Project Reliance

8/6/2019 Project Reliance

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Rural Area:

In the Census of India 2011, the definition of rural area adopted is as follows: (a) All

statutory places with a municipality, corporation, cantonment board or notified town area

committee, etc are not considered to be rural areas (b) A place which does not satisfy thefollowing three criteria simultaneously is defined as a rural area:

i) a minimum population of 5,000;

ii) at least 75 per cent of male working population engaged in non-agricultural pursuits; and

iii) a density of population of at least 400 per sq. km. (1,000 per sq. mile).

Population statistics

Total

Population

Male Female

%

Contribution

to total

population

INDIA 1,21,01,93,422 62,37,24,248 58,64,69,174 100

Karnataka 6,11,30,704 3,10,57,742 3,00,72,962 5.05

Karnataka Rural Population Urban Population

17116598 44014110

Source: Census 2011, Wikipedia

Subscriber Statistics(Karnataka)

State Subscriber Base Population Mobile Phone per

1000 Population

Karnataka 48,465,542 61,130,704 793

Source: indiantelecom.com


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GDP & literacy rate (Karnataka)

Per capita

GDP(US $)

1034.9

Literacy 66.7%

Telephone penetration in India

The mobile subscriber base in India is 826.25 million out of which 68% of the

subscribers are from urban areas and the balance 32% is from rural areas. The urban tele-

denisty has reached 134% whereas rural tele-denisty is only 28%. As a result, the telecom

subscriber growth in urban areas is now saturated and further growth can come only from

rural India.

According to TRAI, 91% of the villages in India are covered by at least one operator.

Overall, 51% of the villages in India are covered by three operators and 31% of the villages

are covered by four operators. The population density across India is very low in villages

making it less viable for the telecom companies. This is due to lower number of subscribers

per BTS and lower ARPU of a rural customer when compared to the urban customers.

Difficult topography and climatic conditions are the other reasons for this low tele-density in

rural areas.

Population Density Number of villages

Between 1000-2000 129,000

Between 1000-500 144,000

Below 500 219,000

Source: www.indiatelecomonline.com


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. If we look at the spread of population, 70% of the population lives in rural India

spanning 492,000 villages. Majority of this population depends on agriculture for survival.

Contribution of the rural India is very significant as 45% of the GDP comes from this

segment. As telecom and network connectivity is seen as enablers of nations socio-

economic growth, the Government is aggressively looking at plans to improve the tele-

density in rural areas. The industry has made several suggestions for improving the tele-

density in rural areas.

y Fast approval mechanism for site acquisitionTelecom companies spend considerable time for the acquisition of land and for

obtaining permission from the quasi-government authorities like Panchayats for the erection

of BTS. There is always a threat of site demolition and considerable delay is experienced in

getting approvals till now. There is also difficulty in laying down optical fibre cable due to

right of way issues.

Telecom is a public utility and a critical infrastructure for rural development. Government

should instruct the Village Panchayats / Forest departments / Highway authorities to issue the

permission for the erection of BTS site on a fast track. Similarly the land for the site

acquisition should be made available quickly and there should not be any restriction or

charges or penalty on conversion of agricultural land to commercial activity.

y Immediate SEB (grid) power connection at industrial rate Another major deterrent for erecting sites at rural areas is the non-availability of SEB

power. The telecom companies depend on diesel power which is very expensive and does not

justify the site at many rural areas.

The Government should treat the telecom as essential services and mandated to the

state electricity board that the power connections should be made available within one month

of application and at industrial tariff. The BTS sites should be exempted from power cuts and

uninterrupted power supply should be made available.USO subsidy should be considered for

non-conventional energy sources like Wind power, solar energy and bio fuels.

y VSAT connectivity for rural areas


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through ATM. Mobile phone is the ideal and unique vehicle to extend the banking services to

rural India. Many African countries have successfully employed mobile phones for fund

transfer among the rural population. RBI and the banking sector should make the necessary

policy changes and join hands with the telecom sector to reach the banking services to the

uncovered areas.

