Transcript Ernst & Young with Prof Ashok Jhunjhunwala and the TeNet Group

Drivers of Telecom in India
Ashok Jhunjhunwala,
TeNeT Group, IIT Madras,
[email protected]
Pan-IIT Conference - March 03
India’s Imperatives
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India has 1000 million people
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Upbeat Mood as Indian
Telecom Poised for Growth
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180 million households
40 million fixed line telephones,
12 million mobile and four million
Internet connections
100 million lines by 2005
200 million lines by 2010
Customers Start to benefit
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long distance cost tumbles from
Rs 30 to Rs 5 per minute
Primary Bottleneck
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Affordability
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Telephone infrastructure cost (Capex) about Rs30K per line a
few years back
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Finance Charge : 15%
Depreciation : 12%
Operation and Maintenance : 13%
License fees, WPC charges, service tax: 10%
50 % of Rs 30,000 required as yearly revenue to break even
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
revenue of Rs 1200 per month
What percentage of Indian Households can afford this?
Urban Household Affordability Vs
Monthly Telecom Spend*
40
70%
36
61%
35
60%
Affordable HHs (In mn)
Affordable HHs ( In %)
30
50%
22
40%
38%
HHs In %
HHs In Millions
25
20
30%
15
11
10
20%
19%
6
10%
5
10%
3
5%
1
0
2%
0%
220
330
440
630
940
Monthly Telecom Spend (in Rs)
* For year 2002-03 at 25% unreported income & 3% income spend on telecom
1560
Rural Household Affordability Vs
Monthly Telecom Spend*
35
25%
31
24%
30
Affordable HHs (In mn)
15%
20
15
11%
15
10%
10
6
5%
5
5%
3.0 2%
1%
1.4
0.50%
0
0%
130
190
260
360
550
910
Monthly Telecom Spend (in Rs)
* For year 2002-03 at 25% unreported income & 1.75 % income spend on telecom
HHs In %
Affordable HHs ( In %)
25
HHs In Millions
20%
India Requires

Telecom Infrastructure at a Capital Expenditure (CAPEX)
of under Rs 10,000 per line
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In doing so and serving the large potential market of
India and other Developing Countries
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Not a problem of the West, as affordability there is much higher
a task of scientists of Developing Countries
we can be amongst the world leaders in telecom technology
CAPEX cost has fallen to about Rs 16000 per line
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can get to Rs 10,000 per line in a few years
Telecom Network Technology
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Contribution to CAPEX from Network Elements for
emerging market
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Backbone Network (contributes to 10% of CAPEX)
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Fibre, WDM Networks, SDH Networks
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Backbone Switches and Routers (contr. 5-10% of CAPEX)
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Access Network (contributes to 60 to 65% of CAPEX)
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Mobile, Fixed Wireless and Fibre Access
Service Platforms (contributes to 10 to 15% of CAPEX)
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OMC, Customer Care & Billing, NMS, IN Services and ISP platforms
Backbone Network
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BSNL has fibre going to
most taluka (county)
headquarters
Reliance, Bharati and Tata
laying fibre feverishly
Technology
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WDM Network
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mostly obtained from
Lucent, Alcatel, Nortel,
Sycamore etc.
SDH Network
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Hwawei, UTStarcom,
ZTE, Tejas Network
dominate
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Chinese and Indian
cost-effective
technologies
India has a fibre 10
km from almost
any village in 85%
area
Access Network
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Contributes to 60 to 65 % of per line CAPEX
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Mobile Cellular : GSM/GPRS and IS-95/3G-1X
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costs have significantly come down : rapid expansion likely
technologies dominated by Ericcson, Nokia, Siemens, Lucent,
Qualcom etc.
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Korean companies enter via IS-95/3G-1X
Fixed Wireless : providing fixed telephone and Internet to homes
and offices
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Fibre Access Network : dominate urban centers
Fixed Wireless: dominated by
corDECT WiLL
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To PSTN
To Internet
35 kbps Internet
(premium rate of 70
kbps) plus simultaneous
telephone
at Rs 8K per line
Fibre Access Network
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Emerging as best option to connect dense urban areas
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For Residential Areas
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Fibre to the street corner with POTS, DSL or Ethernet on Copper
for 500 m
combined with 802.11 wireless tomorrow
may replace coaxial based cable
TV tomorrow
.
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For Commercial Areas
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Fibre to the Building with Ethernet in Building
Technologies dominated by Indian and Chinese companies
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Huawei, ZTE, UTStarcom, Midas
Rural
Opportunity
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India has 600,000+ villages
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650 million people, Rs 600,000 Crores Rural annual GDP
Can we double the Rural GDP in the next ten years….
Connecting Rural India
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BSNL’s Contribution: on the average one fibre connected rural
exchange for every 150 sq km
 a wireless system with 10 km range at existing fibre
connected exchange would cover 80 - 85% of villages in
India
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India need a communications company which would focus and
operate only in Rural Areas
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looks at rural areas as large potential business and provides
wireless Internet connectivity in villages
thinks and acts rural
Innovative Technologies
& Business Models
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N-Logue : A Rural Service Provider
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aggregate demand into a kiosk using
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corDECT Wireless in Local Loop
ISP in a box : Minnow
Reliable power back-up
Rs 50,000 (including taxes) per Kiosk providing telephone, Internet,
multimedia PC with web-camera, printer and 4 hour power back-up for PC

