Will broadband quality improve to support digital payment?

digital-worldIndian telecom operators are gearing up for improving broadband quality and coverage to benefit from the anticipated boom in the digital payment system across the country in the wake of the current currency crisis.

The first important development is the formation of a Committee of chief ministers and experts to script an action plan and draw up a roadmap to implement the digital payment systems across the country – under NITI Aayog.

“The Committee will examine and implement measures for promoting the use of digital payment systems across the country and usher in transparency, financial inclusion and a healthy ecosystem,” said an official statement.

Low broadband penetration

Low broadband penetration in the country is a matter of concern for all the stakeholders. Despite active participation from telecom network operators and the government, broadband in semi urban and rural areas is yet to take off.

India has 171.71 million broadband subscribers as of August 2016. Out of this, 17.67 million is wired and 153.45 million is mobile Internet users. For comparison, India has 1028.88 million mobile phone connections.

“India government needs to do a lot more work in the broadband field to go up in the global ladder, said Telecom Regulatory Authority of India (TRAI) Chairman RS Sharma at a digital event in Delhi on Wednesday.

According to a whitepaper presented at ITU (International Telecommunication Union) event, India’s broadband penetration is only 7 percent. India is even behind countries like Thailand, Singapore and Malaysia in broadband penetration.

TRAI has given recommendations to the India government on using cable television network for broadband delivery. In many developed countries like the US and Europe nearly 50-60 percent broadband comes from Digital Cable TV.

Poor broadband quality

A broadband report from Twin Prime says network access times for LTE and HSPA are very similar for 90 percent of users in India. LTE is better by 50ms, meaning it takes a device up to 180-235ms to get a response from one of its accelerators. Access times are higher for 3G and 2G networks in India; it takes 1.2sec for the slowest users to get a response from the network for 3G.

A quick comparison with the US reveals that LTE response times lag for about 75 percent of users, but only by 30ms. Therefore, India and the US are fairly similar as it pertains to the quality of their LTE networks.

No broadband coverage

Indian broadband operators do not ensure wide coverage in rural areas and semi-urban locations in India. This will be a major drawback for the expansion of digital payment systems.

Free Wi-Fi driven Internet is still a dream for many Indians in rural areas. During the ongoing currency crisis, several millions of Indians travelled more than 10 kms to reach his nearest bank and stood in queue for hours to make payment. This was widely seen in rural India, where broadband penetration is low.
current-issues-and-digital-payment-solutionsDigital payment committee

The BJP-led India government is yet to get full support from all chief ministers for the white currency movement. 

The committee includes Andhra Pradesh Chief Minister Chandrababu Naidu, Odisha Chief Minister Naveen Patnaik, Madhya Pradesh Chief Minister Shivraj Singh Chouhan, Sikkim Chief Minister Pawan Kumar Chamling, Maharashtra Chief Minister Devendra Fadnavis, Puducherry Chief Minister V Narayanasamy and NITI Aayog Vice Chairman Arvind Panagariya as its members. NITI Aayog Chief Executive Amitabh Kant will be the Member Secretary.

Five experts will assist the committee as special invitees in formulating the action plan and preparing the roadmap to implement the digital payments systems. The experts are former UIDAI Chairman Nandan Nilekani, Boston Consulting Group Chairman Janmejaya Sinha, netCORE Managing Director Rajesh Jain, iSpirit Co-Founder Sharad Sharma and IIM-Ahmedabad Professor Jayant Varma.

A part of the expert members in the committee are the supporters to the BJP govenrment at the center.

The committee will outline measures for expansion and adoption of the digital payments systems like cards (debit, credit pre-paid), digital wallets or e-wallets, internet banking, Unified Payments Interface and banking applications.

Other terms include preparing a roadmap for the administrative machinery in the states to adopt digital modes of financial transactions and to identify and address the bottlenecks and indicate solutions for moving towards a digital payments economy.

India government needs to take care broadband needs of rural Indians before start talking about digital payments. Language barrier and low awareness about digital payment need to tackle immediately.

Baburajan K
[email protected]