Impact of telecommunication on rural development?

Answer 1

The significance of telecommunication in the economy is being increasingly felt in recent times because of the enormous impact of this technology across the entire economic spectrum . Information technology is nothing but the synthesis of computers and communications. There is no activity involving manufacturing or services where one cannot apply information technology and not get the benefits in terms of productivity, competitive advantage, profitability or quality of service. In fact, Alan Greenspan, the Federal Reserve Chairman observed some years back that the inflation rate in the United States will be one per cent higher but for the extensive use of information technology.

Telecommunication is very much a part of information technology. It is well known that a one per cent increase in telephone density leads to a 3 per cent increase in the GDP. With another important development taking place, namely, convergence, the impact of telecommunication is bound to be enhanced even more. That brings to the fore another important aspect of the global telecom scene namely the phenomenon of convergence. The convergence can be taken to mean the convergence of audio/video and text technologies or the businesses of information technology, communication and entertainment (ICE). This is thanks to the enormous power of digital technology. So far as electronics is concerned, there is Moore's Law which says that every 18 months the number crunching capacity of the computers doubles and the price comes by half. This tendency of the computers being almost anti-inflationary had helped in the increasing use of computers.

Combining computers and telecommunication, the concept of a computer network was born. This network is being driven by another law called the Metcalfe Law which says that the power of a network is equal to the square of the number of computers in the network.

The explosive growth of the network is demonstrated by the impact of the internet which is a network of networks. In the age of the Internet, perhaps the most critical element is the bandwidth. Copper wire is being increasingly replaced now by the optic fibre which has enormous bandwidth. In fact, so great is the growth of the bandwidth that there is a third law called the Guilder's Law which says that the bandwidth will triple every year and do so for the next 25 years. The enormous impact of the technological realities of convergence and its impact on the economy can be well appreciated. It is necessary that the government has the requisite legal framework so that the technology can be properly harnessed.

The liberalisation process started in India after 1991 when the earlier approach was replaced by an approach to the economy where the market dynamics prevailed. This meant that there had to be more than one player in the market and a healthy competition. This concept has an impact so far as the infrastructure is concerned. Earlier the approach to financing infrastructure was that infrastructure required very up-front lumpy heavy investment and these resources were not available in the private sector. Further, the return on investment may not be attractive and there is a long gestation period.

After the concept of liberalisation, this entire approach underwent a sea change mainly because the government did not have the resources needed for the increasing demands of the infrastructure. It became an operational necessity to attract investment from outside from the private sector both within the country and abroad. The liberalisation policy measures taken by the government after 1991 has an important aspect of opening up what was considered traditional infrastructure areas which were reserved for the government to the private sector. The infrastructure sector covers telecommunication, road, ports, power and, even education. After all, in the knowledge age of the knowledge economy, education should be considered as an infrastructure.

Among all the infrastructure sectors, perhaps the most dramatic changes and developments have taken place in the telecommunication sector. The reform process started in the 80s with the separation of the posts and telecommunication and then setting up the Telecom Commission in 1986. Earlier the entire spectrum of telecom was covered by the Government starting with the equipment manufacture, transmission and customer premises equipment.The first wave started in the 80s when the equipment manufacture was thrown open initially to the state public sector enterprises and then the private sector. The second wave of change started with the opening up of value added services in the form of paging and cellular services from 1992 onwards. A major breakthrough was the clear enunciation of the government's intention of liberalising the telecom sector in the National Telecom Policy resolution of 13th May 1994. Simultaneously the government also kept track of the international developments taking note of the impact of the Internet. 1998 saw announcing of the Internet Telecom Service Providers' Policy. Then came in 1999 the New Telecom Policy where the focus was on convergence. Right now a group of ministers is looking into this issue of convergence and a law for convergence is on the anvil. It will be very soon published for eliciting comments and hopefully, in the ensuing budget session will be introduced in Parliament for enactment of the law.

The policy developments on the telecom front have also resulted in organisational changes. The Department of Telecom has now been corporatised from 1st October 2000 as Bharat Sanchar Nigam Limited. Earlier in the 80s, MTNL and VSNL were formed by hiving of the functions which were earlier done departmentally by the Department of Telecommunication. Corporatisation of the entire telecom sector represents a major step in the telecom reform process.

Having an appropriate regulatory authority is a sin qua non for the liberalisation process. 1997 saw the setting up of the Telecom Regulatory Authority of India (TRAI) which was further modified in the year 2000 to avoid anomalies. There is also a separate appellate authority on telecom regulation. The enactment of the Convergence Bill may see further changes in the form of the authority that will probably regulate all aspects of the telecom sector.

The challenges that lie ahead in the year 2001 so far as telecom sector is concerned. , of course, will be the enactment of the Convergence Bill which may see institutional changes also so far as licensing and regulation of telecom sector is concerned. At the operational level, perhaps the most important issue is the issue of the rural telecommunication. The various policy measures taken by the government, it is hoped, would make investment in the rural telecommunication an attractive opportunity. The rural telecommunication may not follow the same route as was done in the past. Today with the availability of the Internet, satellite communication, digital technology, a whole lot of alternative image of reaching the remote areas can be thought out. Perhaps in the Indian context where computers are hardly four million and cable TV is reaching 35 million houses, the TV may become the mode of accessing the Internet. With the Internet telephony becoming increasingly a reality, the Government will also have to review the policy about permitting Internet telephony which will be much cheaper than the normal telephony.

Therefore, to reach out to the two lakh villages that still do not have telephones out of six lakh villages of India, , perhaps the better would be using these alternative technologies that are emerging. There are various Government organisations like Railways, Power Grid etc. which have the capability of providing bandwidth in the form of fibre optic networks. Private sector companies like Reliance are also coming up with massive programmes for providing bandwidth in states like Gujarat, Andhra pradesh and Tamil Nadu. With the combination of the efforts of both the private sector and the government, one can expect in the current year a massive launch of the bandwidth. The possibilities of the national information infrastructure emerging in the form of fibre optic networks covering states, easy access to internet and government initiatives like cyber dhabas for rural connectivity may see in the next few years a totally different telecom scene.

The telecom scene in the last decade has been a very dynamic one. Poised at the beginning of the third millennium, India is perhaps going to witness even greater changes and greater progress on this exciting front, thanks to the policy initiatives of the Government of India and the investment opportunities these policy initiatives open up for the private sector.