1. Introduction 2. Graph 3. Infrastructure in Rural areas 4. Telecom Situation Today 5. Graph 6.

Overview of the current technology available in India 7. What constitutes Broadband 8. Graph 9. Broadband for rural India 10. Coverage, system gain and cost of towers 11. Suitability of broadband wireless technology 12. Technologies for today and tomorrow 13. Telecom BOP in India 14. Rural communication market 15. Public sector involvement 16. National e-governance plan 17. Critical factors in success 18. E-learning 19. Requirements from the technology 20. Conclusion 21. References

In the last 10 years, India has emerged as a significant economic force in the world. The economic growth that has taken place has been concurrent to its explosive growth in communications and to a significant extent, been fueled by the telecom boom. India used to add less than one million Telephones a year in early nineties. Now it adds six million per month. Wireless technology (both fixed wireless as well as mobiles), has made telecom affordable in India, fueling the growth. This has helped make business more productive, propelling the Indian economy forward. However, the economic growth in India however is limited to urban areas. For the 700 million people who live in 600,000 villages in India, who are watching this transition, there is a growing cynicism that they are being left out from sharing the benefits of economic growth that are accruing primarily in the urban areas. Due to the low penetration of telecom and communications in the rural areas, the right kind of opportunities has not reached skilled and semi skilled people in these areas. The rural economy is still dependent on the agriculture sector. With more than 70% of Indias population living in rural areas with less than $ 100 per month, development of these areas poses a challenge for the India that is fast becoming well known for its economic prowess in the world. The country varies diversely in topography. The northern part of the country is characterized by the presence of plains and flat land. The southern part of the country is characterized by the Deccan plateau that ranges in height between 300 and 600m above sea level. The eastern part has flat land and hilly terrain while the West has desert and flat terrain. A high density of population of 253 to 525 persons per square kilometer can be found in the plain regions in India. In terms of geographical variation, the topography of the plains varies around 20-25 m in terrain with trees up to the height of 10-12 mb.

India reached a major landmark in November 2009 crossing the magic figure of half a billion wireless connections taking the wireless teledensity to over 43%. Between 15-17 million subscribers are added every month in what can be called among the fastest growing sectors of the Indian economy. Over 40% of the next 250 million new subscribers will come from rural areas that account for nearly 70% of the population in India. At the moment around 18% of the rural population has access to the mobile phone as against 97%

for urban areas. The value of rural communication projects in the near future is about USD 100 billion including both public sector and private business interest. BOP (Bottom of the Pyramid) and ICT for inclusive growth have become the buzzword in India with both government and private sector increasingly focusing on this segment of population as the engine of growth. Finpro with Tekes has studied the current and emerging trends in village communications in order to understand which sectors offer most interesting business opportunities for the Finnish companies. The goal of the project was to identify major players, drivers, challenges, regulations, business models and current technology solutions. Also it was to bring together the Indian opportunities and the suitable Finish offering. In the last 10 years, India has emerged as a significant economic force in the world. The economic growth that has taken place has been concurrent to its explosive growth in communications and to a significant extent, been fueled by the telecom boom. India used to add less than one million Telephones a year in early nineties. Now it adds six million per month. Wireless technology (both fixed wireless as well as mobiles), has made telecom affordable in India, fueling the growth. This has helped make business more productive, propelling the Indian economy forward. However, the economic growth in India however is limited to urban areas. For the 700 million people who live in 600,000 villages in India, who are watching this transition, there is a growing cynicism that they are being left out from sharing the benefits of economic growth that are accruing primarily in the urban areas. Due to the low penetration of telecom and communications in the rural areas, the right kind of opportunities has not reached skilled and semi skilled people in these areas. The rural economy is still dependent on the agriculture sector. With more than 70% of Indias population living in rural areas with less than $ 100 per month, development of these areas poses a challenge for the India that is fast becoming well known for its economic prowess in the world. The country varies diversely in topography. The northern part of the country is characterized by the presence of plains and flat land. The southern part of the country is characterized by the Deccan plateau that ranges in height between 300 and 600m above sea level. The eastern part has flat land and hilly terrain while the West has desert and flat terrain. A high density of population of 253 to 525 persons per square kilometer can be found in the plain regions in India. In terms of geographical variation, the topography of the plains varies around 20-25 m in terrain with trees up to the height of 10-12 mb.

