Status of corDECT WLL System

The Indian-developed corDECT WLL system today provides 35/70 kbps Internet and simultaneous voice connection to a subscriber at a total installed cost between Rs.13,000 to Rs.17,000. In urban areas, the system is installed to cover a small radius to better use frequency resources, but in rural areas, it has a range of 10 km in LOS situation. It also provides a Relay Base Station, which can enhance the range to 25 km when required. The system has been installed in Kuppam area in A.P, and provides connections to about 65 villages. corDECT technology has been validated by TEC
(Department of Telecommunications) at Bhopal, Panipat, Rajkot and Mumbai. The system is being installed by Basic Services Operators in Punjab and Rajasthan in a big way. It is also being installed by several ISPs including Satyam and Magna. DOT has placed an order for 25,000 lines in urban areas. Outside the country, the system has been installed in Argentina, Brazil, Madagascar, Kenya, Nigeria, Angola, Tunisia, Yemen, Fiji and Iran. 

Infatuation with IS-95 (CDMA) Wireless in Local Loop

For many years, several in DOT have been favoring the use of imported IS-95 (CDMA based) WLL system instead of corDECT. While competition is welcome, it has been repeatedly pointed out that IS-95 system can barely provide 9.6 kbps Internet connection and is several times more expensive than corDECT. It is not advisable for India to install systems today, which do not provide Internet connections at reasonable speed, and in large numbers. A system being installed today would be in use for nearly about 15 years, and if such systems of poor capability are installed in rural areas, our rural areas would be denied the benefit of Internet revolution for many years to come. This argument has been largely ignored. DOT recently went in for a large tender for 600,000 lines of imported IS-95 WLL for rural areas. As per a report published in Financial Express on Aug 23, 2000, a recent bid for 20,000 IS-95 WLL lines for rural areas was opened by DOT and was found to cost Rs.60,000 per line. A number of major multinationals, including Nokia, Ericsson and Siemens, refused to bid for the 600,000 lines tender even after taking the tender papers. When contacted by the Financial express, representatives of these MNCs have said, "IS-95 is a dying technology with no further developments going into it” and “we cannot step backwards and manufacture outdated models to accommodate one client."
 
Fixation with MNCs

Now that the uselessness of IS-95 for WLL is being talked about by multinationals, DOT is beginning to listen. But many in DOT continue to repeat what multinationals say, and are now saying that they want to wait for 3G technology. The first 3G mobile systems are still a couple of years away, and it will be quite sometime before cost-effective 3G systems providing voice and Internet become available. In the process, once again there is an unwillingness to take cognizance of corDECT WLL and what it can do for our rural areas today. In this manner, one is not only putting down an indigenous technology, but also delaying our rural areas from getting telephone and Internet at a very affordable cost. There is a short-sighted view that an unsustainable high cost for rural areas is not an issue, since subsidy from "Universal Service Obligation (USO)” funds and from higher long-distance charges will always be available. If DOT does not to quickly provide telecom and Internet in small towns and rural areas, claiming it to be expensive, the only option is to make the small towns and rural areas license free so that someone else can provide the connection. Please see the attached note on "Enabling Telecom and Internet connectivity in small towns and rural areas".

Opening up small towns and rural areas

DoT today loses money when it provides services in small towns and rural areas (all areas outside class I cities). Basic Services Operators and ISPs are only focused on large cities. It is the general belief that operation outside class I cities is commercially unviable. The justification for the USO fund arises out of this. In such a situation, there should be no objection to the following : 

(i) making all areas outside class I cities license-free with no one-time license fee. There is little justification in clubbing all these areas with class I cities, and licensing basic service only for circles, with a large entry fee and stipulation that only companies with several hundred crores of turnover could become operators.
 
(ii) if necessary, license fee in the form of revenue sharing could be there for small towns and rural areas, but entry fee should be zero.
 
(iii) frequency spectrum is an important national resource and its spatial reuse as efficiently as possible is in the nation’s interest. But its use outside class I cities is limited. To encourage telecom and Internet connectivity in small towns and rural areas, charges for use of frequency spectrum outside class I cities should be made zero for the first ten years. These steps would encourage a large number of local operators to start service in their areas. Such operators would go for the most cost-effective technology and provide better service in the least costly way. The rapid spread of cable TV in small towns and rural areas is an example of how these local operators make operation viable.

