ITS Regional Telecom Conference

Asia- Africa-Australasia
Curtin University, Perth
14-16 November, 2011

Creating National Broadband Network in

Emerging Market- NOFN India

Satya N. Gupta
([email protected])
1
 Agenda

• Introduction- Broadband Definition

• Facilitating Regulation for Broadband
– Roadblocks for Broadband
– Govt’s Role in promoting Broadband
– Enabling Regulation for Broadband
• National Broadband Policy India –Technology-Neutrality
• National Broadband Plans –Developed and Emerging Markets
• Recommendations for NBP, India Dec 2010
• Creation of NBN India – NOFN Implementation Strategy
• Conclusions
 Introduction

Broadband- Broad Definition

• Generally, Broadband describes high speed, high capacity data

communication making use of DSL, Cable Modem, Ethernet, Fixed
Wireless Access, Optical Fiber, W-LAN, V-SAT etc.

• There is no specific international definition for the Broadband though

there is a common understanding among developed and developing
countries that it should be more than 2MBPS.

• As per Broadband Policy 2004, Broadband in India was defined as:

– “Always-On’ data connection that is able to support various
interactive services including Internet access having the capacity of a
minimum download speed of 256 Kbps to an individual subscriber
form the Point of Presence of the service provider.”

(This definition has already started showing up its limitations and has been
recommended for upward revision to 512 KBPS and further to 2MBPS in
future, in line with best international practices)
Targets for Internet & Broadband Penetration in India
(Broadband Policy 2004 and NTP 2012)

Year Ending Internet Subscribers Broadband Subscribers

(in million) (in million)

2005 6 3
2007 18 9
2010 40 20
2012 - 75
2014 - 160
2017 - 175
2020 - 600
June 2012 (Actual) 40 14.5
 Roadblocks for Broadband-India
1. Price
- Price for broadband access @ INR 300 (USD 6) per month – still unaffordable to
masses
2. Access to the customer
- Lack of access to the incumbent’s copper loop for DSL by competitors.
- Low quality of cable TV infrastructure and lack of industry organization.
- High costs for DTH and VSAT access.
- High spectrum costs making BWA unaffordable to masses.
- Cumbersome and expensive processes for Right Of Way (ROW).
3. Cost of connectivity
- Lack of effective competition in the “within city”/ last mile access networks
- High costs of international bandwidth
- Absence of National Broadband Network (NBN)
4. Fiscal policies
- High taxes and duties, and lack of fiscal incentives for faster Broadband growth
5. Content and applications
- Lack of locally relevant content and absence of “Killer Applications” to drive growth
5
 Govt’s Role in Promoting Broadband

• Creating the right policy environment by having a National Broadband

Plan (NBP) and including Broadband in Universal Service/Access
definition.
• Creating National Broadband Network infrastructure with Open
Access.
• Establishing Internet Exchange in the country.
• Permitting Unlimited Service Based Competition for Broadband.
• Encouraging International players to setup Gateways in the country.
• Funding community investment in Broadband in uneconomic remote
rural areas.
• Leveraging Govt’s own demand and setting example by being on-line
leader.
• Extending special tax concessions for equipments, access devices,
content & services used for Broadband.
 Enabling Regulation for Broadband

• Promoting service-based competition by lowering market entry barriers.

• Permitting infrastructure sharing among different service providers
including LLU and FS for optimum utilization and cost reduction.
• Allowing captive infrastructure of utility companies (Rail-roads, Power
grids, Highways, Pipelines) to be used for public Broadband service.
• Reducing the bottleneck in last-mile access by facilitating deployment of
alternative technologies like Cable TV network, Fiber, Wireless,
Broadband over Power lines, etc.
• Reducing the cost of bandwidth for domestic and international Internet
connectivity.
• Allocation of suitable Radio Spectrum for Broadband services at
reasonable price and making more spectrum unlicenced.
• Permitting broadcast infrastructure like DTH to be used for Broadband
access.
• Allowing service-neutrality over broadband without any restrictions for
VOIP, IPTV etc.
 Broadband Policy, 2004- India

Service Providers can choose any technology(Tech- neutral)