The advent of wireless technologies, Government support and policy changes have

made it possible to overcome many of these difficulties. While launching wireless

technologies in rural India, operators are required to focus on service availability,

affordability, acceptability and awareness. Operators need to create and implement business

models capable of driving profitable growth through a rural expansion strategy.

Revenue from the Indian Telecom Sector

The gross revenue of the telecom service sector for the year 2009-10 was Rs. 1,57,985

crores which is about 3.7% increase over the last year in spite of unprecedented recession in

the market. Average Revenue Per User (ARPU) for full mobility service for GSM was

Rs.131/- and for CDMA Rs.76 per month while the respective minutes of usage were 410 and

307.

Tele-denisty

Overall tele-density

The number of telephone subscribers in India increased to 826.25 million at the end of

February 2011 compared with 806.13 million in January 2011, thereby registering a growth

rate of 2.50 per cent. The overall tele-density in India reached 69.29

Wireless tele-density (GSM, CDMA & FWP)

Wireless subscriber base increased from 771.18 million to 791.38 million registeringa growth of 32.62 per cent. Wireless tele-density stands at 66.36.


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Wire line tele-denisty

Wire line subscriber base declined from 34.94 million in January 2011 to 34.87

million at the end of February. BSNL/MTNL, two PSU operators, hold 82.71 per cent of the

wire line market share. Overall wire line tele-density is 2.92.

Broadband

Total broadband subscriber base has increased from 11.21 million in January 2011 to

11.47 million in February 2011, a growth of 2.34 per cent.

Particulars Wireless (Figures in millions) Wire line (Figures in millions)

Total subscribers 771.78 34.94

Total net addition 18.99 -0.15

% of monthly

growth

2.52 -0.41

Urban subscribers 512.26 26.13

Rural subscribers 258.93 8.82

Tele density 64.74 2.93

Urban Tele density 143.36 7.31

Rural Tele density 31.05 1.06

Source: Trai, annual report 2010

Wireless Statistics

Urban Tele-denisty Rural Tele-denisty

India 143.36 31.05

Karnataka 130 28

Source: Trai, annual report 2010

Some vital Statistics on Cell phones:

y Telephone Subscribers (Wireless and Landline): 826.25 million (Feb 2011). y Land Lines: 34.87 million Feb 2011)


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y Cell es: 791.38 milli Feb 2011)y Annual Cell ne Addi i n: 227.65 milli (Feb 2010 - 2011)y Monthl Cell phone Addition: 20.20 milli (Feb 2011)y Tele-denisty: 69.29 % (Feb 2011)y ProjectedTele-denisty: 1.159billi 75% of popul tion by 2013.

Source: Trai annualreport 2010

Bi est cell phone players ofIndia:

Source: Traiannualreport, 2010

USO

Uni ersal servi e is an economic, legal and business term used mostly in regulated

industries, referring to t e practice of providing a baseline level of services to every resident

of a country. The basic concept of Universal service is the below cost pricing of service to

increase the quantity of service. Most countries fund their USO either by collecting taxes

from the operators or by allocating funds through budgetary process. The third option is to

allow the incumbent operatorto be the designated USO provider by providing them legal and

monopoly protection. Universal Service Obligation is essentialto ensure thatthere is a


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balanced growth in the economic and social well-being of the masses. The Government needs

to take into account the social rate of return and the economic rate of return at the time of

taking decision to provide services to areas which are not commercially viable. In India the

rural penetration of telecom services is lower than the urban penetration. This is because the

private operators were initially reluctant to expand the network in rural areas because of the

lower ARPU and the high cost of provisioning services in those areas.

UniversalService

Objectives

USO

Funding

Policy

Roll Out

ObligationCompetition

Termination

Charges

Tariff

Policy Access

Deficit

Charge

Government

Funding

Rural Service Providers

USO Fund in India

The Universal Service Support Policy came into effect from 01.04.2002 in India. In

December 2003, the Indian Telegraph (Amendment) Act, 2003 was amended to give

statutory status to the Universal Service Obligation Fund. The Fund was established with the

objective of meeting the Universal Service Obligation by providing access to telegraph

services to people in the rural and remote areas at affordable and reasonable prices. The

resources for implementation of USO are raised through a Universal Service Levy (USL) at

5% of the Adjusted Gross Revenue (AGR) of all Telecom Service Providers. This charge is

included in the licence fee which ranges from 6% to 10%. In addition, the Central Govt. may

also give grants and loans to the USO fund.

