With the fastest-growing telecommunications market in Asia, eighth-largest telecom network in the world, third-largest subscriber base on the planet (six million new subscribers being added every month), and a respectable teledensity of 15 percent, ICT (Information and Communication Technologies) usage in India should be on the upswing.

Yet The Global Information Technology Report 2006-07, published by the World Economic Forum, states otherwise. Between 2004-05 and 2006-07, India’s rank in the Networked Readiness Index (NRI), which measures the level of the ICT development of nations, moved down from a peak of 39 in 2004-05 to 44 in 2006-07. The NRI measures the level of readiness and the propensity of the three main stakeholders-individuals, the business sector, and the government-to use ICT. The report blames a weak infrastructure for the low ICT usage in India.

From an ICT stand-point, the basic infrastructure is telephony, and it’s here that India has faltered. Our telecom revolution, driven by private sector telecom companies which today command a 57 percent share of the domestic market, has been confined to the lucrative urban and semi-urban areas. High capex costs-infrastructure accounts for two-thirds of capex costs-have discouraged private operators from establishing telecom infrastructure in rural areas, thus contributing to a digital divide.

Between 2002-03 and 2006-07, urban teledensity-phones per 100 people- vaulted from 15 percent to 47.58 percent while rural teledensity inched up from 1.49 percent to 1.84 percent. In other words, the basic infrastructure to take ICT to the 70 percent of Indians who live in rural areas simply isn’t there.

Another factor is low revenues. Says Deepak Kambam, an independent Bangalore-based telecom analyst, “Average revenue per user is relatively low in the rural market, hence telecom operators aren’t keen to enter it.”

To make it viable for private wireless operators to offer services in rural areas, the Center is offering a one-time subsidy from the Universal Service Obligation (USO) Fund to help them set up shared infrastructure in rural areas. This is expected to bring down the passive infrastructure cost of telecom operators by at least 35-40 percent. (Passive infrastructure includes the tower, shelter, air-conditioning equipment, diesel generator and battery.)

Further, the scope of USO has been extended to wireless broadband services. The focus will be to provide ‘multi-play’ services where two or more services will be provided through a single broadband connection. Simultaneously, the Center has initiated the setting-up of broadband-enabled Common Services Centers (CSC) to deliver government and private services to the rural population. Tools and typefaces of Indian languages for public use have also been developed and made available for free. Kambam underscores the efforts being made by the government to encourage investment in manufacturing telecom equipment; which he feels will bring down the costs of equipment and handsets and help the spread of rural telephony.

Will these initiatives help push up ICT usage in rural India? According to Kambam, penetration of telephony into rural areas will be driven by government subsidies, and will largely ride on voice rather than data. It will be a while before rural India is able to enjoy the benefits of ICT. But the foundation is being laid.