•Over existing infrastructure
DSL/ ADSL/VDSL over Copper loop
Cable Modem over Cable TV network
Power Line Broadband Access
•Over new Cable Infrastructure
Fiber To The Curb (FTTC)
Fiber To The Home (FTTH)
Hybrid Fiber Coaxial (HFC)
Metro Ethernet over Fiber ( MEF)
•Over Wireless Infrastructure
Fixed Wireless Broadband Access ( FWBA) ( WiMax 802.16d)
Wireless LAN (Wi-Fi) (802.11a/ b/ g)
Satellite (V-SAT, DTH)
High speed WLL (GPRS, EDGE, CDMA, CorDect)
3G Cellular Mobile System (WCDMA, EVDO, IMT2000)
IMT-advanced Technologies (Wimax, LTE)
 Broadband Access in India- Technology-Neutrality
(Making use of existing and new infrastructure )

INTERNET VSAT HOME SHOPPING

KIOSK/ HOME Ethernet SERVER (E-COMM)
FTTC VIDEO
512 Kbps- >2 Mbps SERVER
2 Mbps

DSL 256 Kbps- Metro

4 Mbps Ethernet
Cordect E-COMM
SERVER
PSTN INTERNET
70 Kbps (Connection oriented) (CONNECTIONLESS)
SWITCHED
CDMA WLL
TELEPHONE/DATA
ROUTED
SERVICE (TCP/IP)

144 Kbps – M-COMM

2 Mbps Cellular Cable TV SERVER
3G Mobile Network Hotspots Network
(Shared) (WISP)
PLMN
384 Kbps- EVDO/WCDMA BUSINESS
128 Kbps-
2 Mbps VOICE, DATA
1.5 Mbps
WAP ENABLED/ GPRS/ EDGE & VIDEO ON
CM SAME
Broadband
Wireless PLATFORM
64-384 Kbps through Cable TV Broadband Broadband Access
HANDSET
through DTH (Wi-Fi, Wi-Max)
 Satellite based DTH Services offer alternate for the
Broadband via Receive Only Internet Service (ROIS)

– Deployment of DTH for TV has begun, but • Broadband Policy 2004

internet access through this was not permitted a.DTH provider with ISP
license allowed to offer
– While internet data is downloaded from the internet services
satellite, the uplink connection to the ISP is
through another channel b.ISP licenses permitted to
– Since DTH (or receive-only VSAT) dish is only allow customers for
receiving, should not require SACFA clearance downloading data through
or NOCC fee for uplink monitoring DTH

– New technology permits DTH to be used for c.DTH providers permitted

bi-directional internet access, though costs are to provide both way
high because of required hardware Internet service after
obtaining VSAT and ISP
license
 Broadband using DTH for Receive-only Internet

CUSTOMER
PREMISES
EQUIPMENT

BROADCAST RECEIVE
CHANNEL ONLY SIGNAL

OUTWARD
Inbound CUSTOMERS DIALUP
DTH PROVIDERS
TRANSMITTER RECIVING EQUIPMENT
2 MBPS SET
OUTBOUND
COMBINED
SIGNAL Outbound Channel 64 – 128 kbps
(Radio, ISDN,
Dial up etc.)
-

Internet
DTH Service International Service
Provider Internet Provider
Hub Cloud

Speed of outbound channel is generally between 10 to 20% of inbound channel

 VSAT has the potential for significant impact on
Broadband Penetration in Remote Areas

– Advantages of VSAT for remote geographies,

high reliability, multi-casting and disaster
recovery applications are well-known • Broadband Policy 2004
a. Open Sky policy for VSAT to
– VSAT operators face increased costs due to be pursued by DOT
special regulations & restrictions because of b.Minimum dish size of 1 m for
its CUG category KU-band permitted
c. Throughput restricted upto 2
– Policy makers have some concerns that can
Mbps
be addressed in changing current rules d.VSAT service providers
– To bridge last mile, VSAT license could be permitted to provide Internet
services by obtaining ISP
permitted to be used as access media for license
Broadband
 Fixed Wireless Access- an important access technology
• Broadband Policy 2004
a. 2.40 – 2.48 GHz
spectrum De-licensed
for outdoor usage with
– 802.11x (Wi-Fi) technologies are widely used power restrictions (4W).
international standards. Wi-Max has b. 5.15–5.35 & 5.7–5.8
Unlicensed substantial future potential GHz spectrum De-
bands licensed for indoor
– 5.1 and 5.7 GHz bands (802.11a, Wi-fi) usage for low power
equally important as 2.4 GHz (802.11b/g, (200 mw) systems.
Wi-fi) c. 5.25 – 5.35 GHz will be
De-licensed for outdoor
– IMT 2000 bands have been keenly contested usage in consultation
Alternative world over for 3G with DOS.
spectrum d. 1880 – 1900 MHz
– Need to encourage alternative technologies
spectrum delinked from
in less congested bands access providers
– Need to exploit use of 450 MHz and 700 allocation and available
to ISPs.
MHz (Digital Dividend bands)
e. Alternate spectrum for
broadband services to
be identified (2.3-2.4,
2.5.-2.7, 3.3-3.8 Ghz)
Facilitating Radio Spectrum for Broadband Access

