Author: V Sridhar, IIIT Bangalore
India is on the cusp of a digital revolution. There is more than 500 million mobile broadband subscribersmore … than 1 billion people registered for digital identitiesover US$30 million in digital payment transactions processed through the native Unified Payments Interface per month and approximately 24 Indian “unicorn†startups provision of digital platform services. India has embraced digitalization across the board, but technology policy and infrastructure lag behind this growth.
The telecom industry that is building the required digital backbone for India is struggling. The sector once saw fierce competition with ten mobile operators, but has now consolidated to three or four. Cellphone carriers will pay more than US$20 billion to the government after a lengthy regulatory fee settlement issue. This leaves most carriers with nothing to invest in 5G and other future technologies.
India’s telecommunications regulatory fees are among the highest in the world, attracting 7 to 12% of operators’ gross income. Unless this percentage is reduced to manageable levels of 3-5%, operators will not invest in infrastructure to improve service quality. According to Ookla 2020 Speed ​​Test ReportIndia is ranked 128th for mobile broadband speed with average speeds crawling at 10 megabits per second – a fraction of the speeds achieved by carriers in other economies.
Data localization and restrictions on cross-border data flows are also an issue. India has benefited as an information technology (IT) offshore outsourcing destination. The IT sector gained more than 150 billion US dollars free cross-border data flows. But after the Facebook-Cambridge Analytica scandal, many countries, including India, are leaning towards data localization. The main reasons are to protect the privacy of individuals, to improve access to data for law enforcement to protect national security, and to use localized data as an economic resource for the development of local regions.
The Reserve Bank of India (RBI) has issued a guideline for comprehensive financial data localization. At the same time, India’s parliament is about to enact the Personal Data Protection Bill, which guarantees stricter forms of data localization for “critical personal data”. The irony is that Indian companies process the sensitive financial data of individuals and businesses around the world and have benefited from weaker restrictions on data storage and processing rules in other countries. The government will also determine what critical personal data is, which leaves a lot of ambiguity for service providers. Exemptions to the law for government agencies could also be used for undesirable political or other purposes, reducing citizen privacy and increasing the risk of data theft and security breaches.
The deployment of 5G and other related technologies is another key issue. In 2017, the Indian government formed a panel to assess and endorse roadmaps and action plans for rolling out 5G technology in India by 2020. The government licensed network equipment manufacturers, including Chinese companies, to participate in the 5G trial. But with the regulatory tax burden on them, there is very little hope that mobile operators will be willing to invest in infrastructure upgrades for 5G.
Radio spectrum, a vital resource for many communication services, including 5G, is important for network deployment. The government is committed to not reducing the spectrum reserve price, especially for the 700 megahertz spectrum that was not sold in the previous auction. The auction proposed for the second half of 2020 could again have a dismal result. There is also no clarity from the government on the 26 gigahertz spectrum to be used for commercial mobile services. Much of this band is used by the Indian Space Research Organization for satellite communications.
India does not have a strong fibre-based backhaul network. More than 80% of the backhaul network interconnecting the cell sites uses narrowband microwaves. This will limit the deployment of 5G. Although smart city projects were tested in India in 2017, strong use cases for massive machine-like communication and Internet of Things communication are still lacking if 5G is to be fully utilized in India.
The government is also pushing digitalization, especially within the government itself. The National Payment Corporation of India, a quasi-governmental entity, has succeeded in creating the unified payment interface as a standard for digital payments. This indigenous initiative has been integrated into the Google Pay system. The central government’s Government e-Marketplace platform and other state-run e-procurement portals, such as the one in Karnataka, have been successful in shifting the procurement of goods and services to platforms digital. The Aadhaar digital ID card and direct benefit transfer programs have enabled the direct transfer of social benefits to the poorest sections of the population on a large scale.
India is now both a major producer and consumer of its own IT services. This has been facilitated by local digital platforms such as Flipkart, Ola, Oyo, PayTM and Swiggy, as well as the government’s increased use of IT. India can leverage its technological capabilities and entrepreneurial spirit to transition into the digital age and enhance growth and prosperity. To achieve this, the government should reduce telecommunications regulatory fees, set lower reserve prices for 5G radio spectrum that has yet to be auctioned, establish less restrictive data location policies and provide preferential access to start-ups. -ups participating in government IT projects.
V. Sridhar is a Professor at the Center for Computing and Public Policy, International Institute of Information Technology, Bangalore (IIITB).
