A PROJECT REPORT

ON

“REAPING THE BENEFITS OF BROADBAND IN DEVELOPING

COUNTRIES”

IN

“TELECOM DISPUTES SETTELEMENT AND APPELLATE TRIBUNAL”

SESSION: JULY 2009-2011

IN PARTIAL FULFILLMENT OF

ADVANCED POST GRADUATE PROGRAM IN

TELECOM MANAGEMENT

SUBMITTED TO SUBMITTED BY
Ms. KAJAL SINGH SWAPNIL KHARCHE
Registrar, TDSAT, Email id: swapnilk_june09@mba.isquareit.ac.in
NEW DELHI

INTERNATIONAL INSTITUTE OF INFORMATION TECHNOLOGY, PUNE

P-14, Rajiv Gandhi Infotech Park,

Phase 1 Hinjawadi, Pune 411057

1|Page
 Reaping the benefits of
broadband in developing
countries

2|Page
 DECLARATION

I, Swapnil Kharche hereby declare that this report is the record of authentic work
carried out by me during the academic year 2010-2011in Telecom Disputes
Settlement and Appellate Tribunal. The Organization is located at Chanakyapuri,
New Delhi

SWAPNIL KHARCHE

Sign:

3|Page
 Table of Contents
1. Introduction 6
2. The Burgeoning demand for broadband 7
3. Hunger for more Broadband 8
4. Economic effect of Broadband 9
5. Broadband Technology 12
6. Easing urbanization through Broadband 14
7. Best practice to speed and strengthen Broadband deployment 18
8. Current Broadband Status in Developing countries 13
9. Conclusion 21
10. References 22

4|Page
 ACKNOWLEDGEMENT

It is an honor to present this project report titled “Reaping the Benefits of

Broadband in Developing Countries” at Telecom Disputes Settlement and
Appellate Tribunal, New Delhi. During the course of this internship project, I
got valuable insight on the working of the Organization.

It is my duty to express sincere thanks to all those people who helped &
guided me throughout the course of my project.

I would like to express my gratitude to Ms. Kajal Singh (Registrar) who

allowed me to undergo this project at TDSAT, New Delhi.

No words can describe the promptness with which the IT department at

TDSAT arranged the infrastructural support which was required during the
course of my project.

5|Page
SWAPNIL KHARCHE

6|Page
 Introduction
Since the emergence of the Internet, governments around the world have
increasingly recognized broadband’s powerful influence on the economics of
businesses, communities and nations. Already, broadband networks are widely
considered essential infrastructure for the global information economy, providing
businesses, students and consumers with fast, always-on access to Internet-based
services, content and applications.

For at least the past decade, a variety of case studies, anecdotes and qualitative
studies have detailed the wide-ranging benefits of broadband networks. These
benefits include the ability to expand economic opportunities and innovation,
increase trade and productivity, reduce business costs, create jobs and encourage
foreign investment.

Although economic benefits have been seen in both developed and developing
nations, the existing infrastructure, regulatory environment, urban-rural divide and
other factors that affect broadband diffusion are often different in developing
nations. These differences should not prevent the expansion of broadband in
emerging markets, but they reinforce the need to adopt best practices that facilitate
the rapid and cost-effective deployment of broadband technologies, along with
other Information and Communication Technologies (ICT) and services.

7|Page
 The Burgeoning demand for Broadband
The internet is becoming multifarious with rich multimedia. With increasing
digitalization of content, internet access increasingly requires broadband
connection with improved QoS parameters.
Web pages continue to get heavier – the average webpage size has tripled in the last
5 years as over 90% of bytes requested today contain images. Further, videos now
account for 99% of bytes transferred, with the average file size being 10
megabytes. Thus, Internet today requires multiple Mbps connections with superior
QoS - in order to provide an uninterrupted Internet experience.