The average village occupies an area of around 5 km2, most of which is farmland. Settlements in villages range from tiny hamlets of thatched huts to larger settlements of tile-roofed stone and brick houses. The most common fuel for lighting is still Kerosene and more than 65% of people in villages use firewood for cooking. Sometimes children in villages would have to travel up to 20 km to reach the nearest school. In terms of access to health services, less than 35% of child deliveries happen in institutions at the all India leveled. Industrial production in villages has not reached its full potential as of now. Figures show that most villages are typically spaced around 30-40 km apart from the market centers. Each such center serves as catchments of around 250-300 villages. The per capita income of these areas is less than $100 (Rs. 3000) per month. Fortunately most of rural India has some form of roads today and at least one bus plies to a village every day. Highways connect towns, which are rarely farther than 15 Km from the village. Recently through the Prime Ministers rural road development scheme, the Government of India has decided to invest in building roads to connect rural areas to the highways. This is a work in progress. Also, the nearest railway station is at least 20 km away from the village. This allows for relative easy access to transport in the plains. Significant numbers of villages have an electrical grid. Though availability of power on the grid is not an issue, the quality of power is questionable in rural areas. The grid has power only during the period when the demand in urban India is low. During peak demand period, urban India has the capability of sapping all the power produced and the rural areas receive whatever is left over. Even when the power flows into the rural grid (0 hour to 18 hours a day, depending on the state), the voltage could sometimes be as low as 90V (reflecting higher demand in urban areas) or as high as 440V (during nights when power usage in urban areas is very low). There is a urgent need for decentralized power generation solutions to tackle this problem of poor quality electricity at the village level.

The mobile revolution of the last five years has seen base stations sprouting in most towns, owned by three or more operators, including the state-owned company. The base stations of the new operators are networked using optical fiber laid only in the last 5 years. There is a lot of dark fiber, and seemingly unlimited scope for bandwidth expansion in these areas. However, the solid telecom backbone that knits the country ends abruptly at the towns and larger villages. Beyond that, cellular coverage extends only up to a radius of 5 km, and then telecommunication services simply peter out. Cellular coverage can and will grow in rural areas, but this will depend on the rate at which infrastructure and operating costs reduce, and rural incomes increase. Fixed wireless telephones have been provided in tens of thousands of villages, but it would be safe to conclude that the telecommunications challenge in rural India still remains the last ten miles. This is particularly true if one were to include broadband Internet access in ones scope, since the wireless technologies currently being deployed can barely support dialup speeds. This then is the rural India in search of appropriate broadband wireless technology: characterized by fat optical-fiber POPs within a range of 15-20 km of most villages, with a fairly homogenous distribution of villages in the plains, poor rural cellular coverage, and low incomes. The last aspect, i.e. low incomes, makes the provision of basic telecommunications as well as broadband internet services all the more urgent, since ICT is an enabler for wealth creation.

Before we look at Broadband technologies for Rural India, let us take a look at mobile technologies of today. This section will mostly focus on GSM technologies, though CDMA systems are also present in India today. Though it may not be readily evident, the bottleneck in rolling out services to rural areas is not the cost of electronic equipment, but is rather due to the following: i. The most significant cost component is the site preparation and the erection of the tower. The towers are about 40 m tall, and require considerable amounts of expensive steel for its construction. Infrastructure like roads and electricity has to be set up to support the equipment. ii. The second highest contributor to the cost is the power infrastructure RF cables running to the top of the tower, the power amplifiers, RF filtering and the transceivers roughly account for 55% of the costs of the base tower. RF equipment is expensive as of now. iii. The maintenance of cell site infrastructure requires local personnel who should be trained in wireless communications to deal with the problems that arise. iv. Ultra-low cost (ULC) phones at costs below Rs. 1500 with financing packages are not yet available in the markets. v. There is no proper distribution infrastructure for phones, SIMs, spares and accessories in remote areas, and there is a lack of basic training to users thus increasing the maintenance costs. vi. Billing and collection infrastructure for pre- and post-paid subscribers is expensive to set up. If one accepts these factors as the real bottleneck, then it is immediately evident that as soon as there is sufficient GSM voice coverage across India, we are already past the key hurdles. However, one cannot afford to deploy any new cell sites, but one can only add electronic equipment at existing cell sites. To deploy 3G at a cell site, Node B equipment has to be installed (instead of or in addition to the GSM BTS equipment). The cost of such Node B equipment has been falling by

