Bridging India's digital divide

Telecom regulator's plan could trip for different reasons

The Telecom Regulatory Authority of India, or Trai, has recommended free data, up to 100 MB, in rural areas in order to push the case for Digital India. This, it has said, can be done by subsidising the telecom networks from the Universal Services Obligation Fund and allowing in aggregators, as long as their schemes are network-agnostic, and non-discriminatory so far as content is concerned. The objective of better rural connectivity is laudable. India, according to the State of the Broadband Report 2016, was ranked 132nd out of 187 countries in fixed-line broadband penetration and 156th out of 179 in wireless broadband. India’s overall broadband density of seven per cent is way below the world average of 46 per cent. As the wireless teledensity in urban centres is over 150 per cent, it tells you how low internet adoption is in the rural areas. The transformative potential of better internet access cannot be overstated. The Committee on the National Optic Fibre Network estimated that an additional 25 million internet users by 2018-19 would result in economic benefits of Rs 66,465 crore. 

The networks should have no objection to the Trai recommendation because they do not have to pay the subsidy — it will come from the well-stocked Universal Services Obligation Fund with the government. At the same time, the subsidy will not cost the government a huge sum of money as well. According to Trai, some of the networks have started to offer wireless broadband at 10 paise for 1 MB of data. Thus, the cost of administering the scheme would come to Rs 10 a month for every subscriber. The regulator reckons that there are 50-60 million smartphone users in rural areas; so the scheme will cost Rs 50-60 crore a month. These cost calculations could come down further with the recent fall in data tariffs.

However, the adoption will be constrained by the low penetration of smartphones in rural areas. In Trai’s own reckoning, rural subscribers account for not more than 20 per cent of the smartphones in use in the country. Experts put the smartphone penetration in rural markets at less than 25 per cent. The other issue is whether 100 MB of data is good enough. Trai has arrived at this figure from a Cisco report of 2015, which put the average monthly data consumption by a subscriber at 150 MB. Thus, Trai feels 100 MB would be “reasonable to address the basic digital needs of rural users, including carrying out of digital financial transactions”. 

But, some observers have said that the aggregator model of free internet could end up violating the principle of net neutrality. They have argued that some of the smaller players may not have the wherewithal to register with the aggregators, which will put them at a distinct disadvantage vis-à-vis the larger players. This would certainly hold true if the aggregator were to impose a sizeable entry fee. It would be akin to the zero-rating plans of networks, which were disallowed by Trai because they went against the principle of net neutrality. These are genuine concerns. While working out the details of the scheme, Trai must ensure that there is no gate-keeping of content by the aggregators.