The 2G Spectrum Scam

One of the fundamental problems that has been plaguing India ever since Independence has been corruption, especially at the national level. However, with a competitive media industry that's trying its hardest to hold the leaders accountable, the public is increasingly becoming more conscious and aware of the criticality of the situation.

Amongst the numerous scams, both in the public and corporate sectors, that were brought to light in 2010, the 2G spectrum scam probably hit the hardest. Government officials, including the then Minister of Communications and Information Technology, Mr. A. Raja, were accused of illegally undercharging mobile service providers for frequent allocation licenses, which they would use to create 2G subscriptions for cell phones. As per the report submitted by the Comptroller and Auditor General based on money collected for 3G licenses, the nine companies that purchased the licenses in 2008 paid the telecommunications division of the Ministry Rs. 10,772 crore (US $2.34 billion), when the expected amount for this licensing was Rs. 176,700 crore (US $38.34 billion). The main groups involved included the politicians who authorized the sale of licenses, the bureaucrats who implemented the policies, the corporations who bought the licenses, and a few media persons who mediated between the politicians and the corporations. Within the last group, the most controversial figure was Nira Radia, a former airline entrepreneur turned corporate lobbyist who was accused of influencing the decisions of A. Raja. Her phone conversations with the politicians as well as corporate figures were tapped by the Income Tax Department on orders by the Home Minsitry and the Prime Minister's Office. The leaking of these tapes as well as lawyer and politician Subramaniam Swamy's complaints against A. Raja in the Supreme Court were what finally brought the scam to public notice in late 2010. Two prominent media professionals, Barkha Dutt, an NDTV journalist, and Vir Sanghvi, a Hindustan Times editor, were known to have lobbied for A. Raja's appointment as minister and editor articles to reduce the blame in the Nira Radia tapes, respectively. Also, in early November 2010, Jayalalithaa, head of the opposition party (AIADMK) in the state of Tamil Nadu, accused the current Chief Minister M Karunanidhi of protecting A. Raja from corruption charges. A. Raja was forced to resign by mid-November. In response to the scam, Kapil Sibal, who replaced the A. Raja as the Telecom Minister, stated that the notional losses quoted were a result of erroneous calculations on the part of the CAG, and the actual costs are nil.

Whatever the case, this illustrates not only the corruption, but also the casual approach taken by the Congress administration towards the scam. Several media sources are blaming Prime Minister Manmohan Singh's government as the most corrupt in the country since Independence.

Closing Thoughts on the Semester

This post is exclusively about my experiences in "Information 3.0: Exploring Technological Tools," an I-series course offered at the University of Maryland, College Park, that I took during this past Fall semester. The only way to describe it is "unlike any other." It's a course that teaches you how to examine the advantages and disadvantages of using various Internet and mobile applications, learn about people’s general attitudes and behaviors with regard to this type of media, and answer some tough questions on the future of technology and the spread of information. Moreover, it helps you get a grasp of some of the functions of technological tools that currently exist as well as predict at least some of the near endless possibilities that advancement in this field will bring.

            My mind has perpetually been in a state of conflict when it comes to understanding what being “technologically literate” really means. Does it mean having all the latest gadgets there at your disposal? Or does it mean having a reasonably good understanding of their operations and usefulness? Should I even care? On the one hand, I don’t want to feel pressured into purchasing the “classiest” devices in the market, but on the other, I don’t want to be left behind. I presume many people feel the same way. This was one of the many reasons why I decided to take Info 3.0. Now, I’ve understood that assessing the actual worth of a device or application is essential to making a cost-effective decision on whether or not to purchase. This doesn’t only apply to purchases, but even to tools that are free, such as many social-networks. Throughout the semester, my classmates and I have been engaging with Twitter and Facebook to upload technology-related news and personal events real-time. In relation to my blog-topic, I had also taken a survey to analyze the effects social-networking is having on college students in India. (A more elaborate explanation of this is provided in one of my previous posts). Thus, almost every project and discussion we’ve had in this class has led us to this question – Are we becoming too dependent on technology? While the answer does vary from individual-to-individual, the fact of the matter is that there will come a point, most probably in our lifetime, when every aspect of our life, from our work to our family to our entertainment, is digitized. Therefore, it is imperative that we prepare for this by evaluating technology at each step of the way and identify the features that are more useful to us than others.