Accordingly, the individual Internet access mix has undergone significant

transformation in the past 3-4 years. Instead of the traditional primary usage of
Internet for e-mails, there is:
• Increasing proportion of Internet usage for information and content sourcing.
• Growing popularity of e-commerce and e-tailing, which are expanding the
size and reach of the B2C business model;
• With increased digitization of content and the mounting popularity of user-
generated content- YouTube, blogs, reviews and social networking, websites
such as facebook and orkut - broadband demand from individual users has
been burgeoning.

Corporate users, too, are increasingly demanding faster and more geographically
spread broadband solutions. With the expansion of business operations and
demands to reduce operating costs, industries are increasingly focusing on
decentralizing operations to lower cost locations. Moreover, with industrialized
countries increasingly outsourcing activities to Indian companies to cut costs, the

8|Page
size of the Indian outsourcing industry has grown multifold in the last decade. As
reduction in costs is central to the outsourcing concept, a virtuous circle for low
cost and superior broadband connectivity solutions has been set in motion, creating
a Pan India demand for high-speed connectivity solutions.

Hunger for more broadband

Today, India may still be struggling to reach the magic figure of twenty million
broadband subscribers that the Indian Department of Telecommunication had set as
a target figure when it unveiled its Broadband Policy in 2004. However, there is a
heartening piece of development that these figures mask. Despite the obvious
shortfall, broadband growth in India has actually been on the rise in the past two
years, with 18-fold growth from the early 2004 figure of just 48,000 subscribers.
The total broadband connections in the country reached 9.45 million by the end of
June 2010. (Source: TRAI Report, June 2010.) This indicates that there has been
rising demand, if not hunger, for broadband in India.

While it is true that in Asia, India has one of the lowest broadband penetration
rates, recent policy measures and government initiatives to promote broadband are
expected to take the market to 30.1 million subscribers by the end of 2013
(household penetration rate is expected to reach around 8.9 per cent by 2013) and
come close to the goal set by the government.

This growth is mainly driven by three factors, namely: infrastructure, access

devices and content. In terms of infrastructure, digital subscriber line, DSL, is
currently the major technology used in the country for broadband access and has

9|Page
been recognized as a preferred medium to deliver high-quality voice, data and
video in a converged environment.

Existing fixed infrastructure (wire-line, cable, etc.) in both urban and rural areas is
grossly inadequate to meet this growing demand for broadband as only 17% of the
existing wire- line infrastructure is capable of broadband provisioning through
Digital Subscriber Line (DSL), which would restrict the penetration of broadband.
Further, the growing inability of the existing 2G and 2.5G mobile networks to
satisfy the broadband hunger due to spectrum and capacity constraints means
deployment of new wireless networks to offload data-intensive fixed/mobile
broadband applications is inevitable.

Thus, there is crying demand for deploying a cost – effective and scalable wireless
broadband technology across the length and breadth of the country to meet the
broadband hunger of the classes as well as the masses while fulfilling policy
objectives of the government. While 3G and BWA spectrum in 2.1 GHz and 2.3
GHz bands are the giant steps toward enabling mass proliferation of broadband in
India.

The Economic Effects of Broadband

Developed Nations
Studies in developed nations have repeatedly established that broadband networks
drive economic growth and development, and provide a platform for addressing
social issues such as health care and education. On the national level, one study
found that ubiquitous broadband deployment across the U.S. would produce as
much as $460 billion in economic growth per year. Estimates made by Accenture
10 | P a g e
in 2003 suggest broadband could contribute $500 billion to GDP in the United
States and as much as $400 billion in Europe. The nationwide impact of broadband
begins in communities and individual businesses, where research has repeatedly
identified positive effects including greater productivity and rapid employment
growth. One study estimated that for every percentage point increase in broadband
penetration in a particular area, employment would increase 0.2 to 0.3 percentage
points per year. Another study found that from 1998 to 2002, U.S. communities
that were among the early adopters of mass-market broadband experienced more
rapid growth in employment and number of businesses in IT-intensive sectors.
Internet business solutions have enabled private companies in the U.S. to save $155
billion and have helped companies in France, Germany and the UK increase
revenues $79 billion. A survey of more than 2,000 businesses across the U.S. found
that Internet business solutions had already resulted in a net gain of almost $600
billion by 2001 and would add .43 percentage points to future productivity growth
through 2011.

