Impediments in Building the Digital Economy: Case of the National Optical Fibre Network Plan of India

Context

It is generally accepted that broadband plays a key role in the world, impacting the economy, productivity, employment and other spheres of society. The national governments in both developing and developed world are either contemplating or are already executing broadband access plans. India is no different. The Broadband Policy of India aims at enhancing quality of life through societal applications including tele-education, tele-medicine, e-governance, entertainment as well as employment generation by way of high speed access to information and web-based communication.

By 2010, only 0.53% of India’s broadband connections were working on optical fibre. On 25 October 2011 the Government of India approved the setting up of National Optical Fiber Network (NOFN) which will be connecting all 250,000 gram panchayats (GPs) (group of three or four villages make GPs). In Jan 2012, the government had formed a special purpose vehicle for the same, called Bharat Broadband Network Limited (BBNL). It was estimated that additional optical fibre cable (OFC) deployment of 301,000 route kilometres mainly from blocks to villages to cover the 250,000 GPs as part of the backhaul network is needed. The final deployment plan is based on utilizing the existing optical fibre network of BSNL, POWERGRID and RAILTEL. The NOFN is to be rolled out in a phased manner at a cost of 4 billion USD and was slated for completion in December 2012. The funding for the project shall be from Universal Service Obligation Fund (USOF) collected from the telecom service providers. Upon the completion of the NOFN roll out, GPs were expected to get broadband connectivity with speeds of up to 100 megabits per second.

In the BharatNet plan, optical fibre is being laid till the GPs’ office. The onus of taking Internet from that point of contact to the end users is left to the service providers. The service providers can be private, public, NGOs and semi-governmental organizations. Private entrepreneurs in GPs have a greater role to play in taking broadband to the households and individuals through BharatNet. The other important players in the village ecosystem are NGOs, political activists and semi-governmental organizational personnel. Either they provide information to the needy or deliver services to the GPs by making use of BharatNet or serve as a bridge between service providers and the people; and they can also be called infomediaries.

The most celebrated case of M-Pesa in Kenya in addressing financial exclusion problem through mobile phones is great example of institutional users playing a major role as infomediaries in scaling up the innovation (Foster & Heeks, 2013). M-Pesa grew because of small agents and distributors who introduced new mechanisms to serve the customers, which later were adapted by Vodafone, the telecom service provider. As the institutional users are closer to the rural populace, they would be able to adapt or customize BharatNet for wider use and diffusion. The diffusion or uptake of BharatNet is dependent on the institutional users in rural India who double up as infomediaries in rural India.

In the case of broadband, the absorptive capacity of the stakeholders or the infomediaries is important to fully realize the benefits of the infrastructure. The future potential service providers are expected to have capacity to understand, learn and garner the benefits. Once the optical fiber is laid, the absorptive capacity of the institutional users will determine the level of reach of broadband to the rural households. Though the optical fiber is laid by the government, scaling is possible only by the multiple sets of institutional users.

BBNL embarked upon pilot projects in three blocks covering 58 Gram Panchayats in three different states and completed by 2012. Given that pilot GPs had received BharatNet in 2012 and other GPs are in the process of receiving the same, there is need for an empirical study in the mid-term that helps the implementation process. Some of the findings are reported here.

Method

24 Gram Panchayats were selected using systematic random sampling in Arian (16) and Paravda, Vizag (8). Computer assisted in-depth interviews were conducted in person with 1,329 respondents from state government, central government, private and non-governmental and semi-governmental organizations in 2016.

In the sample of institutional users or respondents, 77% of respondents are males. 37% of sample fell in the range of 26-35 years and 34% in 36-50 years. Only quarter of sample had education below 9 years of schooling. Almost all of the respondents had a photo id card, aadhaar card and bank account in own name. Two thirds of them know how to send SMS, half of the know how to use search engine, and use email. One tenth of them can troubleshoot hardware and minor software related problems.

