The Impact of the Internet on Developing Countries
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Telecommunications Infrastructure

Modern telecommunication technology came to India in the form of the telegraph. With the first lines laid down in 1856, the system came into operation during the First War of Independence in 1857, when it was used to provide British troops with advance warning of hostilities.

Following the First War of Independence, under the British, the growth of the telecommunications infrastructure was thus largely driven by the needs of the military and centralized government, with little attention given to either demand or commercial interests. Today, the major cities in India are reasonably up to date from a technical standpoint. However, IT development is severely impeded by unrealistic tariff structures and the lack of broad development of the telecom system, especially in rural areas.

An excellent example of the extensive development in select urban areas is Mumbai, located on the west coast of India. Mumbai is the location of Videsh Sanchar Nigam, Ltd. (VSNL), the governmental agency responsible for all international communications. In addition, all international trunk routes have a hub in Mumbai. Finally, it also boast the largest network for Mahanagar Telephone Nigam Ltd., the government corporation that controls most valuable telephone services across the country. The Internet is also well-established in Mumbai -- the first email network was set up here in 1986, which, under VSNL, grew into full-blown commercial internet access. Today, Mumbai remains the place with the largest number of established internet connections.(1)

Overall, the wiring of cities is predominantly through copper cable, though switch interconnects in major cities have been upgraded to fibre-optic links. Inter-city connections are mainly though microwave links. However, there are plans to install a nation-wide fibre-optic network, consisting of both a grid across the country and a coastal network connecting the west and east coasts.

In addition to traditional phone lines, the growing demand for data communication services led to the introduction of satellite-based services. When originally introduced, the lease costs were prohibitively expensive, but today costs are falling and the technology is becoming increasingly accessible.(2)

By contrast, cellular telephony has never truly gained firm footing in the Indian market. Despite the privatization of the industry and the intense competition for licenses, the price of cellular communication has remained too expensive for widespread use. As a result, despite the steady growth of phone access across the country over the past decade. The slow spread of cellular systems was due in part to the Department of Telecommunications' (DoT) inability to meet certain contractual agreements regarding the provision of interconnect ports for private service providers.

In addition to problems with the growth of cellular technology through the 90's, the growth of Internet services through conventional means was hampered to a failure to conform to international standards. Commercial email service was introduced in India in 1993, through Business India Information Technology's aXcess service. Following aXcess' launch, several other firms joined the email bandwagon, including VSNL, with its GEMS 400 service. However, except for aXcess, none of the services made use of X.25 messaging over the Internet Protocol (IP), the preponderant global standard, and were only licensed to use the (far less widely utilized) X.400 protocol. This discrepancy, stemming from a lack of cooperation on the parts of MTNL and DoT, led to all the companies (except the VSNL) failing to establish themselves in the market. (1)

The VSNL, still by far the dominant player in the ISP market, maintains the backbones that most private firms will have to use to provide access to consumers. There is currently one Level 1 gateway owned by VNSL, as well as a Level 2, through which most private companies will have to connect.

 

 

1995/96

1996/97

1997/98

1998/99

1999/2000

2000/2001

2001/2002

States

Popn CAGR ('81-'91)