approximately 40% each year over the last 4 years. Taken together with the fact that 3G offer more capacity than GSM, the 3G Node B is just 50% more expensive today than the GSM BTS to deploy the same voice capacity. It has already been seen that 55% of the cost of base station equipment is in the RF. Since a single 3G channel of 5 MHz replaces many GSM channels of 200 kHz required achieving the same capacity the RF costs of 3G systems should over time be lower than that of GSM systems. Thus 3G will eventually lead to cheaper equipment than GSM, resulting into Mobile Broadband infrastructure in India.

The Telecom Regulatory Authority of India has defined broadband services as those provided with a minimum data rate of 256 kbps. At this bit-rate, browsing is fast, videoconferencing can be supported, and applications such as telemedicine and distance education using multi-media are feasible. There is no doubt that a village kiosk could easily utilize a much higher bit-rate, and as technology evolves, this too will become available. However, it is important to note that even at 256 kbps, since kiosks can be expected to generate a sustained flow of traffic, 300 kiosks will generate of the order of 75 Mbps. This is a non-trivial level of traffic to evacuate over the air per Base Station, even with a spectrum allocation of 20 MHz.

When considering any technology for rural India, the question of affordability must be addressed first. Given the income levels, one must work backwards to determine the cost of an economically sustainable solution. The 200 odd households in a typical village having disposable incomes can spend on an average $1-2 per month for telephony and data services. Assuming an average of two public kiosks per village, the revenue of a public kiosk can be of the order of $100 per month. Apart from this, a few wealthy households in each village can afford private connections. After providing for the cost of the terminals, it is estimated that a cost of at most $ 300 is sustainable for the connection. This includes the user equipment, as well the per-subscriber cost of the network equipment and infrastructure (towers) linking the user up to the optical fiber POP.

It has been mentioned that one needs to cover a radius of 15-20 km from the POP using wireless technology. The system gain is a measure of the link budget available for overcoming propagation and penetration losses (through foliage and buildings), while still guaranteeing system performance. Mobile cellular telephone systems have a system gain typically of 150-160 dB, and achieve indoor penetration within a radius of about 5 km. They do this with Base Station towers of 40 m height, which cost about $ 10,000 each. If a roof-top antenna is mounted at the subscriber-end at a height of 6 m from the ground, coverage can be extended up to 15-20 km. When the system gain is lower at around 135 dB, as in any line of sight system, coverage is limited to around 10 km and antenna-height at the subscriber-end has to be 10 m in order to clear the treetops. This increases the cost of the installation by about $ 20 per connection. Thus, rooftop antennas in the villages are a must if one is to obtain the required coverage from the fiber POP. A broadband wireless system will also need a system gain of around 150 dB if it is to be deployed with 6m poles. This system gain may be difficult to obtain at the higher bitrates supported by emerging technology, and one may have to employ taller

poles in order to support higher bit-rates at distant villages. There is an important relationship between coverage and the heights of the towers and poles, and thus indirectly their cost. The Base Station tower must usually be at least 40 m high even for line-of-sight deployment, as trees have a height of 10-12 m and even in the plains one can expect a terrain variation of at least 20-25 m over a 15-20 km radius. Taller Base Station towers will help, but the cost goes up exponentially with height. A shorter tower will mean that the subscriber-end installation will need a 20 m mast. At around $ 400, this is substantially costlier than a pole, even if the mast is guyed and not self-standing. The cost of 250-300 masts of this type is very high compared to the incremental cost of a 40 m tower over a 30 m one. With 40 m towers, poles are sufficient at the subscriber-end, and need rarely be more than 12 m high. In summary, for a cost-effective solution the system gain should be of the order of 150 dB (at least for the lower bit rates), a 40 m tower should be deployed at the fiber POP, and roof-top antennas with 6-12 m poles at the subscriber-end. The cost per subscriber of the tower and pole (assuming a modest 300 subscribers per tower) is $ 60. This leaves about $ 250 per subscriber for the wireless system itself, inclusive of both the infrastructure and terminal sides.