68% are from private organizations, 23% from state, 2% from central and 7% semi government organizations. Among the private organizations, 59% are petty traders. Overall, half of the sampled organizations have been started seven or more years. Of the customers served by them, 68% come from the same locality. Half of the sample is receiving electricity for more than 10-12 hours and 35% for 7-9 hours during 0600-1800 Hrs.

Key Findings

The key findings of the study are:

 Poor awareness about BharatNet / NOFN

• In overall, 30% of the respondents claimed that they are aware of the BharatNet / NOFN of which 8% claimed to know it very well.
• Awareness about ICT related programmes appears to be poor: 83% did not know about optic fibre, 76% about Digilocker and 68% about Digital India.
• “Newspapers” at 39%, “Friends and Family” at 37% and “Televisions” at 30% are top three sources of information about BharatNet / NOFN.
• Half of the sample incorrectly assumed that BharatNet / NOFN provides free Internet to people.
• Slightly less than half felt that poor electricity supply will affect BharatNet /NOFN.
• Among the Internet users, the top reasons for not using BharatNet / NOFN are: ‘Equipment breaking down’ (54%), ‘Slow Internet connectivity’ (53%), and ‘Already having internet’ (54%).
• The respondents are optimistic about the potential uses of BharatNet / NOFN. Following are some of them: ‘Learn new skills for personal use’ (65%), ‘Access to better hospitals’ (66%), ‘Finding new business opportunities’ (63%), ‘Access Internet banking’’ (70%), ‘Finding new job opportunities’ (66%), ‘Getting information about Government Schemes’ (76%), ‘Learning new things through online videos’ (78%), ‘Learning new skills for employment’ (68%) and ‘Receiving required latest information’ (67%).

ICT ownership, access & use

• Out of 1329 contacted, only 32 institutional users access BharatNet.
• 65% organizations do not use Internet from any source.
• 62% of the institutional users do not use Internet at the personal level as well.
• Among non-users, intention to use Internet in future is about only 16%. Half of them do not intend to use Internet.
• One third of organizations reported that they are computerized. Inter-office connectivity is better among public organizations.
• In nearly 2/3 of the organizations, the respondents do not have additional personnel to handle the ICT related infrastructure.
• The Internet is used 3-5 hours per day by the organizations.
• The top three activities done at the personal level are: Reading information online, listening to music/radio online, and video.
• Among Internet users, interaction with suppliers (33%), contacting potential customers (33%) and interaction with customers (26%) are done ‘somewhat frequently’ or more.
• Only 8% of users are open to provide Internet as product or services to external people, if permitted.
• The top three triggers for Internet use are: ‘to get instant information access’ (69%), ‘can do many things at once using Internet’ (58%) and ‘everyone around is using Internet’ (51%).
• The top three barriers are: ‘can continue work without Internet’ (75%), ‘do not have required devices to access the Internet’ (73%), ‘no prior experience of using the Internet’ (52%).

 Policy Suggestions

• There is a need for public information campaigns among the institutional users and other stakeholders, as extant awareness about BharatNet is poor. A demonstration of benefits and opportunities available is likely to result in better adoption.
• Trade associations should conduct activities to spur entrepreneurship in the rural digital entrepreneurship space. Innovation hackathons may be one of the activities.
• NGOs can work with private firms to deliver ICT based goods and services in rural India, by utilizing the corporate social responsibility funds to be spent as per government regulations.
• Local private entrepreneurs should be encouraged to explore new businesses on the basis of BharatNet. Contact center for e-health, online education, skills training, and business process outsourcing is a possibility.
• The post implementation scenario can be handled in three major models: government-led, private-led, and shared model.

Other suggestions regarding private player participation, and other details of the study are available at:

http://lirneasia.net/wp-content/uploads/2017/08/BharatNet_Report-with-Que_July-2017.pdf

We would like to thank Ford Foundation, New Delhi for funding the study. However they are not responsible for the contents in this report.