Activities planned under USO Fund

The implementation of USO related activities is carried out by the telecom operators

both in private and public sector in India. The fund supports the following activities.


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Installation, Operation and Maintenance of Village Public Telephone in the revenue

villages identified

y Provision of additional rural community phones in areas after achieving the target ofone Village Public Telephone in every revenue village.

y Replacement of Multi Access Radio Relay Technology Village Public Telephoneinstalled before 1

stday of April 2002.

y Provision of household telephones (RDELs) in rural and remote areasy Provision of Broadband connectivity to villages in a phased mannery

Creation of general infrastructure and induction of new technological development inrural and remote areas for development of telecommunication facilities

Implementation of USO Fund activities

DoT has entered into Agreements with M/s BSNL and Private Operators in March

2003 for operation and maintenance of existing Village Public Telephones (VPTs), providing

Rural community phone (RCP) and for installation of Rural Household Direct Exchange

Lines (RDELs). Substantial progress has already been made in all these areas.

USO Fund has also been utilized to provide subsidy support for setting up and

managing infrastructure sites in 500 districts for provision of mobile services in the specified

rural and remote areas, where there is no existing fixed wireless or mobile coverage.

USO Fund subsidy for wireless broadband had been given to BSNL for installing

Wimax BTS in rural India. BSNL till date has rolled out approximately 1000 Wimax BTS

and is in process of deploying an additional 7000 BTS in rural area. DoT is also considering

support to the winners of Broadband Wireless Access (BWA) spectrum auction to ensure

level playing field in rural area.


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Highlights of National Telecom Policy 1994

Objectives:

y Availability of telephone on demand, provision of world class services at reasonableprices,

y Improving Indias competitiveness in global market and promoting exports, attractiveFDI and stimulating domestic investment,

y Ensuring Indias emergence as major manufacturing / export base of telecomequipment and universal availability of basic telecom services to all villages.

Targets:

y Telephone should be available on demand by 1997.y All villages should be covered by 1997.y In the urban areas a PCO should be provided for every 500 persons by 1997.

Value Added Services:

In order to achieve standards comparable to the international facilities, the sub-sector of

value-added services was opened up to private investment in July 1992 for the following

services:

y Electronic Maily Voice Maily Data Servicesy Audio Text Servicesy Video Text Servicesy Video Conferencingy Radio Pagingy Cellular Mobile Telephone

Pilot Projects:

Pilot projects will be encouraged directly by the Government in order to access new

technologies, new systems in both basic as well as value-added services.


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absence of a polycam. The meeting tookplace for ten minutes in the course of which Dr.

Alok advised the patient on hisfuture treatment plan. The billing for a telemedicine

consultation is done at a flat rate of INR500 in case one specialist is involved and INR750 in

case of two specialists. In case of overseas referral cases ATEL charges $50 if one specialist

is consulted and $75 in case of two. This web consultation has saved Shanker Chandra quite a

few expenses he wouldhave incurred if he had to travel to Hyderabad to consult Dr. Alok

Ranjan. Web consultation has its own problems like connectivity delay, image and voice

distortion. Dr. Alok Ranjan Consultant Neurosurgeon, Apollo Hospitals- Hyderabad feels

that Information Technology will radically change the working of medical science.

Telemedicine has revolutionized medical consultation by cutting down the distance between

the rural patient and urban specialist. Dr. Ranjan feels that the direct benefits of telemedicine

for patients are convenience, better care, cost effective care, state of art care and best possible

care.