           Our classroom discussions this semester have spanned a wide variety of topics including online privacy and security, netiquette, searching vs. surfing, Internet and cell phone dependence, mobile applications, blogging, photojournalism, social-networking, education and gaming. Some of the most interesting aspects of this class were that we were allowed to use laptops for every class and we got an iPod Touch towards the end of the semester on which we took a couple of interviews using a recording app. Overall, I recommend every student to take this class so that you can find out for yourself what it means to be technologically literate!

Technology in India - Past, Present and Future

Every person in India who lived through the last decade can experientially envision a more technologically-advanced future for him- or herself. The 2000s saw the highest growth in wireless connectivity in the world. TIME Magazine reports that in 2000, the number of cell phone subscribers was 2 million and that number has climbed to 545 million in early 2010. Currently, India is adding about 15 million mobile users on average per month. Not only has this rapid growth in the telecommunications market opened several doors for many of the nation’s rural poor, but it has benefitted the economy as a whole. With cell phones, individuals and businesses are managing their time better and have become more efficient in their day-to-day work. As per the June-August 2010 Performance Indicator Report released by the Telecom Regulatory Authority of India (TRAI), 213.81 million of the total 635.51 million wireless subscribers (approximately 34%) are subscribing to data services as well.

            During my interview with Mr. Deb Dutta, who is the Counselor of Science and Technology at the Embassy of India in Washington, DC, I asked him to explain some of the reasons for the tremendous expansion of this industry. He stated that “till the last decade, in India, telecommunications wasn’t considered infrastructure. So there wasn’t much investment in ‘hard infrastructure’ in the form of telephone lines.” A second issue was the digital divide between urban (30% of the population) and rural (70% of the population) India. The government realized the need to overcome this situation by liberalizing its policies and opening the wireless telephony market. The competition amongst the numerous service providers drove down prices and made cell phones more affordable to the public. As many rural dwellers still don’t have access, there are several operators still entering the market. Mr. Dutta pointed out that the government predicts 97% of India will be connected through wireless telephony by 2014. In his opinion, the governments’ steps have not only resulted in a more technologically-advanced nation, but have also contributed to a certain level of social-equality amongst the people.

            While wireless penetration has risen enormously in the last decade, Internet penetration stood at a meager 7% by the end of 2009. According to TRAI’s latest report, the total ‘Internet Subscriber Base’ stood at 16.72 million between June and August 2010. Other sources such as InternetWorldStats.com report the number of ‘Internet users’ in the country to have reached about 81 million by late 2009. This figure is also corroborated by the CIA World Fact Book. The wide discrepancy exists because most Internet users in India, unlike in developed nations, do not have their own connections and instead regularly access the net in cyber cafes. As a result, each subscribed connection has multiple users. All the same, the overall figure of users still remains low when compared to that of wireless telephony.

With regard to Internet penetration, Mr. Dutta stated that the requirements for infrastructure to support Internet connectivity are greater. Infrastructural bottlenecks with respect to fiber-optic cables, satellite connectivity, etc., along with limited rural electrification have restricted the use of Internet outside urban areas. However, the government is well aware of these shortcomings. The new IT and Telecom Policies have laid considerable emphasis on improving rural IT infrastructure with the overarching aim of sharply increasing Internet penetration. The plan is to use the Internet to bridge the communication gap that exists in areas that are poorly connected by hard infrastructure such as roads. It is felt that because of the relatively low cost of IT infrastructure, deficiencies could be easily addressed in a short span of time. It is also hoped that once the process gathered momentum, the growth in the number of users would mirror the explosion witnessed in wireless telephony.

