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Sunday, November 02, 2003

Affordable Computing

Rajesh tells us he gave a presentation on Affordable Computing, as part of the "IT and Common Man" session at the BangaloreIT.com thrash. As he says, much of his talk centred around what he's have been writing in his emergic Tech Talk series on SMEs and Technology.

He aslo draws attention to the presentation given by Ashok Jhunjhunwala, who spoke about how some of the group of companies incubated out of the Telecom and Computer Networking department at IIT-Madras are helping to realise his dream of doubling India's rural GDP from Rs 10,000 to Rs 20,000 over the next decade. As well as this fascinating presentation, Ashok has a lot more interesting material onsite, including a document entitled 'Making the Telecom and IT Revolution Work for Us'. His argument: look for big cost reductions in the price of Telecom and develop appropriate policies which enable decentralized operation

A more detailed look at costs of telecom and Internet networks around the world reveals that in the West, the cost of providing a telephone line is around $800. We use the same technology and it is not surprising that our numbers are similar. But this cost of $800 was reached in the West more than a decade back. There too, an operator needs between 35-40% of initial investment as yearly revenue to break even. However, this amounts to barely $30 per month and is affordable to over 90% of the homes. Therefore, homes in the West have been fully wired up quite some time back. Now, reducing the cost further, no longer expands the market. Their R & D focus therefore naturally shifts to the replacement market, where more and more features and services need to be provided rather than lower cost products.

However, technology at this cost is hardly affordable to a few percent in a country like India. The cost needs to be reduced by a factor of three or more for telecom (and Internet) to be widely affordable in India. Who would do this? Not the R&D efforts in the West. Naturally, this becomes the task of Indian R&D. Such cost reduction is not easy. Coming up with a disruptive technology that could reduce cost by a factor of 3 would require total mastery of current knowledge in the area and a lot of innovations. But then R&D efforts are always a challenge. The important thing is that if one achieves this, one would also become a technology leader in this area. And if it results in a production of 150 million telephone lines in India (and may be 500 million lines taking into account similar requirements of other developing countries), one would rank among the world's best product designers and largest manufacturers (150 million lines even at Rs.10,000 per line implies production of Rs.150,000 crores). A service industry that would operate and maintains 200 million connections would employ a large number of people.

But above all, such telephone and Internet connectivity can start changing the lives of people. Using Internet, resources can be deployed more efficiently. With telecom and Internet connectivity, Indian villages would have the necessary infrastructure to stand up in the world. It could make our agriculture more remunerative and give our home-based industries a potential market for their wares at fair prices.

Besides reduction of equipment cost, which reduces the investment required to provide telecom and Internet connectivity, one has to develop technologies that lead to reduction of the operation cost. Conventionally, a large initial investment (of the order of several tens of millions of rupees) is required to start providing connections. It is possible today to come up with small access systems, which could be connected to a backbone telecom network. Such access systems would require low initial investment and could be operated very much like cable head-ends. A small entrepreneur could then serve a neighborhood (either a few streets in an urban area or a few blocks in a rural area) and provide low-cost service in an accountable manner. Of course, for this to take place, one would require not only technology, but appropriate policies which would enable such decentralized operation.

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