One of the pre-requisites for any wireless technology for it to cost under $ 250 is that it must be a mass-market solution. This will ensure that volumes and competition drive down the cost of the electronics to the lowest possible levels. As an example, both GSM and CDMA mobile telephone technologies can today meet the above cost target, (however, an even lower cost is needed for a non-broadband technology since the services provided are limited). The third-generation evolution of cellular telephone technologies will probably continue to meet this cost target while offering higher bit-rate data services. However, they will not be able to provide broadband services as defined above (as at most they will provide 64 kbps to each user). If one were to turn ones attention to some proprietary broadband technologies such as WiMAX-d (IEEE 802.16d), it is found that at present

volumes are low and costs high. Of these, WiMAX-d has a lower system gain than the others (which are all around the required 150 dB). All of them will give a spectral efficiency of around 4 bps/Hz/cell (after taking spectrum re-use into account), and thus can potentially evacuate 80 Mbps at each Base Station with a 20 MHz allocation. However, high cost due to low volumes is the inhibitory factor with these technologies.

While wide-area broadband wireless technologies will be unavailable at the desired price-performance point for a few years, local-area broadband technologies have become very inexpensive. A well-known example is WiFi (IEEE 802l.11) technology. These technologies can provide 256 kbps or more to tens of subscribers simultaneously, but can normally do so only over a short distance less than 50 m in a built-up environment. Several groups have worked with the low-cost electronics of these technologies in new system designs that provide workable solutions for rural broadband connectivity.

In about two years, we would see better broadband technologies, which could provide the 150dB gain, while providing the 256 kbps or more for each connection. The three most promising technologies are all standard based and are therefore expected to meet the price targets required for Rural India. These technologies are: IEEE 802.16 m 3GPP LTE 3GPP2

Although the per capita purchasing power of the poor is low, but if taken as a whole, this segment can prove to be a major revenue earner for corporates on sheer volumes. Reports have indicated that the POP population is willing and able to pay for goods and services and at times they even end up paying more than economically stronger sections for essential products and services. Contrary to popular perception, rural consumers are not only tech savvy but also good users of value added services offered by mobile operators. For instance, the leading private sector GSM operator Bharti Airtel has the highest electronic recharge in terms of value coming from the relatively economically weaker state of Bihar and the highest value added services usage from the state of Uttar Pradesh, again not as strong in per capita GDP terms as many other regions. Owing to the high illiteracy rates in rural India, services that are voice-based tend to do better than text-based services. Diversity of languages and cultures across the country also results in the need to have multiple languages (most commonly, Hindi, English, Marathi, Punjabi, Bengali, Tamil, Telegu) inbuilt into applications. Applications that can assist the mostly agrarian population in employment generation or income supplementation area are highly valued by the rural segment. Other applications that have potential include education, healthcare and infotainment. Handset manufacturers such as Nokia have designed India-specific entry level models that support multiple languages to cater to the vast rural population. The need to provide competitively priced products and services to the poor can often lead to innovations that bolster a companys market competitiveness and once tested for success, these products and services can be extended to other emerging markets. Including the poor in business value chains as producers, consumers, franchisees, distributors etc can also expand supply and lower risk, at the same time increasing their income. The village entrepreneur model has achieved considerable success for private sector projects here; a local villager is imparted training in the use of IT tools

and dissemination of information on the corporates offering. The entrepreneur earns a commission on services rendered in addition to increased prestige and standing in society. At the same time, factors such as unsuitable market conditions (business environment for the private sector), lack of infrastructure, diverse cultural and social needs and an underdeveloped rural ecosystem often make doing business with the rural segment difficult.