            From the typical Indian student’s perspective, it is important to analyze whether advancements in technology as well as greater accessibility are transforming his or her experience in the classroom and, if so, how. Interestingly, in an article written by Jeffrey Young on October 3, 2010 in The Chronicle, it says that Indian companies are spending millions of dollars in corporate-training programs for their new employees and the classrooms they use are much more high-tech than those at several universities. When Young visited Infosys, the software giant that helped start India’s booming technology sector, he was stunned by the grand and futuristic architecture on campus. In one of the classrooms he entered, “each seat had its own PC, and most students had opened a copy of the instructor's PowerPoint presentation and followed along on their own screen, sometimes scrolling back to see what they had missed, sometimes looking ahead.” Not a single student went on Facebook or any other diversion. Of course, if they want to be paid, they are forced to concentrate. The trainees there said their professors in college delivered their lectures in the typical chalk-and-talk method, which they feel wasn’t too effective. Now as several urban universities are “smartening up their classrooms [by] adding Wi-Fi, projectors, and computers,” many professors feel they are losing the attention of their students. And the debate over technology continues…

Social-Networking in India

In the contemporary world, social-networking is probably the most-commonly used Internet application. Therefore, analyzing the state of social-networking and the affects it is having on people is critical to understanding their perceptions and behaviors on the web. It is interesting to see the facts and figures that are emerging from developing countries with regards to this topic as it gives us a glimpse of how widespread social-networking has become and how it is making our world smaller and faster. However, the question is – is it making us smarter? Or even social?

According to an article in DanceWith Shadows.com, in July 2010, Facebook announced that its user-base in India had crossed 12 million. To put this in perspective, the number of Internet users in India stood at about 81 million at the end of 2009.  Even though the percentage penetration of Facebook across the total population is just about 1%, which is less than most other countries, Internet penetration as a whole stood at about 7% in 2009.  It is evident that the site has gained a lot of momentum in India, especially in urban areas. According to a report by Facebook India, Indian users alone upload more than 53 million photos in a month and mobile usage has increased nine-fold in 2010.

So what is it used for? Adults use it primarily for connecting with old friends and classmates, while teens use it mostly for posting details about their everyday life. At one point, Orkut used to be the most popular social-networking site. But Facebook has beaten it hollow. In order to better understand social-networking attitudes, I conducted a survey of 18 college students (all under 20 years of age) residing in various Indian cities. Here are some of the questions I asked and the responses I got (in tabulated form):

As a proportion of the total time you spend on the Internet, how much time to you spend on social-networking sites?

I spend no time on social-networking sites I spend a quarter of the time on social-networking sites I spend half the time on social-networking sites I spend three-quarters of the time on social-networking sites I spend all my time on the Internet on social-networking sites

2 6 3 6 1

11% 33% 17% 33% 6%

What is the primary social-networking site you use?

Facebook Orkut MySpace Twitter Hi5 Other

16 1 0 0 0 1

89% 6% 0% 0% 0% 5%

What do mainly use a social-networking site for? Check all that apply.

Casual conversations with friends Making friends with strangers Reuniting with old friends Reporting events in the news Looking for relationships Business/Marketing/Networking Entertainment/Sharing Photos and Videos Other

15 0 13 0 0 2 8 0

88% 0% 76% 0% 0% 2% 8% 0%

Do you own a cell phone? If so, what type?

I don’t own a phone I own a standard cell phone I own a smart phone (iPhone, Blackberry, Android, etc.)

2 12 4

11% 67% 22%

Do you access social-networking sites through your phone and to what extent?

No I only access social-networking sites through my phone I usually access social-networking through my phone I occasionally access social-networking sites through my phone Even though I can, I prefer not to access social-networking sites through my phone

12 0 0 3 3

67% 0% 0% 17% 17%

Do you feel uncomfortable when you get friend requests from strangers?

Never had the experience Yes No

0 8 9

0% 44% 56%

What would be your response to the situation above?

I’d accept their request I’d reject their request I’d ignore their request I’d block them

1 8 7 1

6% 44% 39% 11%

Who do you think make up the majority of stalkers on social-networking sites?

