-

There is increasing realisation that sizeable growth cannot take place in the telecom sector unless attention is paid to the rural areas. In line with this thinking, the Telecom Regulatory Authority of India (TRAI) released its recommendations on increasing telecom services in rural India.

TRAI rightfully points to the large differential that exists between rural teledensity (1.94 per cent) and urban teledensity (31.1 per cent), and the need to reduce it.

According to TRAI, the present universal service obligation (USO) policy of subsidising individual DELs, VPTs, MARR replacements, etc. would not go far in achieving the rural teledensity target of 4 per cent by 2010, even after providing a huge subsidy support of approximately Rs 300 billion.

Since such high subsidies to achieve so little are not acceptable, TRAI feels there is a need to relook at some of the policies regarding the communication needs of rural areas. Provision of telecom services in rural villages should be viewed as a "universal service opportunity" rather than a "universal service obligation", and policy should facilitate this.

The regulator recognises that, unlike elsewhere in the world, the Indian rural market has substantial purchasing power if the price of the product is right. Moreover, service providers are looking to offer broadband/internet services in rural areas and cable TV, which is hugely popular among the masses, offers potential for providing triple-play services. Taking these factors into account, TRAI recommends pushing triple play networks in rural areas.

Recommendations
TRAI has recommended the adoption of an alternative approach to facilitate network infrastructure expansion. This approach proposes financial incentives to service providers in the form of coverage of partial cost of shared infrastructure. According to TRAI, infrastructure should be shared by at least three service providers in rural areas. Subsidy support of Rs 80-90 billion would then be adequate to create the necessary infrastructure to provide wireless coverage to 80 to 90 per cent of the rural population. With this kind of subsidy support, it would be possible to install 20,000 base stations in rural areas. If three operators share the passive infrastructure, the cost of the base stations would be substantially lower.

The TRAI paper suggests a series of incentives and concessions to keep multiple technology options open for rural connectivity in the future apart from a reduction in the licence fee and spectrum charges based on the number of rural base station locations.

According to TRAI, the delicensing of certain spectrum bands for Wi-Fi and WiMax and lower licence fees for VSAT connectivity combined with the higher purchasing power of rural households should help to make rural telephony more attractive to operators.

In fact, going by its experience of mobile growth in the urban areas, TRAI believes that, if the proposed schemes are implemented early, India should be able to achieve rural teledensity of around 15 per cent by December 2007. This, combined with an expected urban teledensity of around 43 per cent, would take the overall teledensity of the country to 22.98 per cent, which would help meet the target of 250 million subscribers by 2007 set by the communications ministry. On the other hand, if only the present USO policy continues, India would achieve a rural teledensity of around 3 per cent by 2007. Which would mean that an urban teledensity of 70 per cent would be required by December 2007 in order to achieve the 250 million subscriber target. This is too ambitious.

The highlights of the TRAI recommendations are as follows: