subsidies


BSNL has been favored child, being fed enormous subsidies and fees by different governments in power in India. But it appears the hunger is insatiable. BSNL and MTNL have not been compensated by the government for the spectrum they surrendered three years ago. The Forum has also demanded that a payment of Rs.1,250 crore be made to BSNL, a sum already sanctioned in lieu of the discontinued subsidies and the Access Deficit Charge (or ADC, envisaged as a cross subsidy by private mobile operators for use of landline services run by BSNL), which was discontinued in 2008 on a recommendation by Telecom Regulatory Authority of India (TRAI).
Our colleague Sunil Abraham had the following to say about Digital India: What do you think of the government’s Digital India plan? The government can use the billions from the Universal Service Obligation fund for broadband connectivity. The markets cannot handle back haul infrastructure and in most countries, some amount of state investment is necessary. Some of the open access details have to be worked out. The government seems to have a monopoly position in execution.
Not the most perfect summary, since I did the interview with half my mind on the need to get to the airport in time for my flight out.
Governments like subsidies. We do not mind, as long as they do not harm competition and are deployed intelligently. One big complaint we had about the Indian Universal Service Fund was that it was not being used (as was the even bigger fund accumulated by Brazil). The Indian government responded with a USD 4 billion plus plan to roll out fiber to village cluster level. That will be among the policy initiatives that will be discussed at ITU Telecom World Forum, 21 November 2013 in Bangkok.
I thought 35 billion was a bit much. That was what the now under-radical-revision NBN was going to cost the Australian taxpayer. Even for a country with more than 60 times the population of Australia, USD 323 billion seems excessive. But, hey, they have to do something with the cash that’s piling up . .

Wire or wireless?

Posted by on July 31, 2011  /  0 Comments

One of the principal rationales for the creation of LIRNE.NET in 2000, and then LIRNEasia in 2004, was to counter the tendency to transplant policy and regulatory thinking unchanged from the developed market economies into the developing world. But that never meant that we should ignore theoretical developments and policy/regulatory innovations just because they emerged in the developed market economies. It is my firm belief that theory is universal. But the application of abstract theory to concrete circumstances must always involve deep interrogation of local context and will almost always requires adaptation and innovation.
I found it interesting that President Obama’s plans for broadband rest on wireless access. This meshes with our narrative re the path for our people to the Internet. Now come the details. Billions will be spent; but billions will be earned too. “It’s about connecting every corner of America to the digital age,” the president said.
Most people do not associate telecenters with the United States. That’s because they are called public libraries there. The Economist reports that more people are coming to the American telecenters because critical government and other services are increasingly available only through the web and because some people have dropped home connections in the hard times of the Great Recession. The best way for America to ease the new strain on its libraries is by closing the digital divide; companies and state agencies are unlikely ever to give up the efficiencies they won by moving online. Around $7 billion of 2009’s stimulus went to expand broadband access.
We expressed skepticism when the Labor Party first announced it. We are pleased it is being cancelled. The previous Labour government hummed and hawed about this rural-urban “digital divide”. Eventually, in 2009, it proposed levying a 50p tax on every fixed telephone line in the country: the proceeds were to be given to BT to allow it to connect even the remotest hamlets by 2012. The new coalition administration abandoned that plan, ditching the tax and pushing the target date back to 2015.
I was invited to conduct a discussion at the Cabinet Office in Brasilia with senior government officials driving the Brazilian Broadband Policy that will shortly be announced. Representatives of the relevant ministries, ANATEL the regulatory agency, the public telecom operator and a local think tank participated in what proved to be a lively discussion. Given the policy was almost fully formulated, I decided to focus on performance indicators, a subject I was working on for both UNCTAD and one which had preoccupied me since the time I was a regulator. It is also a subject that LIRNEasia has developed considerable expertise in. My guess was correct.
The US universal service fund is among the oldest and most inefficient, spending more on administration than comparators and not targeting the subsidies well. Our research has been cited in debates about improving it. The FCC under the Obama appointed Chair does not appear to be engaging in fundamental reforms, but is instead seeking to use the Fund as the main vehicle for executing its broadband plans. Instead of repurposing the existing funds, it is raising additional money by taxing customers of the telcos. Chief among its goals, the F.
I am writing this sitting at an IGF session dealing with the twin themes of access and diversity. Learning new and useful things about making websites accessible to differently abled people which should have important implications for the design of mobile terminals that will make more-than-voice services more accessible to those lacking knowledge capital. The danger of course is the money question. When the many well meaning people who work on disabled access issues look around for money to advance their causes, they first look to government. And where in government?
Technology to send broadband over power lines has been around for several years, but it typically hasn’t been able to offer enough capacity at a low enough price to beat service from cable and phone companies. But with government subsidies, the approach is starting to be deployed in areas that don’t have access to other forms of broadband. I.B.M.
The stimulus packages being worked up by governments the world over all seem to have a broadband component.  Even the Sri Lanka government which barely has enough money to pay its bills, is thinking of launching a USD 100 million satellite for high speed Internet (I guess this means broadband?).   Leaving aside the insanity of the Government of Sri Lanka operating satellites, even the other proposals to provide government subsidies to rollout fiber networks can have bad effects that need to be thought about, before taxpayer money is doled out.  As the Economist points out: Another drawback with big state subsidies for broadband is that they could distort the market and create regulatory problems.