Centre for Internet & Society

For better policies, decision-makers need to know their own and others’ biases, and consider what others are doing, writes Shyam Ponappa in an article published in the Business Standard on 4 November 2010.

Why do the same facts regarding people’s needs for ICT infrastructure give rise to different policies? Apart from problematic motivation such as malicious intent and opportunism, even well-intentioned policy-makers may prescribe entirely divergent solutions for a given situation. This is evident if one compares India’s broadband policies with those of most countries. There are at least two reasons for this: differing perceptions of the facts, and differences in underlying beliefs and assumptions, i.e. ideology, as distinct from objective data.

Consider the facts of India’s ICT space. In one sense, there has been spectacular success in the communications sector. One statistic cited as evidence is the phenomenal increase in mobile phone subscriptions (over 12 million in September 2010). Equally, to those who focus on aspects like the shortfall in services outside the big cities and towns, or the meagre broadband coverage and its inaccessibility in rural areas (i.e. in much of the country), the communications sector falls tragically short of its potential, and requires policy change.

In this time of India Rising interrupted by the Great Recession, there is a stark contrast between the orientation of our ICT policies and that of most other countries. One area is the extent of government intervention and spending on broadband development. Governments of most advanced economies have stepped in to dramatically improve their broadband networks and policies for user access. This is not only in the EU where, historically, the approach is that government acts to extend consumer welfare, but also in America, the UK and Australia, which are considered much more free-market-oriented in their approach, and in many countries in Asia, including China. Unlike in America since Reagan, regulatory intervention in Europe is part of more supportive policies at the national and local levels. But this time around, even America has embarked on a comprehensive Broadband Technology Opportunities Program, with the goals of providing access to users in unserved areas, improving access in underserved areas, supporting public interest schemes for broadband access, improving broadband use by public safety agencies, and stimulating demand for broadband, economic growth and jobs; there is also a separate Rural Utilities Service.*(Click for graph)

With regard to underlying assumptions and beliefs, an analysis on how economic doctrines affect policies by Robert D Atkinson of the Information Technology and Innovation Foundation offers a way to think through alternatives for better decisions.** His analysis is on ICT, although it can be applied to all sectors. To quote from his conclusion, for advocates and policy-makers, “differences over doctrine cause partisans to view facts differently and to focus on small segments of complex debates, leading to a breakdown of constructive dialog and much ‘talking past each other’.”

He summarises four ideologies or economic doctrines:

  • Conservative Neoclassical (CNC)
  • Liberal Neoclassical (LNC) 
  • Neo-Keynesian (NK)

Innovation Economics, also called structuralist-evolutionary, neo-Schumpeterian, or evolutionary economics (IE)

While he describes differences in nuanced detail, the simplified abstractions rendered as a logic tree in the accompanying diagram (above) show how economic beliefs affect network policies.

CNCs are characterised as being less concerned with fairness, and less likely to expect market failures. Therefore, network and broadband markets in which governments do not intervene are considered to be competitive, and require no unbundling or price prescriptions. Their bias is for pure competition.

LNCs are more concerned with fairness, as are NKs and IEs. They accept that telecommunication markets are not competitive, and that there may be market failures. LNCs and NKs would use policy to increase competition in different ways. LNCs expect more competition to lead to increased consumer surpluses. LNCs favour regulated competition, viewing more competition as better. NKs want more competition through directed government subsidies, e.g. for municipal broadband or to small companies (which they consider less rapacious than large corporations).

IEs believe broadband markets have economies of scale, and that increased competition could result in excessive and redundant investments. They consider duplication of existing, expensive infrastructure as inefficient investment. IEs view communications infrastructure as a “general purpose technology” that drives economic activity, innovation and productivity. Therefore, they advocate policies that invest in higher-speed broadband, and in extending network services to more people, favouring a national broadband policy. The US National Broadband Plan defines broadband as a “Transformative General Purpose Technology”, and most countries practise IE. Irrespective of their economic philosophies, most countries have embarked on an aggressive broadband plan.

In comparison, India’s approach does not fit any of these categories. There are no policy incentives for broadband, and actions like the spectrum auctions this year indicate a focus on collecting government revenues rather than on facilitating communication services. Whereas the OECD countries and other Asian economies are working on network resource-sharing schemes, India seems to have previous-generation preoccupations: revenue-collection-for-the-government, increasing competition per se, or abstruse technology considerations, such as loading the most traffic on every unit of commercially available spectrum, instead of maximising the economic benefits from it. Costs and benefits in the public interest are apparently ignored.

BSNL, MTNL and DD have networks that, if they could be channelled with the right mix of policies and private enterprise, could be part of the overall backbone infrastructure for open network operations, as is being done by a consortium in Singapore. If our policy-makers understand their biases as well as those of others, they could adapt beneficial policies from other countries, as demonstrated by many countries with different philosophies converging on improving broadband.

* “Broadband Stimulus Policy in Europe and the US: A Comparative Review”, Dariusz Adamski, Berkman Center for Internet and Society, Harvard Law School: http://www.nyls.edu/user_files/1/3/4/30/84/187/245/Adamski,%20SPRING%202009,%2018%20MEDIA%20L.%20&%20POL%E2%80%99Y.pdf

** “Network Policy & Economic Doctrines”, Robert D Atkinson, The Information Technology & Innovation Foundation, October 2010: http://www.itif.org/files/2010-network-policy.pdf

Read the original in Business Standard

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