Estd

Popn

CAGR of Lines

Actual

Lines 000

Lines/100

Estd

Lines

Lines/100

Estd

Lines

Lines/100

Estd

Lines

Lines/100

Estd

Lines

Lines/100

Estd Lines

Lines/100

Estd Lines

AP

2.19

696.98

20.44

797

1.35

959

1.59

1155

1.87

1391

2.20

1675

2.60

2017

2.58

2044

Assam

1.20

227.37

21.59

107

0.56

130

0.68

158

0.81

192

0.98

233

1.17

283

1.16

284

Bihar

2.14

903.30

19.97

280

0.36

335

0.43

401

0.50

481

0.59

577

0.69

692

0.68

694

Gujarat

1.94

428.65

16.52

916

2.44

1067

2.79

1243

3.19

1448

3.64

1687

4.16

1965

4.18

2012

Haryana

2.45

174.52

21.31

295

2.00

357

2.36

433

2.80

525

3.31

636

3.91

771

3.90

786

Himachal

1.91

53.60

28.27

110

2.58

141

3.23

180

4.06

230

5.10

295

6.42

378

6.45

387

JK

2.57

82.29

13.61

53

0.71

60

0.79

68

0.87

77

0.96

87

1.05

98

1.02

98

Karnataka

1.93

466.52

20.32

784

1.98

943

2.34

1134

2.76

1364

3.26

1641

3.85

1974

3.85

2013

Kerala

1.35

307.74

22.24

681

2.67

832

3.22

1017

3.88

1243

4.68

1519

5.64

1856

5.71

1905

MP

2.41

700.25

22.47

623

1.06

762

1.27

933

1.52

1142

1.82

1398

2.17

1712

2.14

1730

Maharashtra

2.32

831.86

18.70

2425

3.38

2878

3.92

3416

4.55

4054

5.28

4812

6.12

5711

6.19

5904

Orissa

1.85

327.44

19.68

166

0.59

198

0.69

236

0.82

282

0.96

337

1.12

403

1.11

405

Punjab

1.91

210.22

25.23

571

3.34

715

4.1

895

5.03

1120

6.18

1402

7.60

1755

7.70

1813

Rajasthan

2.53

468.70

28.14

494

1.32

633

1.65

811

2.06

1039

2.57

1331

3.21

1705

3.17

1727

TN

1.44

570.17

22.01

1014

2.14

1237

2.57

1509

3.09

1841

3.72

2246

4.47

2740

4.50

2798

UP

2.30

1464.71

25.53

810

0.68

1016

0.83

1275

1.02

1600

1.25

2008

1.54

2520

1.51

2537

WB

2.23

714.44

15.56

610

0.96

704

1.09

813

1.23

939

1.39

1085

1.57

1253

1.55

1265

The above table represents an extrapolation based on the figures available at the end of the 1995-96 fiscal year. The figures show that the penetration of phone lines is in fact growing faster than the population. In addition, the figures represent only the penetration of public services, whereas the latest telecom policy calls for added investment in the private sector. Nevertheless, it is clear that the current trends in growth will not result in the planned telephony penetration into India (7% by 2005 and 15% by 2010). In addition, in many cases the figures are skewed towards the urban regions within the states, and mask a poorly developed rural sector.

Thus, the general indication at this juncture is that there is a clear need for dedicated infrastructure development throughout India, with IT being borne in mind by policy-makers as being of prime importance. As much of India's population lives outside the cities, there is also a clear incentive for expanding the telecom networks into rural areas, especially given the social and commercial incentives. Fortunately, the government appears to finally have recognized both the importance of bringing the Internet to India and the need for sweeping policy changes in order to achieve this goal. There are thus a number of policy initiatives and projects in the pipeline, which should could come to fruition in the near future.

Political Barriers

It is arguable that the political atmosphere in India is perhaps most responsible for the slowed growth of both Internet access and the telecom infrastructure in general. Despite the general liberalization of the Indian economy in 1991, the telecommunication sector remained in tight control until 1998, results in a variety of problems for both private firms and consumers. Today, despite the increased government interest in promoting the growth of the Internet throughout India, there is a clear need for the re-thinking and/or removal of regulations still in place if the telecom industry is to flourish.

Until quite recently, the telecommunications industry was entirely under the control of the government and its affiliated corporations, such as the VSNL and the MTNL. This trend encapsulates the entire history of commercial data telecom in India. The original telegraph was run exclusively by the Post and Telegraph Department, as was the telex. All fax connections were switched by the DoT and the MTNL (along with the very few private service providers). For the better part of the 90's, the same was true of the Internet. In 1995, the government official awarded monopoly status to the VSNL, based on its existing monopoly over all international telecommunication networks. This further stifled the already struggling group of private service providers, who at the time were forced to provide connections by using the VSNL's gateways. (1)

One of the major problems that plagues the telecommunications industry in South Asia as a whole is the Telegraph Act of 1885, which is more often than not still the basis for telecom law in these countries. A product of the British occupation period, the Telegraph Act provides for strict government control of all data communication system, and is, like much of the telecom infrastructure in the Subcontinent, geared towards centralist decision-making rather than economic and technological progress. In India, the Telegraph Act has been amended periodically in an effort to liberalize the sector; however, these efforts have inevitably been too ah-doc as to lead to a significant improvement of the situation. (2)

The first moves towards liberalization came in 1992, when the Department of Telecommunications allowed private firms to set up public telephone booths. This had up till this point been impossible because of the Telegraph Rules of 1951. This measure in itself allowed millions of user access to telephone services that they did not have before. However, recognizing that this change alone was not sufficient to meet the growing demand, the government opened the markets both conventional and cellular telecom to private investment in 1995. However, due mostly likely to difficulties surrounding infrastructure development and the lack of cooperation between the VSNL/MTNL and private firms, the number of private basic telephony providers has only recently started to take off. (1)