Developing nations
In developed nations, broadband penetration levels often rise above 30%, while in
many developing nations, high-speed Internet access is virtually unknown or so
expensive that it is out of reach of nearly all citizens and businesses. Broadband
penetration is more recent and less extensive in developing nations, fewer studies
have been done to document its economic, social and other benefits. Nonetheless,
early research suggests that broadband diffusion creates a wide range of benefits in
developing nations including supporting economic growth, in part by improving
global competitiveness and attracting international investors. Although such
improvements are difficult to measure, one recent study found that developing

11 | P a g e
countries with better ICT infrastructure attract significantly more business from off
shoring, outsourcing and foreign investment.

Developing nations share characteristics that make widespread broadband diffusion

particularly beneficial. For instance, the majority of the people in developing
nations - many small and medium businesses are located outside urban centers.
Expanding broadband networks to these non-metro areas can spread economic
efficiency and productivity, diversifying income by supporting both non-
agricultural employment and higher incomes from agricultural jobs. Greater
exposure to technology can better prepare rural citizens for an eventual urban
transition while at the same time reducing urban desire.

Broadband networks can also be used to bring more citizens and businesses from
rural and remote areas into the formal national economy. Transitioning more
people into the formal economy can enable governments to strengthen the basic
Infrastructure (roads, schools, hospitals, etc.) in rural areas. Connecting the non
metro population via broadband also enables access to e-government for citizens
and businesses, and better educational opportunities for students who can be
introduced to the technology necessary to compete and succeed in the 21stcentury
global economy.

12 | P a g e
 North America

Australia

Europe

Latin America

Middle East

Asia

Africa

World, Avg

0.00% 20.00% 40.00% 60.00% 80.00% 100.00%

Penetration Rate

Source: Internet World Stats

Penetration Rate are based on world population of 6,845,609,960 and 1,966,514,816 estimated Internet
users on June 30, 2010

Broadband Technology: Now More Accessible and Affordable

In the past, the benefits of broadband were not available to many developing
countries. This was especially true in rural and remote areas, where broadband
solutions such as digital subscriber lines (DSL) and cable broadband access have
often proved too expensive or difficult to deploy. Fortunately, in recent years,
broadband technology has become more available, reliable and cost-effective, as
well as easier to deploy.

13 | P a g e
Today, broadband connectivity can be provided to remote regions using a
combination of backhaul networks and last mile networks. Affordable backhaul
solutions include wired, satellite and IP-based wireless point-to-point solutions.
Dependable last-mile, or access, networks suitable for nonurban areas include
WiMAX and Wi-Fi (in areas where power restrictions don’t adversely affect
coverage). These wireless broadband systems can reach remote regions and can
often be rolled out faster and more cost-effectively than wired solutions, while
offering greater portability and mobility. In addition, wireless technology can be
deployed incrementally to serve growing demand, without requiring expensive
network wide upgrades. Serve growing demand, without requiring expensive
network wide upgrades.

WiMAX is a wireless broadband solution that provides particularly attractive last-

mile connectivity options through technology designed to deliver ubiquitous, high-
throughput broadband wireless services at a low cost to remote and rural areas.
WiMAX installation costs are lower for a wireless infrastructure based on IEEE
802.16e than for today’s wired solutions. WiMAX offers fixed, nomadic and
mobile services, so it can be configured to cover wide metropolitan and rural areas.
WiMAX also enables integration of voice and data, reducing the cost of
connectivity and enabling more affordable access to services.

14 | P a g e
 Easing Urbanization through Broadband

Urbanization is one of the most powerful forces affecting developing nations, as the
rural and non-metro population rapidly moves into metro centers in search of
employment and other opportunities, as well as an overall better standard of living.
The expected impact of urbanization can be seen in a country such as China, where
55% of the population lives outside cities, and compared to just 20% in the United
States. By 2025, mass urbanization is expected to more than double China’s energy
demand in urban areas, and increase demand for water by 70% to 100%. Health
care, education and other social services are expected to be severely strained, while
the loss of arable land and demand on natural resources will have a profound effect
on the environment.