• ISM Spectrum (2.4 to 2.48 GHz, Wi-Fi) de-licensed for in-campus

WLAN using any technology.
• De-licensing of this along with 5.7-5.8 GHz for outdoor usage has
also been notified with 4W EIRP.
• De-licensing of 5.1 to 5.3 spectrum for indoor & in-campus usage has
been notified.
• Earmarking of 20 MHz (1880 to 1900 MHz) for wireless TDD access
systems by ISPs (delinking from mobile licencing).
• Time-bound frequency allocation, site clearance & frequency
licenses through automation of Spectrum Management System and
by setting predetermined standards for WPC.(E-application for
SACFA clearance).
• E-Auction of 3G spectrum in 2.1 GHz and BWA spectrum in 2.3 to
2.4 Ghz band has been completed and spectrum allocated.
• In NFAP-2011, 700 MHz band has been earmarked for BWA.
 Fiscal measures to reduce the cost of access devices,
infrastructure and broadband service

Recommendations
a. Allow 100% depreciation of PC’s and
broadband CPE’s in first year Broadband Policy 2004
b. Give tax benefit for donated PC’s a. High priority to indigenous manufacture
c. Remove anti-dumping duty on import of of Broadband related equipments
recycled PC’s b. Package to bring down the cost of
d. Reduce and rationalize import duties broadband services at affordable level to
e. Put local manufacturing on equal be worked out in consultation with
footing with imported finished goods Ministry of Finance and other related
departments.
f. Exempt web hosting from income tax
g. Exempt ISP’s from service tax
h. Personal broadband allowance

15
 Reduction in the cost of connectivity
• Cost of connectivity (international & domestic) forms a significant part
of Opex for Broadband services.
• Tariff for international bandwidth was forborne and left to the market
forces. It was considered to be on the higher side in comparison to
international benchmarks.
• Govt. has reduced the license fees for ILDOs, NLDOs and
Infrastructure Provider category II (IP-II) from 15% to 6% of AGR
and bank guarantee for IP-IIs from Rs. 100 crore (USD 20M) to Rs. 5
crore (USD 1M).
• Revised tariff orders reducing the ceiling price for international
bandwidth (IPLC) by 35% for E1 and by 70% for DS3 and STM1
capacity has already become effective from 29.11.2005.
• The revised tariff orders reducing the ceiling tariff for domestic leased
circuits (DLC) by an extent of 30% for E1 market price and 70% for
DS3/ STM1 market price, has become effective from 1.5.2005.
• These are gradually coming down below the prescribed ceilings but
there is a need for further review of these as well as Access Charges at
Cable Landing Stations to make them cost- based.

16
 National Internet Exchange of India (NIXI)

•National Internet Exchange of India (NIXI) has been set up on

recommendation of TRAI by DIT, Government of India to ensure that
Internet traffic, originating and destined for India, should be routed within
India.

•Six nodes of NIXI have been setup in metros and about 45 ISPs have
already connected to these.

•All the ISPs are not still connected to NIXI and also all routes are not
announced on NIXI leading to under utilization of the infrastructure.

•NIXI is taking appropriate steps for increasing the utilization of its

facilities.

17
 Emerging Broadband Services

• High speed Internet access (death of World-Wide-Wait) – Still the killer

application for Broadband in India

• Video-On Demand, Interactive TV, IPTV, PPV, Time Shifted TV,

Videoconferencing (Multimedia over Broadband)

• Triple Play (data, voice, video) – By UASP

• IP-VPN (low cost connectivity) – By UASP/NLDO

• VOIP (permitted only for UASPs)

• Interactive Gaming (future killer application)

• 4 e’s (e-Governance, e-Learning, e-Health, e-Commerce)