In addition, 1997 marked the constitution of the Telecom Regulatory Authority of India (TRAI). TRAI was authorized to set telephony rates and later, under the latest telecom policy, to arbitrate between government service providers and private firms. In addition, the new policy allows for the unlimited interconnection of networks, allowing businesses to better define their specific markets. However, the TRAI has unfortunately been less than successful in bringing about positive change in the Indian telecom industry. There are several reason for this-firstly, the government's new telecommunications policy was created without specific reference to the TRAI, and the organization is thus poorly integrated into the implementation process. Furthermore, much of the staff at the TRAI comes from the ranks of the MTNL and the DoT. There is therefore a conflict of interests between support for the incumbent government corporations and moving towards increased private investment. Finally, the TRAI's policies indicate a lack of understanding of the nature of the modern telecom industry, especially as concerns the changes brought about by the Internet and the specific needs of a developing nation such as India. (1)(2)

1998 marked another step down the path towards economic liberalization, with the government officially ending the VSNL's monopoly over Internet provision. Private firms are now theoretically free to establish their own gateways through which to provide access for end users. 20 some IT firms have joined forces in this enterprise, forming the ISP Association of India, working together by pooling resources to create private international gateways. However, the current government policy, especially as regards issues of privacy, has prevented most independent ISP's from setting up private gateways. For example, ISP's are required to provide a digital transcript of all information traveling through their gateways to the government, as well as any information that could be linked to potentially illegal activities. In addition, while most ISP licenses are free for the first five years, the providers are required to provide bank guarantees amounting to the total fee - a requirement which has further impeded the abilities of many firms to enter the market. Thus, most providers are forced to provide service by using VSNL's gateway, resulting in a marked loss of quality of service for the consumer. In addition, there is much controversy as regards certain Internet services, notably Net telephony, which some members of the government believe, if legalized and implemented, could lead to the collapse of the DoT. (1)(7)

Thus, it is clear that for there to be any noticeable progress in India as regards Internet development, the government must clearly rethink its current policies on telecommunications, take into account the global changes brought the about by the advent of new technology, and work to create a market environment that is favorable for investment by both local and international IT firms. A trailblazer in this area in Andhra Pradesh Chief Minister Chandrababu Naidu. Naidu's "Vision 2020" for his home state involves the comprehensive integration of the Internet into society - accessing a multitude of audiences, implementation of government intranets, and stressing the importance of the Net in infrastructure policy and development - is free of utopianism and has already started to come about. Andhra Pradesh has, by sweeping legal reform, eliminated over 2,700 of an estimated 4,000 unnecessary regulations in the state telecom and commercial laws. (1) (10)

Online Content

Despite the problems expanding the access base of the Internet, there is an abundance of Internet content generated in India. Over 3,000 firms in India are currently online, as well as the majority of newspapers and magazines. The National Informatics Centre provides online information on a number of government departments, such as finance, education, industry, and the Parliament. In addition, the importance of the Internet as a broadcast medium is being recognizing by firms - online newspapers and magazines are now at the top of the list of advertising locations. The search engine Khoj indexed the over 10,000 India-content websites. (7)

Additional, e-commerce is also coming into its own in India, and consumers can purchase a wide variety of products, from electronics to food produce, online.

Local language content is also being developed, with such initiatives as the Centre for Development of Advanced Computing's Webware iLEAP-ISP scheme and the local-language initiatives in Tamil Nadu. (8)

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References
  1. Crishna, Vickram. Telecommunications in India: Thin Bones, Wasted Flesh
    http://www.sasianet.org/indiatelecom.html
  2. Crishna, Vickram, et al. Telecommunications Infrastructure: A Long Way to Go
    http://www.sasianet.org/telecominfrastr.html
  3. McGivering, Jill. Fast track for Indian Internet
    http://news2.thls.bbc.co.uk/hi/english/world/south_asia/newsid_769000/769635.stm
  4. TARAhaat.com - Devalt.org newsletter
    http://www.devalt.org/nwesletter/sep/of_5.htm
  5. Knowledge System for Sustainable Food Security
    http://www.mssrf.org/information village/knowledge-system-concept.html
  6. Mehta, Dewang. Internet: India's Second Tryst with Destiny
    http://www.timesofindia.com/today/26repu8.htm
  7. Rao, Madanmohan. Internet Content in India: Local Challenges, Global Aspirations
    http://www.sasianet.org/indiacontent.html
  8. Rao, Madanmohan. Online Content in South Asia: Opportunities and Realities
    http://www.sasianet.org/onlinecont.html
  9. An Internet Portal for Rural India
    http://adsections.businessweek.com/digital/portal.htm
  10. Rao, Madanmohan, Transforming Citizens of Today into Netizens of Tomorrow: Indian Chief Minister Chandrababu Naidu Leads the Way
    http://www.indialine.com/net.editorial/editorial63.html