Broadband can be used in several strategic ways to ease the damaging effects of
urbanization:

1. Reduce urban desire: Affordable broadband access can improve the

economies of rural areas, driving up incomes, improving lifestyles, and
reducing the need and desire to move to cities.
2. Improve skills and education: Broadband access increases educational
opportunities in rural areas and supports development of ICT skills. This
preparation enables rural citizens to find better employment in urban areas
and reduces the strain placed on social services.
3. Improve urban life: In conjunction with other technologies, broadband can
be used to encourage decentralized work environments that improve

15 | P a g e
 productivity while also reducing energy demands, noise pollution, vehicle
emission and other forms of pollution.

Best Practices to Speed and Strengthen Broadband Deployment

Best Practice 1: Adopt Supportive Regulations

In many developing countries, spreading broadband technology at a pace rapid
enough to catch up and compete with the rest of the world requires simpler and
more supportive regulations and policies.

A wide range of regulatory reforms can be made to create an enabling environment.

Hundreds of countries now have national regulatory bodies. Market liberalization
and privatization can increase private sector investment and healthy competition,
and strengthening regulations and making them more transparent can build the trust
necessary to spur greater investment and encourage infrastructure sharing.

Without encouragement and incentives, operators are unlikely to roll out broadband
networks in non-urban areas, where the majority of citizens live. To make such
rollouts cost-effective, governments can take a number of actions, such as offering
tax incentives, implementing initiatives that promote the sharing of infrastructure,
liberalizing licensing conditions and providing more efficient spectrum allocation.
Changes in government policies can also have a far-reaching impact on ICT and
broadband penetration. An increasing number of countries are altering their current
Universal Service Fund (USF) policies to allow the funds to be used to support not
only telephone but also broadband services. The result — in countries as diverse as

16 | P a g e
Pakistan, Chile, India and Malaysia — is the extension of voice, data and Internet
service to citizens in even the nations’ most remote areas.

Best Practice 2: Invest in Intermediate Infrastructure and Technology

In developing nations, where the infrastructure is not likely to be fully developed,
investment is necessary to support the intermediate infrastructure — including
everything from utilities to computers — that in turn enables successful diffusion
of broadband networks.

The World Bank found that in industrialized countries, if a technology reaches 5%

of the market, it is highly likely to reach 50% of the market. However, in emerging
markets, only six of 67 technologies that reached 5% of the market went on to
capture 50%. The difference is due, to a great extent, to intermediate technology,
which must be in place to ensure successful diffusion of any new technology.

For governments, the bottom line is that broadband must be supported by a solid
infrastructure that includes, for instance, reliable electricity and dependable roads.
Over time, investments in the general infrastructure, in combination with
investments in ICT initiatives, will enable successful and sustainable broadband
deployments.

Best Practice 3: Release Spectrum

Releasing spectrum enables governments to place bandwidth in the hands of private
businesses that can then develop its use through emerging industries and
technologies, thus offering a significant source of sustained revenue.
17 | P a g e
When spectrum licenses are issued, costs go down, new investments are made in
wireless technologies and new services are introduced into the market. While
spectrum auctions can raise money for deficit reduction, taxpayer relief and other
government cause. Releasing spectrum now makes solid economic sense because it
increases competitiveness, is better for consumers, leads to innovation and
ultimately boosts GDP.

Best Practice 4: Encourage Competitive Ecosystems

Transparent national policies and regulatory frameworks can promote a competitive
environment that attracts investment, drives down prices and makes large-scale
rollouts more affordable.

Policies should be weighed carefully to ensure consumers are protected while at the
same time avoiding over-regulation and unnecessary protections of incumbents.
When all levels of government adopt and support policies that encourage
broadband competition, lower prices and the many benefits of expanded usage are
likely to follow.

