The Telecom Regulatory Authority of India’s (Trai) recent move to set a tariff ceiling for broadband services offered to PM-WANI providers was expected to kick-start a scheme that has struggled to take off. Unfortunately, all that it seems to have done is reiterating the status quo. By allowing telecom service providers (TSPs) to charge up to twice their retail fiber-to-the-home (FTTH) rates from public data offices (PDOs), the regulator has merely put a stamp on existing market practices. Therefore, instead of offering a course correction, Trai has ended up reinforcing the very structural barriers that were seen to have rendered the scheme commercially unviable.
Launched with the ambitious vision of enabling millions of low-cost Wi-Fi hotspots across the country, PM-WANI was meant to bridge the last-mile connectivity gap and empower small entrepreneurs, like tea stall owners, grocery shops, railway vendors, etc., to become Internet service providers. The goal was to create a decentralised, public Wi-Fi ecosystem. Yet, four years on, the numbers are dismal with just 330,000 hotspots rolled out against a target of 10 million by 2022, and 50 million by 2030. The primary reason for this under-performance is the lack of a viable business model for PDOs. Trai had the opportunity to change this trajectory, which it chose not to. The problem lies in Trai’s logic. It has reasoned that because TSPs are already charging PM-WANI aggregators double the FTTH rate, setting that figure as a ceiling offers flexibility. But this overlooks the fundamental issue that these rates are already too high for most PDOs to absorb, given their revenue profile.
Worse, Trai’s framework lacks any substantive analysis of the market it is attempting to regulate. There is no assessment of how much data is typically consumed at a PDO, how many users log in daily, or how much revenue is generated per hotspot. There is no indication that Trai engaged in any form of demand-side mapping or business viability assessment before issuing this order. The entire pricing benchmark is misaligned with the real use case of PM-WANI. FTTH users are typically urban, high-data consumers with monthly plans. PM-WANI, on the other hand, targets users who need affordable, short-duration Internet access. These are two different markets. Trai should have bench-marked PM-WANI rates with prepaid mobile data packs, not FTTH. For instance, Reliance Jio offers daily data packs as low as Rs 11 for an hour of unlimited usage. If PM-WANI is able to provide an alternative to such mobile plans for economically disadvantaged users, it would surely be a success.
There was also scope for financial innovation through the universal service obligation (USO) fund. If Trai feared that lowering tariffs for PDOs would hurt mobile operators’ average revenue per user, it could have proposed a viability gap funding model. The USO fund, meant to subsidise rural and under-served digital infrastructure, is ideally suited to support PM-WANI operators. By offering subsidised backhaul to PDOs and compensating telecom operators through the USO mechanism, incentives could have been aligned for all stakeholders without distorting the market. In short, the need of the time was a bold rethink, but what has been offered is just a bureaucratic rubber-stamping exercise dressed up as reform. Trai has thus missed a chance to pivot PM-WANI from policy failure to success story. Unless these structural issues are addressed, PM-WANI will remain a well-intentioned but ineffective policy.