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plus Indian language software
set up by a village entrepreneur on the line of STD PCOs
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needs Rs 3000 per month to break even
n-Logue Deployment Strategy
Telephone
Backbone
Application &
Content
Providers
Internet Backbone
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Scope:
1 –3 Talukas
25 Km radius, 2000 sq km
4 – 5 lakh population
2 - 5 towns
300 -400 villages
500 + Connections (at least 1
in each village)
ACCESS
CENTRE
Connections:
• Individuals
• Government
— schools and PHCs
• Kiosks
LSP
Banks
KIOSK
OPERATOR
Rs. 50,000 / Kiosk
Banks
Micro Finance
Organisations
What is the monthly income?
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STD PCO
Children learn typing
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Kiosk is a photography shop
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Rs 300
Rs 300
voice mail and video mail
Rs 500+
e-governance access
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also a video parlour on weekend evenings
Rs 500+
email and browsing
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all kinds of on-line and off-line education
Rs 500+
connect to taluka Government office for services Rs 200
and much more
Word-processor in Indian Languages
Multi-lingual Office Package
IITM Chennai Kavigal
Mailclient in Tamil
Mundi . . . .

A 60 year old from a village
near Melur
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Palaniamma had lost vision in
both eyes since 2 years
through the Aravind process
Doctors confirmed that vision can
be restored in at least one eye
IITM trying to develop Remote
Diagnostic tools
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Blood Pressure, Sugar & Iron, ECG
Monitor, stethescope
at total cost of Rs 10,000
Crop Consultancy
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Top:
Ladies Finger Diseased
with yellow mosaic
Below : Post treatment
Saving of Rs 140,000 for the
farmers
Cost of information Rs 20
Can Kiosks become Micro-banks?
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TeNeT and n-Logue working with ICICI
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Remote Bill Payment
Rural ATM
Micro-finance
Remittance
better credit assessment
Credit and Product Marketing is one of the biggest
requirement of Rural India
Do we have a model for sparser areas?
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Fibre not available in 15% of areas
Only about 50 to 100 villages in 20 Km radius
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less population per village
less available money
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Technology Intervention
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Business Intervention
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finance and buying/selling may make even larger sense
For inaccessible Rural Areas
ISRO-IITM
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3.8 m antenna
2.4 m antenna
15 -20 Kms with 100 connections
PSTN
Internet
• 8-10 voice channels + 64/128 kbps Internet satellite backhaul
• Each hub supports 16 to 20 remote sites with 2 Mbps downlaod
• Rs 10,000 corDECT + Rs 10,000 backhaul cost per connection
To Sum Up
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Telecom will take off in a major way in India in coming
years
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most regulatory hurdles crossed
focus on reduction on CAPEX
Can Telecom help in Doubling India’s Rural GDP
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will change India
Internet is Power
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can we have a micro-bank in every village in the next five years