Current Broadband Status in Developing Countries

Brazil: Spreading Broadband Quickly and Cost-effectively

In Brazil, just 3.8% of the population has access to broadband Internet access.

18 | P a g e
Brazil’s government recognizes the urgency: Broadband adoption must be spread
quickly across the vast country to keep pace with other emerging markets, and at
the same time, to catch up with developed nations.

Intel is serving as a trusted advisor in Brazil, helping to deploy broadband networks

in remote areas and also identifying ways to make the spread of broadband more
sustainable and affordable. With the help of telecommunication companies,
affordable technology bundles that include broadband connectivity are now being
developed. At the same time, Intel is working with the government to change
existing policy and allow available Universal Service Funds (USF) to be used to
expand broadband services into remote and rural areas.

Vietnam: Working with Telecoms to Make Broadband Affordable

More than 70 million households in Vietnam have landline telephone subscriptions,
but less than 2 million have broadband Internet connections delivered over those
landlines. To improve the country’s broadband penetration, Intel worked with
VNPT, a state-owned telecommunications company.

Initially, VNPT offered broadband services to its 10 million telephone customers,

but the setup and monthly service charges put broadband out of reach of ordinary
citizens. As late as 2002, less than 100,000 people had subscribed to the service.
Extensive promotions, low-cost purchase programs and increased competition from
other service providers have now driven down the monthly service charges, from
about $60 per month to as little as $5 per month.

As a result of the increased competition and targeted purchase programs, nearly

19 | P a g e
2 million VNPT subscribers now have broadband Internet access, and many more
are expected to sign up in the years to come.

Ghana: Delivering Broadband to Small and Medium Businesses

In Ghana, as in most of Africa, business is often limited by the lack of access to
affordable broadband connectivity. An innovative program established by Intel and
USAID and supported by local businesses is changing that reality for 90 small and
medium businesses.

The businesses can purchase an eBiz Box business bundle that includes a reduced-
price Intel HP laptop computer, broadband connectivity, a package of accounting
software and four training classes. The broadband connections are offered by two
service providers, so businesses can choose between a wireless, pay-as-you-go
option and a fixed ADSL service that comes at a fixed monthly price.

India: Present condition of Broadband

As per the consultation paper on ‘National Broadband Plan’ issued by TRAI,
Availability of Broadband services at affordable tariff will provide access to
enormous information, facilitate delivery of civic services, increase GDP
contributions, generate more employment and enhance productivity.

Broadband penetration in India is low in spite of the fact that 104 telecom service
providers are providing broadband services. The broadband penetration is just
0.74% when compared with teledensity of 52.74%. A need is being felt to identify
impediments and create an environment to encourage broadband growth. The net
broadband addition per month is just 0.1 to 0.2 million in contrast to approximately
18 million mobile connections per month.
20 | P a g e
Though 70% of Indian population lives in rural areas; broadband facility is limited
to metro and major cities. Availability of broadband is critical for development of
rural areas. Out of total 9.45 million broadband subscribers at the end of June,
2010, just 5% are in rural areas. The low broadband penetration in rural areas is
attributed to non availability of transmission media connectivity upto village level.

Conclusion

Broadband networks are an increasingly essential part of the global information

society, enabling overall economic growth, and creating new jobs, fostering
innovation and enhancing national competitiveness. To achieve these and other

21 | P a g e
benefits of broadband, developing nations need to establish enabling environments
that support long-term, cost-effective broadband deployments.

Governments can lead the way by working with partners to develop plans and
programs that encourage the rapid and strategic expansion of broadband and ICT.

22 | P a g e
 References
[1] Telecom Subscription data as on 30th June 2010. Available:
http:// www.trai.gov.in
[2] Broadband Policy 2004. Available: http://www.dot.gov.in
[3] ASSOCHAM and Frost & Sullivan, “Report on Broadband in India”
[4] Atul Bindal, “Broadband demand in India” 2007.
[5] Broadband across Africa 2009, Available: http://www.cisco.com
[6] World Telecommunication/ICT Development Report 2010. Available:
http://www.itu.int

23 | P a g e