That demonetisation has been a watershed event for India’s collective economic consciousness is now old hat. In more ways than one, it was India’s financial digital awakening. But it was not as much about the cash (or the lack of it) as much as it was about a radical technological shift that led to a fintech boom, forever changing the way India accesses finance and financial products.
So one saw funding materialise in the payments, lending, credit scoring, virtual currencies and many more. Social media, peer-to-peer networks and innovative technology service providers underpinned by almost ubiquitous urban connectivity underpins this fintech revolution. The problem is — is urban connectivity enough?
Infrastructure issues
India’s digital inclusion story has so far appeared to hinge on India’s ambitious BharatNet project that envisages fibre optic connectivity to all of India’s 250,000-plus village panchayats. By the end of 2017-18, high-speed broadband connectivity on optical fibre is supposed to be available in more than 150,000 gram panchayats, with Wi-Fi hotspots and access to digital services at low tariffs.
However only 25 per cent of villages where a fibre network is already in place have active internet connectivity and the quality of that network is yet to be ascertained. Hence, the dependence on the BharatNet project to provide any significant service in the mid-term is highly doubtful.
The main challenge in providing such affordable broadband coverage in semi-urban and rural areas is difficulty in providing the wireless “last-mile” or rather “last-few-miles” link.
Typically, carriers will extend data coverage to rural areas after a well-developed network of telecom towers is established. Being capital intensive though, setting up rural towers is uneconomic and often require government support in the form of subsidies (such as land and infrastructure made available at low or no cost). Of India’s 450,000 telecom towers, only 60 per cent are located in non-urban areas. An estimated additional 60,000 to 100,000 towers at a minimum will be required to enable national connectivity. As of now, the focus of telcos is to maximise urban connectivity and migrating urban customers to 4G connectivity.
A few States are already scrambling to roll-out other, experimental options. Niti Aayog CEO Amitabh Kant recently suggested that States such as Jharkhand take a leaf out of Andhra Pradesh’s initiative of using electric poles for enabling internet connectivity in villages.
This, he suggested, would enable the State to make the transition to a cashless economy faster. If one looks at just these two States, only about 15 and 570 villages in Andhra and Jharkhand, respectively, have a functional internet connection (basis BharatNet). This would mean States investing resources to create duplicate networks that not only run the risk of getting affected by other unforeseen issues but also ‘connectivity’ problems.
Satellite to the rescue
Satellite broadband is a more viable and cost-effective deployment option for Indian States to consider — a non-terrestrial broadband network that can be deployed considerably faster is significantly more cost-effective and promises high broadband throughput, which is fast, secure and reliable. Terrestrial networks have inherent constraints when it comes to serving communities living in the geographic outposts (hilly communities, for example).
This is where satellite connectivity can be a change-agent. This is precisely the reason behind the success of DTH through satellite in the country.
Already, countries as diverse as the US, China and those across Asia Pacific, West Asia, Africa and Europe have high capacity satellite broadband networks in place to supplement terrestrial networks and also for use by consumers and enterprise who, due to geographical and other constraints, cannot be served by legacy networks. Satellite is now poised to challenge the terrestrial broadband industry.
A new generation of satellite entrepreneurs is headed back to the launch pad. Backed by billions of dollars from strategic long-term investors, they are planning to blanket the earth in the next few years with satellite constellations — thousands of miniature satellites beaming very cost-effective, ubiquitous broadband service.
These new satellites, largely mass-produced, will orbit Earth as part of a large constellation covering thousands of square miles, will be best-equipped to provide high-speed internet connectivity pretty much everywhere, on airplanes, cruise ships and in the remotest village in Ladakh or Africa.
Are we network ready?
While the initiatives to build a Digital India continue, the fact is that India has a long way to go becoming digital. India ranks a poor 91 on the Networked Readiness Index (NRI) 2016 — a key component of the World Economic Forum’s ‘The Global Information Technology Report 2016’. The report assesses the state of networked readiness of 139 economies and examines the role of information and communication technologies (ICT) in driving innovation.
It is thus a key tool in assessing a country’s preparedness to reap the benefits of emerging technologies and capitalise on the opportunities presented by the digital transformation. India’s poor ranking aside, what is more worrisome is the fact, as highlighted by the WEF report, that a deep divide continues to persist between well-connected metros (where telcos compete the maximum and derive a majority of their revenues) and remote rural areas, where lack of broadband infrastructure and rudimentary ICT awareness mars growth.
Which brings us back to the fintech boom; a sector that received a strong fillip with demonetisation. According to Nasscom, the Indian fintech software product market generated revenues of $1.2 billion in 2015, and is expected to grow over twice by 2020.
With over 400 fitech companies, India is quickly emerging as a fintech products hub out of which more than 30 per cent are mature firms catering to demand across regions. But this is just one side of the story. These 400 companies need a large ecosystem to thrive and grow the market in India.
While initial operations will be limited to urban clusters, sustained growth is possible by tapping into semi-urban and rural clusters. Integration with a digitised financial ecosystem is the single biggest impetus that these regions and their many millions of inhabitants can get.
But a broadband network that is not reliable and robust or completely absent defeats the very purpose of its creation. India needs to consider satellite connectivity as the necessary third pillar of connectivity without which India’s emerging broadband connectivity story threatens to remain still-born.
The pay-off? The Brookings Institution believes that India’s economy would rise by $1 trillion (₹67 lakh crore) by 2020 if all Indians go online. If that is not a good enough reason to go satellite, I don’t know what is!
(The writer is SVP & Head at Enterprise Business, Hughes Communications India. The article first appeared in The Hindu BusinessLine.)