To sum up 

In summary, basic service provides including DOT should not 

(i) on the one hand, use outdated expensive technology to provide low-speed connections in small towns and rural areas, 

(ii) on the other hand, use the non-viability of such expensive connections to claim cross subsidy either from long-distance operation or from USO funds, and 

(iii) at the same time be against allowing license-free operation in small towns and rural areas by small local operators who could provide better connections in an inexpensive way. The process of telecom liberalisation should include specific steps in the interest of small towns and rural areas of the country. A first step in this direction is to allow total license-free operation outside class I cities as suggested in the accompanying note “Enabling Telecom and Internet Connectivity in small towns and rural areas in India”.

August 14, 2000 

        Enabling Telecom and Internet connectivity in small towns and  rural India

Preamble

1. There are a little over 300 class I towns (over 100,000 population in 1991 census) in India. These are the only towns in which Department of Telecommunications make a profit for their services.In other places (class II, III, IV towns and rural areas), DoT either just about breaks even or loses money. The private Basic Service Operators today are putting up their services in the largest cities and have very little interest in going beyond class I cities. At most, a few may cover some larger class II cities. The Internet service operators also pretty much confine their operations to the larger of class I cities.

2. World over, telephone revenue, continues to significantly exceed revenue obtained from Internet connections. Revenue from telecom has been used to build the Internet. The Internet on the other hand is likely to yield large revenues in future and also change the way of living and doing business.

3. The IT task force took a very bold step in freeing the setting up of Internet service anywhere in the country, virtually license-free. It has lead to emergence of a large number of ISP's all over India.But today, they largely depend on the telecom network to provide access to subscribers. Not only are they denied a part of the resulting telecom revenue, but in fact subscribers have to pay Rs.26 per hour to DoT (or Basic Service Operators) as access charges, in addition to paying Internet service charges. Such a low revenue share for an ISP out of the total amount paid by a subscriber for Internet access,implies that an ISP can be successful only in larger cities.

4. Development of telecom and Internet in smaller towns and rural areas require Telecom and Internet revenue to be combined to make the operation commercially viable. Further it requires a local business focussing on the region to optimize its costs.

Recommendations

We therefore recommend:
I. Completely license-free telecom operations in all areas of the country other than class I cities. A local service provider (LSP) could set up a telecom network and provide telephones in all such areas (in addition to Internet service which is today virtually license-free) by simply registering oneself. The region of operation could be small or large - one town, one district, or one block or even one neighborhood. The local operator will be allowed to connect to the nearest state-wide telecom operator (DoT / Basic Services Operator) by paying connectivity charges as per norms similar to those applicable for Basic Services Operator today.

II. A basic services operator (BSO) today pays 
a) a revenue share (15 to 20%) to government for license in addition to one time entry fee for the whole state (circle).

b) for the physical connectivity to the nearest DoT (digital E1 connections) exchange

c) 33% of STD charges for all calls routed through DoT network

d) 50% of International STD charges for calls routed through DoT/VSNL network.

To help telecom and Internet network grow in small towns and rural areas, the license fee and revenue share (as in (a) above) should be Zero for fifteen years. The charges as in (b), (c) and (d) for an LSP should be same as for a BSO, or even less, in order to encourage LSPs. However for connections in rural areas, the LSP should get Universal Service (USO) benefits jut like the DoT and BSO will.

III. The interface between exchanges used today in India is digital E1 lines. The signalling used is R2-MF or SS7. The R2-MF signalling dominates today though it is being progressively changed to SS7. The LSP should be allowed to connect to DoT/BSO on E1 lines with R2-MF signalling. As and when the DoT/BSO as well as LSP have the capability to upgrade the connection to SS7, the upgrade should be allowed. The LSP should require only this E1 interface approval for connection to
DoT/BSO. 

IV. Frequency spectrum is a valuable resource and frequencies must be used and reused efficiently by the country. The frequency charges must be such as to encourage this. However, in small towns and rural areas, where the usage is less, the charges should be made zero for the first ten years in order to rapidly enhance telecom and Internet services in these areas.

Justification

1. The charges stated in II (b), (c) and (d) are reasonable as the access part of the telecom network costs 65 to 70% (even higher percentages in rural areas) of the total cost of installing a telephone line. The backbone network costs only a small percentage of the total cost.

2. This policy will enable tens of thousands of small local operators to come up, providing telecom and Internet service in small towns and rural areas. The operating costs of these small entrepreneurs would be much less than that of DoT and BSO. Further, being local, they would provide better services. India’s phenomenal cable TV expansion in small towns and rural areas is an example of the success of this approach.

3. The DoT/BSO do not lose by this policy as today they make no money anyway when they provide connections in small towns and rural areas.

4. The target for such connections in these areas should be at least 30 million in the next five years.

                                                   Home  Opinions