Dr. Alok Ranjan feels the number of cases will increase from two per week now to

close to twenty, which will make their task more challenging. Wider acceptance of the

telemedicine concept will increase the number of referrals for a doctor and his compensation

will commensurate accordingly. Doctors on the telemedicine panel should be tele-savvy,

should be able to understand and answer the patients problem precisely and fast because of

connectivity constraints. The Dr. believes that presently telemedicine in India is only for

second opinion and is not a means of performing surgeries, due to lack of infrastructure. He

feels that Apollo being one of the first corporate hospitals to use telemedicine, have large

growth prospects in terms of technologically backed quality treatment and in creating a niche

segment in telemedicine care. In India confidential information cannot be transferred using

the existing network as it is prone to web hacking etc. To overcome this problem, Hippa a

European standard for data protection can be implemented to transfer confidential

information between two different hospitals. Apollo has not adopted this standard for its

current project but is considering it for its future telemedicine projects.

Opportunity within NREGA for mobile payment of salaries

y Opportunity within NREGA - 25 lakh working people under NREGA need bankaccounts, but half the accounts are with post offices, and not under any electronic system


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y Difficulties with Biometric Details - Although biometric details are taken for the cardholders, these details do not conform to UID specifications. There is a daunting task of

repeating the whole exercise

y Fund flow from NREGA require a common platform - Cascading of fund flow from largeaccounts to end customers involve multiple bankers and financial institutions. Currently

there are no common standards existing for the whole gamut of bankers, neither are there

any standards for interoperability.

y MPFI (Mobile payment forum of India) is being jointly formed by Institute forDevelopment and Research in Banking Technology (IDRBT) and Rural Technology

Business Incubator (RTBI) of IIT Madras with a mission to enable mobile payments

in India with secure and low cost transaction. MPFI is working on creating such common

standards.

Grameen Sanchar Sewak Scheme

The scheme is designed to provide availability of a phone at the doorstep of every

rural household. Under the scheme, a mobile phone will be provided to a postman (Gramin

Sanchar Sewak). When the postman goes to a house to deliver a letter, he will carry the

phone with him. Since a postman reaches practically every house, the scheme will enable the

phone service to be made available practically to all citizens in his area. Initially, the scheme

is proposed to be operated on a pilot basis in 2000 post offices covering 10,000 villages.

WLL Phones for the scheme will be provided by BSNL. The phones have a display screen on

which the units will be displayed. A receipt for the transaction will be provided by the

postman. A 25% commission has been proposed for the scheme. Based on the results of the

pilot, the scheme will be extended to more post offices in the country

Role of regulator

The mission of Telecom Regulatory Authority of India (TRAI) is to ensure that the

interests of consumers are protected and at the same time to nurture conditions for growth of

telecommunications, broadcasting and cable services in a manner and at a pace which will

enable India to play a leading role in the emerging global information society.


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The Telephone Regulatory of India (TRAI) has had to rule on contentious issues, such

as on the competing claims of GSM and CDMA operators in the licensing areas and, more

recently, on issues connected with spectrum allocations and pricing. Unless precedents and

case laws are well established, regulatory decisions will continue to be marked by

uncertainty.

Major Challenges in going rural faced by telecom companies

There are four main difficulties in serving rural communities, each one of which has

appeared insurmountable:

Power challenges

Most of rural India is not served by the power grid. Some areas may get agricultural

power two hours in the morning and evening but even this is the exception. When fuel

can be afforded and delivered, power tends to come from diesel generators. The combination

of poor fuel quality and poor generator maintenance severely limits the life of any generator.

Revenue challenges

Rural India can pay for mobile services, but only around $2 per month. The cost base

of any solution has to be geared to these ARPU levels.

Skills challenges

There are no trained telecom engineers and few people can read or write. This makes

the installation and maintenance of GSM networks highly challenging.

Access challenges

These are extremely remote communities, served by poor roads and no other

significant infrastructure.