Family/Friends Complete strangers

10 7

56% 39%

Privacy Settings - Do you think they are effective?

I’ve not put any privacy settings I’m satisfied with my privacy settings I’m not satisfied with my privacy settings

1 14 2

6% 78% 11%

Do you think you spend too little/too much time on social-networking sites?

Too little Too much Just enough

2 4 11

11% 22% 67%

What do you gain from social-networking? Check all that apply.

I can just be myself online It helps me relieve stress I like interacting with several people simultaneously I like learning more about other people It’s a waste of my time, but I just like staying connected Other

5 4 9 4 6 2

29% 24% 53% 24% 35% 13%

What are some of the conclusions we can draw from the results? Students in India are using social-networking sites mainly for communicating with their peers and for entertainment. Clearly, using such sites as tools to report news events or network on a professional level does not seem to be their primary use amongst this group. They agree that social-networking is good for getting connected with friends and having access to many people simultaneously, but a lot feel it is a waste of their time. Most students do not access social-networking sites from their phone, which is expected as the majority own feature phones and not smart phones. As far as privacy goes, most students are satisfied with their privacy settings and don’t feel threatened by getting friend requests from strangers. However, instead of blocking such people, most people only reject their requests. Overall, students are satisfied with the amount of time they spend on such sites.

Graphs Illustrating the State of the Internet in India

Trends in the Number of Active Internet Users from 2000-2009

Trends in Internet Usage in Urban vs Rural Areas

A Demographical Distribution of Internet Usage 

Distribution of Internet Usage by Place of Access

Trends in Purpose of Internet Usage by Urban Dwellers from 2008-2009

Source: http://trak.in/tags/business/2010/04/07/internet-usage-india-report-2010/

Rural Connectivity and the Economic Impact of Mobile Phones

Now that we’ve looked at the history of Internet and mobile services in India as well as people’s general attitudes towards their adoption, let’s look at how the rapid distribution of  mobile phones have changed the face of the economy, with special focus on rural penetration.

As part of the Vodafone Public Policy series, a study led by Professor Rajat Kathuria of the Indian Council for Research on International Economic Relations (ICRIER) was conducted in January 2009 to analyze the impact of telecommunications on economic development in India and compare its progress to that of other developing nations. State-level data was collected to investigate the impact of mobile phones across states, economic sectors and population segments. The results of the econometric analysis that was performed suggest that there is a causal relationship between higher mobile penetration (mobile subscriptions/population) in a region and higher economic growth, by 1.2% points a year more on average for every 10% increase in the penetration rate. The study also measures to what extent the benefits of the 8-10% growth rate are trickling down to the poorer socio-economic groups. The study indicates that in the agriculture and small and medium enterprise sector and even amongst the urban slum dwellers, access to telecommunications is an important to realizing productivity. Citizens who have mobile phones can tap more easily into the benefits of information and opportunity, and thereby economic growth.

While 2008 saw the growth in telecommunication connections reach 10 million per month, certain harsh realities have been overlooked: (a) Teledensity lags behind other developing nations at similar stages of development (b) Many less developed states in India, such as Bihar, Uttar Pradesh, Orissa and Madhya Pradesh and Assam have penetration rates of less than 20%.

The growth of mobile in India can be seen as an outcome of a compelling technology and an increasingly liberal policy environment. While the growth of mobile is accelerating, the growth of fixed lines is trending down. In March 2008, mobiles accounted for 86% of all telephones in India, and by October 2008 this number had increased to 90%. Contrast this with the situation in 1999 when mobile constituted just 5% of all telephones. The study slightly underestimated the number of subscribers there would be in 2010 (540 million) as the figure has currently gone beyond 600 million.

