Digital Infrastructure The Prerequisite for Modern Economic Development

Transcription

1 Digital Infrastructure The Prerequisite for Modern Economic Development Presented By: TV Ramachandran President Sep 12, 2018

2 Contents The Indian Telecom Sector Story Telecom Sector Moving from Traditional to Digital Digital Infrastructure to Drive Digital Growth Challenges in Rolling Out Digital Infrastructure Possible Way Forward

3 Effective charge (cents/min) NTP rd & 4th operator 9.3 The Indian Telecom Story Introduction of UASL LF Reduction % to % NLD/ILD LF Reduction 15%-8% Rev Share ADC Regime ADC Phase out NTP 2012' Entry of new player Effective charge (in cents/min) Subscriber figures Subscriber figures (in mn) For converting Effective charge to Cents/Min, conversion rate of 1 USD = INR 64 has been used. Source: TRAI Result of Entrepreneurship, Forward Looking Policies and Enabling Regulation Things Do Not Happen. Things are Made to Happen. - John F. Kennedy 3

4 The Indian Telecom Story Contd. The Story of Reforms The Story of Creation of TRAI & TDSAT The Story of NTP 99 The Story of Continuous Engagement with Government & Regulator Unique Solutions to Address the Challenges 4

5 The Indian Telecom Story Contd. Outsourcing non-core activities like IT, network Infrastructure sharing The sector witnessed high competition With as many as operators in a circle (Year 2008) now coming down to 4 as sector undergoes consolidation. Paradigm shift from ARPU to revenue per min Focus on prepaid Low cost distribution, e-charge The Story of Competition Economies of scale Low acquisition cost (no handset subsidy) The Story of Innovation Competition and Innovation have Led to Growth of Telecom Sector 5

6 India Growing from Data Poor to Data Rich Nation GB Data usage per sub per month FY16 FY17 FY18 FY19 Projected Source: TRAI Offers Huge Opportunities for Digital Infrastructure Creation 6

7 Entry of New Player in the Market Increasing Data Traffic Data Traffic grown 144% YoY in 2017 Paradigm Shift in Data Consumption, With 4G Traffic Capturing 82% of the Total Data Traffic Source: Nokia, TRAI 7

8 Four Factors Driving Digital Growth in India $33.62 Bn have been invested into start-ups since Half that amount was invested in 2017 ($13.7 bn) and Q ($2.26 bn). India has about 500 million Internet subs as of Mar G driving mobile Internet usage Source: AT Kearney Analysis, TRAI, YourStory Report-2018 Demographics, Internet, Start-ups and Government Focus to Drive Digital Growth 8

9 Devices PCs, Tablets Mobiles, wearables Digital Ecosystem Connectivity Spectrum, Towers Fiber, Satellites, Wi-Fi Inputs Semiconductors Sensors Software IT systems Platforms Hubs Data centers Cloud Computing Community Public Access Essential Services India Needs Digital Ecosystem for Economic Development 9

10 Our View of Digital Infrastructure Digital infrastructure are foundational Products, Services & Applications, for both consumer and enterprise markets, that enable the information technology capabilities of a nation, region, city or organization. Need to Create All Above Infrastructure in a Balanced Manner 10

11 Digital Infrastructure - Fibre, Towers, Public Wi-Fi, Satcom & EV Bands Optic Fibre Digital era cannot happen without India marching towards Fibre First Initiative US has installed over 400 mn km of fibre for less than onethird of our population and China has over a bn km of fibre, while India has deployed only ~100 mn km Fiberization of Towers For 5G, 100% of the towers would need to be fiberized Source: India Infrastructure research Total Investment for BharatNet - US$ 6 billion Digital Infrastructure to Increase Threefold in 5 years: Aruna Sundararajan, Secretary-DoT

12 Public Wi-fi hotspots Hotspots per 100,000 people Digital Infrastructure Contd. Hotspots per 100 Sq. Kms At approximately 2.68 hotspots for every 1,00,000 people, India has a lot of potential for Public Wi-Fi Satcom Terrestrial Broadband technologies involve difficult rollout, prohibitive costs and long timeframes to deploy. Satellite broadband can be achieved almost on tap Public Wi-Fi and Satcom Imperative for Digital India 12

13 Spillover Effects of Digital Infrastructure on Digital Economy Impact of Digital Infrastructure on GDP Impact of Broadband penetration on GDP Impact of Apps on GDP Improving the digital infrastructure will help achieve the goal of trebling GDP to USD 7.5 trillion over the next five years through increased usage of Internet 1 Increased revenues from GST, license fee, SUC, spectrum auctions, corporate tax and property taxes Of all ICTs, broadband has the biggest economic impact 2.5 to 4.0 additional jobs for each new broadband job 2 GDP per capita growth is 2.7 to 2.9 percent higher after the introduction of broadband 3 Doubling broadband speeds adds 0.3 percent to GDP growth 4 Data based services or apps add for more value than just access to the internet. Apps contributed at minimum $20.4 billion to India s GDP in Potential to have this value increase to $271 billion by Each user of Applications in India receives on average $249 of consumer surplus annually. Applied to the total population, this number stands at $74 per capita 7 Sources: 1. Press Trust of India 2 Broadband strategies handbook, Kelly & Rossotto, 2012, available at 3 Broadband Infrastructure and Economic Growth, Czernich et al, 2009, available at 4 Socioeconomic effects of broadband speed, Ericsson, 2013, available at Estimating the value of new generation internet based applications in India, Kathuria et al, 2017 available at 7 The economic and societal value of Rich Internet Applications in India, Arnold et al, 2017 Spillover Effects of Digital Infrastructure are Immense and Create Huge Opportunities 13

14 Making Digital PPPs work India Needs More of Successful PPPs Represents Opportunities for Japan 14

15 Building Blocks in Rolling Out Digital Infrastructure Need to Address the Challenges in Rolling Out Digital Infrastructure 15

16 Secure Storage Encryption Virtual IDs (eg. Aadhaar) Securing Digital Infrastructure and Data RBI Guidelines for Collection & Storage of Financial Information SC Guidelines on Data Privacy with Data Protection Draft Data Protection Bill *India has evolved a Two Level Authentication & Security for its Digital Identity Infrastructure known as Aadhaar. Level One uses a Virtual ID by which the Original Biometrics and photographs are not tampered with, in transaction mode. Securing Digital Infrastructure is Focal for Growth 16

17 Possible Way Forward Declare Broadband as a fundamental right Use of Universal Service Obligation Fund (USOF) for funding Digital Infrastructure Government led Telecom Infrastructure Fund Budgetary Allocation for Digital Infrastructure Projects Tax Free Bonds/Infrastructure Development Funds Tax Holiday for Hi-Tech Industries and Tax Incentive on R&D Rationalization of Corporate Tax Rate Simplification of Tax Laws Collaborative approach by various agencies/departments Monetisation of world class infrastructure To Take a Holistic View of the Digital Infrastructure keeping in mind the Externalities and Long-Term Vision 17

18 Opportunities in Indian Telecom Sector 5G Core Network Infrastructure Smartphones and Devices Smart Cities Internet of Things Apps Financial Inclusion Digital Commerce Government of India Initiatives Many Opportunities Arising Out of Liberalised National Digital Communications Policy 18

19 Progress is impossible without change and those who cannot change their minds cannot change anything Thank You - George Bernard Shaw 19