamless access to information and knowledge, converging telecom and information technology to consign geographical constraints to history. Distance learning Today it is easy to envisage, for example, children in India’s remotest villages learning to read and write through access to creative distance learning solutions. Distance learning can overcome the twin problems of distance and chronic teacher absenteeism that afflict India’s schooling system. Always on, high-speed, broadband solutions that provide cost-effective connectivity are being deployed in both pre-designated nodal and recipient schools. For most students, this is the first real educational opportunity. The initiative bridges the gap in primary and secondary education standards between schools in rural and urban areas. This ties in directly with the Government’s accent on e-education, to address a major need of the country. Wireless broadband technology connects teachers and students by providing real-time video and audio feeds to a cluster of recipient schools from a classroom in a nodal school. The broadband wireless link and the computers/software connect the nodal and recipient schools. The nodal school provides the curricula and content; a NGO partner produces it in Internet compatible format. A similar project, in partnership with the state government of Rajasthan, focuses upon panchayati raj or village self-governance. Being cost effective and scalable, broadband, especially wireless broadband, can be creatively leveraged to improve the quality of governance and the provision of public service. For instance, the President of India A P J Abdul Kalam has envisioned a project called PURA, an acronym for Providing Urban Amenities in Rural Areas. Broadband would make it possible to establish community centres in each one of India’s 600-odd districts with PC kiosks to provide combined opportunities for e-welfare and e-commerce. In some parts of rural India, farmers are already harvesting the benefits of information and communications technologies in the form of an e-marketplace called e-choupal put in place by a major tobacco company, ITC Limited. By providing farmers with real-time information on commodity prices, weather reports and so on, ITC has helped farmers slash transaction costs by eliminating exploitative middlemen and enhanced farm productivity. Telecom technology can also assist in healthcare delivery in unprecedented ways. India’s public healthcare delivery system, established in the 1950s, is no longer equipped to address even the primary healthcare needs of the country’s 1.1 billion citizens. HIV/AIDS, tuberculosis, malaria and other communicable diseases continue to afflict the population. Tele-medicine, in which doctors can share patient information, provide education, guidance and training, could play a key role in relieving the burden of under-funded health centres. We need a future where hand-held PDAs – both cellular and WIFI – dominate rural India. These will enable voice, data, one-way video and related applications, connect India’s billions, and drive the country into the age of connectivity and convergence. Leveraging telecom can help India leapfrog over several stages of development, right into the global information age. Access to information enables people to make choices, a necessary pre-condition for the healthy functioning of a democracy. Using the telecom edge to improve the quality of life of all its citizens will help India stride into the league of developed countries. The telecom edge is, clearly, a catalyst of socio-economic change.

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