Digital Infrastructure The Prerequisite for Modern Economic - - PowerPoint PPT Presentation

Presented By: TV Ramachandran President

Sep 12, 2018

Digital Infrastructure

The Prerequisite for Modern Economic Development

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

The Indian Telecom Story

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Result of Entrepreneurship, Forward Looking Policies and Enabling Regulation “Things Do Not Happen. Things are Made to Happen.” - John F. Kennedy

21.8 21.8 9.3 5.6 3.1 2.5 0.7 0.7 0.6 0.5 0.5 0.5 0.5 0.5 0.7 0.8 0.8 0.7 0.7 0.3 0.3 0.9 1.2 1.9 3.5 6.5 13 33 52 97 158 261 391 562 812 896 915 971 1036 1152 1191 1169 200 400 600 800 1000 1200 1400 5 10 15 20 25 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Subscriber figures (in mn) Effective charge (cents/min) Effective charge (in cents/min) Subscriber figures

3rd & 4th

• perator

LF Reduction 12-10-8% to 10-8-6% Rev Share ADC Regime ADC Phase

• ut

NTP 2012' Entry of new player

For converting Effective charge to Cents/Min, conversion rate of 1 USD = INR 64 has been used. Source: TRAI

NTP ‘99 Introduction

• f UASL

NLD/ILD LF Reduction 15%-8%

4

The Story of Reforms The Story of Creation of TRAI & TDSAT The Story of Continuous Engagement with Government & Regulator The Story of NTP 99

The Indian Telecom Story Contd.

Unique Solutions to Address the Challenges

5

The Story of Competition The Story of Innovation

• The sector witnessed high competition
• With as many as 12-14 operators in a

circle (Year 2008) now coming down to 4 as sector undergoes consolidation.

Outsourcing non-core activities like IT, network

Infrastructure sharing

Focus on prepaid Paradigm shift from ARPU to revenue per min Low cost distribution, e-Charge Economies of scale Low acquisition cost (no handset subsidy)

The Indian Telecom Story Contd.

Competition and Innovation have Led to Growth of Telecom Sector

India Growing from Data Poor to Data Rich Nation

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Source: TRAI

0.4 1.3 4.9 6.8 5 10 FY16 FY17 FY18 FY19 Projected GB

Data usage per sub per month

Offers Huge Opportunities for Digital Infrastructure Creation

Entry of New Player in the Market – Increasing Data Traffic

7 Source: Nokia, TRAI Data Traffic grown 144% YoY in 2017

Paradigm Shift in Data Consumption, With 4G Traffic Capturing 82% of the Total Data Traffic

Four Factors Driving Digital Growth in India

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• $33.62 Bn have been invested

into start-ups since 2014.

• Half

that amount was invested in 2017 ($13.7 bn) and Q1-2018 ($2.26 bn).

• India has about 500 million

Internet subs as of Mar 2018

• 4G driving mobile Internet

usage

Source: AT Kearney Analysis, TRAI, YourStory Report-2018

Demographics, Internet, Start-ups and Government Focus to Drive Digital Growth

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Digital Ecosystem

Devices PCs, Tablets Mobiles, wearables Software IT systems Platforms Community Public Access Essential Services Inputs Semiconductors Sensors Connectivity Spectrum, Towers Fiber, Satellites, Wi-Fi Hubs Data centers Cloud Computing

India Needs Digital Ecosystem for Economic Development

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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

• rganization.

Need to Create All Above Infrastructure in a Balanced Manner

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 one-

third 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

Digital Infrastructure - Fibre, Towers, Public Wi-Fi, Satcom & EV Bands

Total Investment for BharatNet - US$ 6 billion

Source: India Infrastructure research

Digital Infrastructure to Increase Threefold in 5 years: Aruna Sundararajan, Secretary-DoT

Public Wi-fi hotspots

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At approximately 2.68 hotspots for every 1,00,000 people, India has a lot of potential for Public Wi-Fi

Hotspots per 100,000 people Hotspots per 100 Sq. Kms

Satcom

Terrestrial Broadband technologies involve difficult rollout, prohibitive costs and long timeframes to deploy. Satellite broadband can be achieved almost on tap

Digital Infrastructure Contd.

Public Wi-Fi and Satcom Imperative for Digital India

Spillover Effects of Digital Infrastructure on Digital Economy

• 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

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Sources: 1. Press Trust of India

2Broadband strategies handbook, Kelly & Rossotto, 2012, available at https://openknowledge.worldbank.org/handle/10986/6009 3Broadband Infrastructure and Economic Growth, Czernich et al, 2009, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1516232 4Socioeconomic effects of broadband speed, Ericsson, 2013, available at https://www.ericsson.com/res/thecompany/docs/corporate-responsibility/2013/ericsson-broadband-final-071013.pdf 5 6 Estimating the value of new generation internet based applications in India, Kathuria et al, 2017 available at http://icrier.org/pdf/Estimating_eValue_of_Internet%20Based%20Applications.pdf 7The economic and societal value of Rich Internet Applications in India, Arnold et al, 2017

Impact of Digital Infrastructure on GDP Impact of Broadband penetration on GDP Impact of Apps on GDP

• 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 2015-165. Potential to have this value increase to $271 billion by 20206

• 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 capita7

• Of all ICTs, broadband has the biggest economic impact
• 2.5 to 4.0 additional jobs for each new broadband job2
• GDP per capita growth is 2.7 to 2.9 percent higher after the introduction of broadband3
• Doubling broadband speeds adds 0.3 percent to GDP growth4

Spillover Effects of Digital Infrastructure are Immense and Create Huge Opportunities

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Making Digital PPPs work

India Needs More of Successful PPPs – Represents Opportunities for Japan

Building Blocks in Rolling Out Digital Infrastructure

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Need to Address the Challenges in Rolling Out Digital Infrastructure

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Secure Storage Encryption Virtual IDs (eg. Aadhaar) RBI Guidelines for Collection & Storage of Financial Information SC Guidelines on Data Privacy with Data Protection Draft Data Protection Bill -2018 Securing Digital Infrastructure and Data

*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

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

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To Take a Holistic View of the Digital Infrastructure keeping in mind the Externalities and Long-Term Vision

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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

Thank You

19

“Progress is impossible without change and those who cannot change their minds cannot change anything”

• George Bernard Shaw