Mobile density across states and between urban and rural areas to a large degree reflects the differences in per capita income across states. The simple correlation coefficient between per capita income and mobile density for 2008 is 0.87 (where 1 would indicate perfect correlation). Yet another determinant of penetration is how early the state or region started liberalizing telecommunications. Despite the massive increase in mobile density, access is still skewed towards urban areas where much of the industrial base is located. However, the study does cite some reasons to be optimistic:

(1)   Urban teledensity (all attributable to mobile growth) increased by 34% while rural teledensity increased by 62% from March 2007 to March 2008, the disparity reflecting the low rural base (These figures have changed tremendously since 2008. The more recent ones are available on one of the previous blog posts).

(2)   Until around 2008, the focus of mobile operators’ attention had been on the more lucrative urban markets. High cost of infrastructure rollout in less dense rural areas and affordability for the rural population were big hurdles. But now infrastructure rollout in rural areas is now eligible for subsidy and all major providers have reported future plans for expansion in rural India.

Today’s mobile technology has the potential of reducing the digital divide. The authors of the report believe that at the policy level, there is a need to recognize the significance of wireless, both for delivering voice and for data services, and to stimulate the installation of backhaul infrastructure in rural area through the use of incentives.

3G Adoption in India

To better understand the attitudes of most Indians with regards to mobile devices, I looked at a study published in June 2010 in the International Journal of Next-Generation Networks. Entitled “The Forecasting of 3G Market in India Based on Revised Technology Acceptance Model,” this study was a collaborative effort by some renowned Indian physicians, professors of engineering, and application developers. They define 3G services to include “wide-area wireless voice telephone, video calls, and wireless data, all in a mobile environment… [3G] allows simultaneous use of speech and data services and higher data rates.” 3G has been made possible in India as a result of 2-8 Mbps bandwidth availability. Some of its applications include (a) Mobile TV, (b) Video Conferencing, (c) Tele-Medicine (where a remote person can be given attention by a doctor located at a distant place), (d) Location-Based Services, and (e) Video On-Demand.

To assess the factors affecting adoption of 3G services in India, the researchers used the following measures: (1) perceived usefulness, (2) perceived risk, (3) perceived ease of use, (4) individual characteristics, (5) cost of adoption, (6) perceived service quality, (7) apprehensiveness, (8) subjective norms, (9) perceived lack of knowledge, and (10) intrinsic motivation. The researches collected their data by surveying, emailing and interviewing students from schools/colleges/institutions in urban areas, employees of Government/Private sector and highly educated housewives who use 3G services. Of the 400 respondents, 65% were male and 45% were female. The respondents were asked to assess the eight listed parameters with a set of statements on a 5-point Likert scale, ranging from 1 (strongly agree) to 5 (strongly disagree).

The results were tabulated as follows:

Item	1	2	3	4	5
Perceived Usefulness	12.5	60	25	2.5	0
Perceived Risk	62.5	37.5	0	0	0
Perceived Ease of Use	37.5	50	12.5	0	0
Individual Characteristics	50	25	25	0	0
Cost of Adoption	50	37.5	12.5	0	0
Perceived Service Quality	25	50	25	0	0
Apprehensiveness	50	25	25	0	0
Subjective Norms	0	50	37.5	12.5	0
Perceived Lack of Knowledge	12.5	37.5	25	12.5	12.5
Intrinsic Motivation	37.5	37.5	25	0	0

From the results, it is clear that perceived risk and cost of adoption have the greatest (negative) effect on Indians’ attitudes towards using 3G services. The next two items that has a strong (positive) effect is perceived ease of use and, consequently, perceived usefulness. Intrinsic motivation and perceived service quality play a significant role in determining people’s attitudes as well. Apprehensiveness and individual characteristics are slightly less significant. Surprisingly, subjective norms and perceived lack of knowledge have no effect.

The data presented in this study is useful not just to telecommunication companies, service providers, businesses and banking services, but to the general public too. Yet, there are certain limitations that the researchers themselves note. First, the sample size is relatively small as compared to the number of mobile users in India. Second, alternative models should be considered in future research to make comparisons about which model best represents the typical Indian consumer in relation to the adoption of 3G services. A third shortfall is that this study was limited to urban settings. To truly examine the success story of the telecommunications market, rural penetration and connectivity are important factors to acknowledge as well.