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Mobile Communication in Rural Areas: The stakeholders

Telecom Service provider

y Sharing of Telecom Infrastructurey Outsourcing Network O&My Quick rollout of network Infrastructurey Broaden Reach

Electricity Department &Energy Providers

y Full rural electrificationy Lower energy cost for rural usey Simplify procedure for EB connection

Technology Vendors and Application providers

y Provide equipment that do not require A/C, sheltery Enhance maintainability and sharabilityy Seek Sourcing and manufacturing opportunities in low cost areas

Independent Telecom Infrastructure Provider

y Ability to rapidly roll-out towersy Set up sharable towers proactively in Dark Spotsy Serve as a one-stop-shop provider of Telecom Infrastructurey Support Operators to focus only on their core activities

Regulatory& Govt Bodies

y Simplify land acquisition processy Rebate for serving rural area


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Internet Penetration in rural India(Based on the research conducted by

IMAI in 7 states of India)

Internet penetration is rising appreciably in India today. Urban India which accounts

for about 28% of the total population, has witnessed the bulk of this growth, with students,

youth as well as office goers being the primary drivers. Rural India, on the other hand, lags

behind. By December 2009, rural India had about 7.45 Mn claimed Internet users and 5.5 Mn

active Internet users.

The All India estimates for computer literates in rural India are 47 Mn. This

translates into a computer literacy of about 7.4% for rural India as a whole.

The reasons for increased Internet penetration, especially in rural areas are multiple.

Government initiatives facilitated by DIT (Department of Information Technology) such as

NeGP (National e-Governance Plan), SWAN (State Wide Area Network) and CSC (Common

Service Centres) are increasingly maturing. As per latest reports provided by the DIT, there

are about 90,000 CSCs operational in various parts of India. With India having about 600,000

villages, each common service centre on an average serves about 6 villages approximately.

Other notable Government initiatives include Sarva Shiksha Abhiyan (SSA) and the National

Rural Employment Guarantee Act (NREGA) scheme. The SSA has helped computer literacy

to rise among school children while also increasing Internet awareness and usage. As part of

NREGA, a web based system has been designed that villagers can use for their personal use

and obtain their payment online, while also storing their money safely.

Also, private sector initiatives such as ITCs e-Choupal, HULs Project Shakti,

Microsofts Project Shiksha and Googles Internet bus among various others, continue to help

increase Internet awareness and usage.

Common Service Centres (CSCs) are by far the most widely used Internet access

points. In the current edition of the report therefore, there has been a streamlined focus on the

type of services CSCs are typically accessed for. About 65% of all Internet access in rural

India happens at a CSC or any publicly accessible computer. As per the findings, educationrelated surfing (49%), general Internet surfing (46%), gaming purposes (28%) and bio data

and CV services (25%) were the main reasons for people to access CSCs.

Internet Non Awareness is still by far the main reason why people do not use the

Internet in rural areas. This is followed by non-availability of computers, non-availability of

Internet connections as other reasons cited. In other words, awareness of the Internet as a


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medium will be another important factor that will expedite Internet adoption. Internet

awareness can be increased through careful planning, designing, and execution of various

promotional campaigns.

These campaigns should be run with Haat, Mela, and Mandi events in villages, as

these are main channels that villagers are exposed to. In addition, the penetration of television

and cable television in particular, has also risen greatly in rural India. These must be utilized

to generate greater awareness.

Initiatives taken by private players to enhance internet penetration in

rural India

With the e-Choupal initiative, ITC continues to reach out to about 4 million farmers

through 6500 kiosks and over 40,000 villages. The initiative provides useful information

about the weather as well as the market price of the food grains, helping prevent the

exploitation of farmers. In addition, the initiative helps to grow a range of crops including

wheat, rice, pulses, soybean, and coffee among others.

Hindustan Unilevers Project Shakti, with its iShakti community portal has also

enabled Internet penetration to rise. The focus of this initiative is women in rural India. There

are about 45,000 women entrepreneurs that cater over 135,000 villages across 15 Indian

states. It is estimated that there are over 3 million consumers that are buying products sold at

such outlets.


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Purpose of Internet access in rural India (According to the study connected

by IMAI in 7 states of India)

Source: Internet rural India, IMAI 2010

Main reasons of non usage of internet in rural India(According to the study

connected by IMAI in 7 states of India)

Source: Internet rural India, IMAI 2010


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