Bridging the Digital Divide

Key Government Initiatives: Strategic Proposal

Prepared by Najmuddin Jabalpurwala

Table of Contents
Project Overview Digital Divide Key Indicators Key Challenges Broadband Penetration Building Blocks Building Rural Demand Improving Returns on Investment Mitigating Concerns of Service Providers Suggested Roadmap

Project Overview

Digital Divide ² Key Indicators
Parameters Current State One of top 5 most populated nations (250 million ) GNI approximately $1,100 per capita Sizable population in age group 25-55 years 30% in urban areas v/s 70% in rural Less than 10.5 % broadband penetration across the nation Less than 1 % penetration in rural areas Only 2.5% broadband connections till May 08 Low PC penetration Inadequate telecom infrastructure Lack of basic education to adopt advance ICT technology Language barriers Lack of effective demand to justify investment by private players Lower disposable income-Affordability issues

Size & Population Urban v/s Rural

Broadband Penetration Key Obstacles Supply Side

Demand Side

Sources: World Bank ± ICT Snapshot; Government Websites

Three Key Challenges have been identified

1. Building Demand in Rural Areas 2. Improving Return on Investments 3. Reducing apprehensions of Service Providers

Key challenges need to be resolved to achieve success..

Broadband Penetration ² Building Blocks

‡ Political Sponsorship ‡ Program priority ‡ Autonomous Regulation

‡Policies & Acts ‡Technology / Standards ‡ Infrastructure ‡ Training

‡ Strong need for cheap
communication options ‡ Need for Information ‡ Increase Agriculture operational efficiency

‡ Industry Participation ‡ Skill Sets ‡ Corporate Incentives ‡Innovative Revenue Models

Improving ROI
Key Factors Hypotheses
-Currently demand is weak with a high cost to serve y Low demand (volumes and pricing) and high level of fragmentation y Scale benefits difficult to achieve -Due to geographic diversity, unable to meet demand in remote areas -Infrastructure is not present ² most ICT lines bypass the rural markets -Low availability of ICT-enabled devices is a major impediment for speedy diffusion

Potential Action Plan
-Launch a nation wide initiative to create awareness and communicate the benefits of broadband -Consolidate ¶points of presence· across rural areas to aggregate demand -Employ wireless. Satellite broadband technologies to provide remote access -Government owned cable infrastructure projects across rural areas to prepare the platform -Reduce import duties on ICT products such as handhelds/PDAs to enable faster adoption & penetration -Provide corporate tax benefits & assured subsidies as incentives for Service Providers -Provide access to low interest capital for operators to expand in rural areas

Demand Side

Supply Side

-Significant investment is needed for the rural markets and involve large pay off periods and high financial risks -Operating costs such as bandwidth, network hardware & maintenance are very high.

Mitigating Other Concerns of Service Providers
Key Concerns Potential Causes
-Terrorism & related incidents are causing disruption of services & potential damage to infrastructure

Potential Mitigation
-Stricter law enforcement in rural areas to protect core infrastructure during civilian outbreaks - Adequate government backed insurance in case of damage due to public unrest -Government initiated professional training centers to impart basic ICT trainings -Local schools to start courses on Internet for building talent pool -Enable local businesses with ICT to reduce migration & boost employment in rural areas

Volatile Law & Order Situation

-Security of business investments is perceived as risky -Political goons frequently demand favors and financial ransoms from ICT establishments perception of easy money -Significant difficult to find rural labor trained in ICT technologies (hardware and esp. software) -High compensation costs for convincing urban professionals to locate to rural centers

Availability of skilled labor in rural markets

-Kiosks considered as a community resource instead of personal; hence difficult to frame a sustainable revenue model

-Government sponsored Kiosks -Provide services to promote E-commerce; value added services like voice & entertainment -E-government services via user fees -E-education services through local schools sponsored by local councils

Revenue Models for Rural payments

-Per capita ICT investment in rural areas higher due to additional costs such as power and lower capacity of consumers to pay

-Keeping pace with innovations in ICT technology can be costly

Radical Changes in Technology

-Avoiding technology obsolescence by periodic upgrades calls for regular investments

-Involve global ICT players to learn best practices in selecting broadband technology -Long term planning for technology investments to avoid impact of changes

Potential Road Map
Key Action Areas Build Rural Demand Lay basic cable infrastructure & setup kiosks Improve ROIInvest in Supply Side Service Augmentation 2009 2010 2011 2012 2013 2014 2015

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