Micro Analysis of a Rural Telecom Area in India

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Micro Analysis of a Rural Telecom Area in India
Telecom in India Conference at Stanford
University

• Joseph Pernyeszi, Madanmohan Rao,P. Yadagiri,
  Uday Kumar
• email uday_at_RuralTelecomFoundation.org
• November 9/10, 2000

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Telephone and Cable-TV Lines in Parvatagiri
Mandal/Block in AP State as on October 15, 2000
Parvathagiri data includes Daulatnagaram
village
3
Monthly Revenue (September 1999 to August 2000)
for Parvatagiri Village Exchange
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Past and Current Rural Policy
A
J
K
- Thin pipe - Centralized Mgmt- Village Public
Phone - No Phones in 50 of Villages
B
City/Town
E
Z
C
I
Y
H
X
F
D
- Villages A, B, C, D, X, Y, Z with phones- No
Phones in E, F, G, H, I, J, K
G
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Proposed Fat Pipe with Cluster
A
B
- Local Mgmt - Universal Coverage at Household
level
City/Town
Z
C
Y
D
X
Villages A, B, C, D, X, Y, Z
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Metcalfs Networking LawValue of the Network
rises Exponentially with new members!
3 Members 3 Connections
6 Members 15 Connections
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Spatial Network Value
W is District HQ
A Intra-Village TrafficB Inter-Village
Traffic C Village-to-District HQ
C
30 Km
Network Value
B
Village P
A
2 Km
10 Km
30 Km
1 Km
Distance from center of Village P
Note Graph is not to scale
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Monthly Revenue vs. Cost per Access Line
Assumptions- Capital Cost per Access Line Rs
20.000- 50 Capital Amortized over 20 yrs - 50
Capital Amortized over 10 yrs- Interest rate
15 InterestDepr. 17.6 of Capital-
OperationsMaintenance costs 9.4 of Capital-
Total Cost (Interest Depr. Oper. Maint.)
27 of Capital
Last Mile Cable Cost
Avg. Cost per Line
Revenue/Cost (Rs) per month
HardwareTrunk Costs
450
Avg. Rev. with 20 Coverage
Loss
250 to300
Avg. Rev. with 80 Coverage
t2
t1
Yr 2000
Time
Note Graph is not to scale
Rs 250 per line per month revenue for
outgoing calls only Rs 300 per line per
monthrevenue if incoming calls, 5050
interconnectivity revenue splits are also
factored in.
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Industry Structure
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Rural Telecom Public Policy Recommendations

• License at Block/Mandal level. -
  Administrative Units generate community of
  interests - Telecom SDCA is not an
  Administrative Unit
• For a basic access fee, unlimited calls of lt 3
  min. duration within Block/Mandal.
• Local Calls Area Administrative District, or
  Telecom District, which ever is larger.
• Create a Rural Telecom Infrastructure Bank to
  finance enterprises at the Block/Mandal level

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Rural Telecom Public Policy RecommendationsContin
ued

• After Rural Company lays interconnect
  infrastructure to Incumbents POP, Incumbent
  must pay 50 of trunk medium give
  interconnectivity within 7 days.
• No license fee for Rural Entrepreneurs
• If a Rural Company proposes to give Universal
  Access at Household level in fixed time-frame,
  license must be instantaneous with the
  time-frame clause.
• Fair interconnect fee between Rural Company and
  Incumbent Urban Company.
• Rural phone owners must be not be obligated to
  file IT returns just because they own a phone.
  
• Rural Companies to set their own subscriber
  pricing policies.

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Benefits of Universal Access at the
Village-Household Level

• Low-cost fast communication
• Increased throughput of Govt. machinery
  programs lowers corruption
• Creates social capital through Networking
• Saves consumption of high-cost Petroleum Products
• Improved Rural Productivity

Good Politics, Good Economics!
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The Team

• Joseph Pernyeszi - Telecom Technical
  Advisor(around 12 patents in Telecom
  High-Voltage circuits over 10 years of Telephone
  Switch line-circuit experience)
• Madanmohan Rao - Rural Economist over 20 years
  of rural economy public policy experience
• P. Yadagiri - Political Scientist over 20 years
  of field experience
• Uday Kumar - Network Planning, Business Modeling
  20 years of High-Tech experience

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Rural Telecom Foundation Mission

• Support a fast-track public policy that rapidly
  improves Rural Telecom Access. - This
  policy must lead to a decentralized Rural Telecom
  industry structure that is high-quality,
  rapidly-scalable, reliable, financially
  sustainable, manageable at the Block/Mandal
  or village level.

Short-term Goal

• Create working models in a few villages.
  - Purpose of the working models
  Demonstrate financial viability with innovative
  solutions.

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Final Thought
Build the BRICK before you CLICK. - Prime
Minister, Vajpayee