18
Access-Radio Technology Comparison

19
Access-Possible Services by Radio Technologies

20
Broadband Commission for Digital Development (BCDD)-
UN Targets for Universal Broadband,2015
1. Making broadband policy universal - By 2015, all countries should have a
National Broadband Plan (NBP) or strategy or include Broadband in
their Universal Access / Service definitions.
2. Making broadband affordable - By 2015, entry-level Broadband services
should be made affordable in developing countries through adequate
regulation and market forces (for example, amount to less than 5% of
average monthly income).
3. Connecting homes to broadband - By 2015, 40% of households in
developing countries should have Internet access.
4. Getting people online - By 2015, Internet users penetration should reach
60% worldwide, 50% in developing countries and 15% in Least
Developed Countries (LDCs).
5. The Broadband Challenge – Develop innovative policy frameworks,
business models and financing arrangements needed to facilitate growth
of broadband worldwide and to stimulate content production in local
languages to benefit from and contribute to the digital revolution.

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22
 International Initiatives for NBP

Name of Country Brief of National Broadband Plan ( NBP)

Australia • Government investment of USD 38 billion in National
Broadband Network (NBN).
• 90% of population shall be provided broadband access at
100 Mbps speed with fiber based network.
• Telstra to be structurally separated under ASD 11B deal.
Singapore • Next Generation Broadband Plan (NGBP) started in 2006
with Government subsidy.
• Open Access Wholesale to 95% population by 2012 with
initial speed 100 Mbps rising to 1 Gbps using FTTH
network.
Malaysia • High speed broadband network to connect 1.3 million
homes in major cities on FTTH/FTTC network by 2012.
• Government to invest USD 0.7 billion out of total cost 3.2
billion USD.
• Government to invest additional USD 250 million in rural
areas.

23
 International Initiatives for NBP (Con.)
Name of Country Brief of National Broadband Plan (NBP)

EU EC proposes USD 12B for Broadband Investment to achieve Digital

Agenda for Europe to get Broadband for All by 2020
Sweden • Local municipals to invest more than 180 million USD to deploy 1.2
million km of fiber in and around Stockholm.
United • Government invested 1.6 billion USD for development of NGA
Kingdom (FTTP) in rural areas (1/3rd of UK).
• Aim is to bring the superfast broadband (100Mbps) to 90% of
population by 2014 and to “All” by 2015.
• Private investment is expected to cover 70% (3.5B USD) of optical
fiber cost by 2017.
• Part funded by proposed broadband levy of USD 0.8 per month on
all fixed line in the country .
United States • There is a National Broadband Plan to provide the nationwide
broadband including rural areas.
• Government to provide USD 11.6 billion under various broadband
programs.
• Further USD 2.5 billion is made available for grants loan and loan
guarantees. 24
India-Approach to Estimate Investment for Broadband
Access Infrastructure in Each State

25
 NBN-Government Owned Model

Source: Analysys Mason

26
 NBN-State Government or Municipality Owned

Source: Analysys Mason

27
NBN-Incumbent Owned, Government Supported SPV

Source: Analysys Mason

28
 NBN-Jointly Funded and Owned by SPV,Telco Led

Source: Analysys Mason

29
NBN-Jointly Funded and Owned by SPV,Government Led

Source: Analysys Mason

30
NBN-Government Loan / Subsidies, Private Owned

Source: Analysys Mason

31
NBN-Operational Plan for Government Owned Model

Source: Analysys Mason

32
 NBN-Operational Plan for Incumbent Owned,
Government Supported SPV Model

Source: Analysys Mason

33
 NOFN India-Existing Fiber Infrastructure and
Coverage by Various Service Providers

Source: Industry Inputs, Analysys Mason

34
NOFN India-Investment Required to Rollout Backhaul
Network to Connect 250,000 Gram Panchayats

Source: Industry Inputs, Analysys Mason

35
NOFN India-Potential Investment Models for Additional
Fiber Deployment

Source: Analysys Mason

36
Regulator’s Recommendations for NBP - Dec 2010
• Broadband Definition- 512 kbps
• Targets- 75M (17 MDSL, 30M cable and 28M wireless) by 2012 and
160M (20M DSL, 78M Cable and 60M wireless) broadband
connections by 2014.
• Connecting all Gram Panchayat (250,000 villages) by 2012.
• Connecting all the villages (6,00,000) by 2013.
• Setting up of Govt. funded National Optic Fiber Agency (NOFA)
• Setting up of State Optical Fiber Agency (SOFA) jointly with state
governments and NOFA.
• Estimated investment of USD 12.5B financed by USO fund and Govt.
• Bringing out of Right Of Way (ROW) policy in consultation with
states.
• Enabling Cable TV infrastructure to be fully digitized.
• Consideration for 100% depreciation for the tax purpose for CPEs
and reduction in duties and levies on equipments used for broadband
services.