Until recently, the rate of growth of telecom penetration in urban India was higher than that in rural areas of the country. However, subscriber reports show that the highest additions are being seen in Circles C, B and A (in this order) and lowest in the metros thus going to show that it is the smaller cities and towns that offer more growth to operators. As on end-October 2009only 26.6% of the telecom subscribers were from rural India that constitutes 70% of the total population of the country. Information via mobile, such as weather reports and market prices, has begun to have an impact on productivity for the agricultural sector. However, it also concludes that other infrastructure challenges, such as poor roads and lack of refrigerated transport, need to be addressed in parallel in order for farmers to realise the full potential of access to information via mobile. The Indian wireless industry, with over 43% penetration, is only second after China in terms of subscribers. Most of this growth has come from urban India where penetration (fixed line + wireless) is close to 100 per cent, but in rural markets is around18%. And it's here that the industry sees the largest opportunity for growth. In rural India, villagers often consider mobile phones as resources to be shared among family members and close friends instead of as individual possessions. Studies (source: LIRNE Asia) have found that in approximately 80% of Indian households at the bottom of the pyramid, mobile phones owned by one member of the family are shared with other family members, nearly 50% share their mobile phone with nonfamily members at times with no cost implication on the user. Usage of mobile phone usage in India started with urban areas, then expanded to

trading communities in larger villages as they needed to do business with suppliers/customers in cities who were already using mobile phones, and subsequently, mobile phone usage expanded to the broader rural community. These days, mobile phones are commonly seen with low and semi-skilled workers (construction workers, vegetable vendors etc) in urban areas. Mobile phone usage has received a major fillip with operators offering plans specifically targeted at this segment (low value recharge, lifetime validity among others), as well as handset manufacturers (such as Nokia, Reliance) developing ultra low cost handsets priced at less than INR 1000 (less than EUR 15) for the poor. Leading Indian CDMA (and now GSM) operator Reliance reportedly sold 1 million low cost (INR 777, EUR 12) handsets within a month of their introduction. Provision of microfinance facilities for purchase of the first handset will also drive mobile penetration in rural areas. Large national and multinational companies are focusing increasingly on the BOP market as evidenced by the growing number of pilot projects, launch of new businesses or extension of product lines in existing businesses that cater to POP markets. So far the corporate sector has focused on housing, agriculture, consumer goods and financial services to meet consumer needs of POP population. Experts, however, recognize that the most noticeable rural success story is mobile telephony.

Financial support from USOF by DOT (Department of Telecommunication) is to all operators that offer telecom services in rural regions and open infrastructure for sharing. The scheme, effective from 1st June 2007 is divided into 2 phases: First Phase- The scheme will cover 7871 number of infrastructure sites (towers) in 500 districts spreading over 27 states for provision of mobile services in the specified rural and remote areas, where there is no existing fixed wireless or mobile coverage.

Second Phase- The scheme will cover the other uncovered areas in the country through mobile services for which additional 11, 000 towers have been identified by DoT through Infrastructure Support for Cellular Mobile Services.

National e-Governance plan started in 2006 with a mission to make all Government services accessible to the local people, at affordable costs and to realize the basic needs of the common man. To achieve the vision, a common service delivery platform was created. It consists of 3 elements: State Wide Area Network (SWANs) establishment of intra government network till the district headquarters, facilitating the rolling out of citizen centric services. Implementation to be either the PPP model or the NIC model that would set up and operate for a period of 5 years. Common Services Centres aimed at establishing rural internet enabled kiosks, which could deliver government and private services to the grass root level. This would enable last mile communication, leveraging of existing telephone exchanges, wireless services and usage of USO Funds. State Data Centres (SDCs) to be established across 29 states and 9 union territories of India to consolidate, manage and securely host the state level data and applications.

Village communications projects need to have well-defined strategies focusing on self-sustainability and specific plans for scaling up along with community involvement right from project development stage. Research on areas crucial to village economies such as retail, FMCG, telecom also needs to be undertaken to identify issues of concern to the rural population and design localized solutions. In the initial phases of the project, handholding by the corporates and involved implementing agencies is essential to see the project through to fruition. Scalability depends on right combination of factors such as: Infrastructure Vision Research Community involvement Strategic partnerships Connectivity and maintenance issues 1 2 Provision of need-based and localized services- local languages, local requirements. Funding issues international/national funding sources and availability, investment by private sector players.