37
 Creating NBN- NOFN India ( BBNL)
Govt. of India
(Ministry of Communications & IT, Universal Service Obligation Fund)

Advisory Body consisting of High Level Committee led by

Secretaries of the Govt., Chiefs of Infrastructure Advisor to PM
PSUs, Chairs of Industry bodies led including chiefs of 3 Telecom
by Infrastructure Advisor to PM PSUs including incumbent
(BSNL), C-DOT & Secretary

• Objective to connect 2.5 Lacs SPV ( BBNL) (USO funded,

Grampanchayts (Large Villages) Govt. owned, participated by
spread over 5000 blocks by Optical telecom PSUs BSNL Railtel and
Fiber backbone by 2014. Powertel)
• Making use of the existing
transmission infrastructure of PPP (Equity participation from
incumbent BSNL and utility telcos. private players and industry at a
• Investment of around 4.0 B USD later stage)
to be funded from USO fund.
38
 Establishment and Maintenance of NOFN-I: NOFN
Implementation Strategy
• In its plan for the NOFN, for extension of the existing optical fiber network to all
Panchayats, DoT proposed an Executing Agency (EA) to undertake the work of
establishment, management and operation of the NOFN through a transparent
bidding process.
• Phased institutional mechanism for implementation of NOFN
– Stage I: A High Level Committee (HLC) to steer and coordinate all activities
related to the NOFN Project.
– An Advisory Body to advise on implementation issues and upstream and
downstream integration as well as issues relating to non-discriminatory access.
– A Project Implementation Team (PIT) shall look in to preparatory activities
such as GIS Mapping, finalisation of network design, formulation of bid package
as well as on issues related to establishment of SPV.
– Stage II: After approval by the Union Cabinet (End Oct. 2011), action to be
taken to establish and operationalised a Special Purpose Vehicle (SPV).
– The management of NOFN would be transferred to the Special Purpose Vehicle
(SPV), which will take over the functions and responsibilities of the EA.
– Stage III: Private sector companies will also be inducted into the SPV by equity
expansion under PPP mode.
39
 Funding Source of NOFN-USO Fund

• Establishment and maintenance of the NOFN will be financed solely

through the USO (Universal Service Obligation) Fund based upon bids
received by the Executing Agency (EA), BBNL. (USD 4.0B for first
phase)
• Necessary funds will be allocated by the Ministry of Finance (MoF) to
USOF within the amounts accrued/accruing to the USOF. No additional
liability on the state exchequer outside of USOF is envisaged.
• Given the size and scope of USOF Projects, budgetary allocation by MoF
towards USOF expenditure to be restored under Non Plan budget to
avoid procedural delays and ensure timely allocation of funds.
• As on date the funds available are with USOF are approximately INR
18,000 crores ( USD 3.5B) and on an average the annual accruals to the
fund would be approximately USD 1.2B. it is expected that the
approximate funds available including cumulative accrual of funds over
the next three years (upto2014) would be about USD 7.0 B.
• At Intermediate stage Private sector will also be encouraged to make
matching investments under PPP mode.
40
 Conclusions
1. BCDD, a UN Initiative has laid down ambitious targets for all the
nations to have National Broadband Plan(NBP) and strategy by 2015.
2. For ubiquitous broadband the underlying Backbone infrastructure is
required to be created by Govt. through State/USOF/Public funding
with Access infrastructure to be funded through PPP (Public-Private-
Partnership).
3. In India, national regulator (TRAI) has provided landmark
recommendations to the Govt. for NBP entailing an investment of
USD 12B for next 5 years
4. Govt. of India has announced NTP-2012 providing requisite emphasis
on “Broadband for All” and also the NBP. Creation of NOFN with
USO Funding (4.0B USD) and utilizing the existing Infrastructure of
Govt. telcos has been approved by Cabinet.
5. Time and hence the Execution is Essence for such project of national
importance which needs to be professionally managed in Mission
mode through Special Purpose Vehicle( SPV) in PPP mode.
 THANK YOU

Satya N Gupta
[email protected]