India is a diverse country; all villages are different with their own specific requirements. Electricity is a challenge in many villages. All states vary in levels of IT-friendliness, education levels and demographics-there are differences even at village level. It makes business sense to target middle level of the pyramid at least in the beginning as this segment possesses the purchasing power for products and services offered by corporates. Language and illiteracy factors need to be considered before developing solutions for the rural market. Content should be locally relevant, have compelling value, intuitive and easy to use. It is essential to develop regional content. Pricing is very crucial pricing of technology, content as well as services. Private sector companies say they discount their products by as high as 90% for the rural market. Ensure price supports value of content-important to look at different pricing models. Requirements from technology: technology should be affordable, accessible, user-friendly visually appealing, should not

require high-end equipment or high bandwidth as broadband connectivity in rural areas is poor. Some of the biggest challenges are: handset affordability, high tariffs, access to GPRS, customer education/awareness, network limitations, power situation in villages.

Until a few years ago, initiatives in rural connectivity were undertaken predominantly by government organizations, either through various government schemes or under the USO Fund. However, in recent times, there has been an upsurge in private sector activity in the area targeting the rural population is no longer seen as merely a CSR initiative but as a means of generating revenue for corporates. To this end, many of the private sector driven projects either directly or through indirect channels aim to increase usage of their products and services among the rural population; hence these projects are likely to be internally funded. Margins may be low but numbers are huge. Other stakeholders in village communication projects are the Non Governmental Organizations (NGO) that help in extension work - NGOs play a key role in increasing awareness, expanding outreach and to liaise with the government, both at the Centre and State levels as well as ensure the necessary buy-in from village Panchayats (group of five persons, usually elderly, that are respected by villagers and are looked upon to solve disputes at village level). Content is provided mainly by local organizations research or academic institutes, government organizations or private sector content providers. Technology providers, for instance, telecom operators, partner with these local content providers to package their offering for the rural masses. All stakeholders need to work in a cohesive manner to ensure the demand side is met through locally relevant content, packaged in a userfriendly and affordable manner and distributed through the right channels to reach the target population for mutual benefit.

Projects can be either government funded or through the open market (private players). Partnership can be at Central and State government levels. Purchase orders generally come from the state governments through tendering process whereas the Central Government provides funding under its various schemes. Public Private Partnership (PPP) is increasingly being looked upon as a favourable business model. Before planning market entry, Finnish companies need to consider the following: Identify target group teacher training or students; rural, urban, semiurban, first-time learners Identify offering technology/content/infrastructure or combination of any Is the technology offered by Finnish companies already present in India? If yes, what is the Finnish companies USP? What is the comparative cost? India is a very price sensitive market. Volumes are the key. Finalize business plan is the objective philanthropic/business oriented? Customize content for Indian market or create content in India for the market- It may be more cost-effective to create content locally than customize existing content.

Affordable, accessible. User-friendly visually appealing. Should not require high-end equipment (should work with low configuration of computers) or high bandwidth as broadband connectivity in rural areas is poor.

Government has planned huge outlay of funds for the upliftment of economically weaker and rural sections of society including through use of technology by introducing numerous schemes and govt. programs. Many of these schemes are on PPP (Public Private Partnership) basis. Corporates too, have realized that the rural (POP) population offers tremendous business potential not only in India, but also Africa and rural populations elsewhere in the world. Finnish companies, with their technological expertise in e- and mservices and products for focus areas of agriculture, education, health, banking and governance stand to benefit immensely from participation in rural projects, which can be led by the govt, or alternatively, by the private sector. Alternatively, Finnish success stories in Finland or elsewhere in the world can be brought to India as a showcase with the requisite customization and localization undertaken to meet Indian demand. However, it is very crucial for Finnish companies to understand the local requirements of the target segment and accordingly customize their offering. Business models of the West may not necessarily work. India is a diverse country where every village has its own set of challenges and requirements. India is a market for the long term. Finnish companies need to overcome their fear of entering India: India is diverse but good local knowledge, team and contacts are useful. It is crucial to identify the right partners for the right projects and right mode of market entry.