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NOFN: A distant dream

Govt revises deadline for National Fibre Optic Network project that would connect gram panchayats with 100mbps broadband

Sounak Mitra  |  New Delhi 

The government has once again revised the deadline for its dream project - National Optic Fibre Network (NOFN) that would connect 2.5 lakh gram panchayats across the country with optical fibre for offering 100 megabit per second (mbps) broadband services.

The new deadline for the Rs 20,000-crore NOFN project is March 2017.Themuch-talked-about NOFN project, which was initiated in 2011 after beingapproved by the Union Cabinet during the UPA-II regime, was to be completed withintwo years of Cabinet approval.

The deadline for the project has been revisedquite a few times since the Cabinet approval.If theimplementing agency - Bharat Broadband Network Limited (BBNL), a specialpurpose vehicle of state-owned Bharat Sanchar Nigam Ltd (BSNL), PGCIL andRailtel - becomes successful in meeting this deadline, it would surely be areason for the new communications and IT minister Ravi Shankar Prasad. Prasad,on his first day in office, had the Modi government should be known for broadbandhighway.

However, it maynot be an easy task for BBNL to complete the project even by March 2017. SinceOctober 2011, BBNL has only been able to float a few notice inviting tenders.Even in some states, BBNL is yet to get the right of way that allows diggingfor the laying of optic fibre. While BBNL would need to lay more than six lakhkilometres of optic fibre across rural India, the process is yet to start.

But, a purchase order for two lakh kilometres of optic fibre is being issuedvery recently.According to atop official at the Department of Telecommunications (DoT), the project wasconceptualised without a proper study. "NOFN would connect 2.5 lakh villagesfrom the block level. But, no study was done on the details on optic fibrestill the Block level, and how healthy those fibres are.

A detailed propermapping on the fibre connecting points between the gram panchayats and theblocks," said the official, seeking anonymity.Now, after morethan three years, a consultant is being hired to execute the study.

"To ensurethat the study is accurate, a second agency is being appointed to verify thedetails given by the first consultant," said the official, indicating that with a proper mapping, the cost of the project may actually come down by 20-30%.

But, the projectcan not be completed in two years. Globally, such projects have taken much moretime, even in countries which are much smaller in size. According to DoT data,a similar project in Australia had taken 10 years to be completed, while it wasfive years in Singapore, 10 years in Malyasia, six years in Indonesia, fouryears in Argentina and four years in Brazil.

"The people who conceptualisedNOFN should have done detailed research," said the official.The DoT has saidthat the project will be implemented in three phases - one lakh gram panchayatsin the first phase to be executed by BSNL, Power Grid and Railtel by March2015, followed by 50,000 gram panchayats to be executed solely by BBNL and inthe third phase the remaining one lakh gram panchayats will be covered.

"The timeframeprojected is most unlikely to be met. The laying work of optic fibre has noteven started yet," said an official with BBNL, seeking anonymity. The officialadded that BBNL's internal assessment estimated that it will take at least fiveyears from now to complete the laying of optic fibre network. BBNL did notrespond officially. NOFN, which isbeing funded by the Universal Service Obligation Fund (USOF) that is built withcontributions from private telecom operators, is aimed to offer e-governanceservices and utility bill payment, etc for rural masses.

Experts say thatthe NOFN project does not include service offering. It is just about the layingof optic fibres. For end-to-end services, service providers will have to set uptheir own infrastructure at the gram panchayat level.

"While the initial costwas projected at Rs 20,000 crore for the NOFN project, private companies willneed to pump in much more than this amount to offer services to end customers.This may not be a commercially viable proposition, considering the fact thatthese would be low revenue markets," said an analyst with a management consulting firm.

In July 2012,former telecom minister Kapil Sibal had also made a similar statement:"The cost of the initial phase of the NOFN scheme is likely to be in theregion of 20,000 crore. A similar amount of investment is likely to be made bythe private sector complementing the NOFN infrastructure while providingservices to individual users."

So, the actual cost of the NOFN project isupwards of Rs 40,000 crore, and the entire project is actually funded by private telecom operators, considering the fact that USOF is built by takingfive% of the operators' revenue.

Rajan Mathews,director general of Cellular Operators Association of India, which lobbies forGSM telecom service providers, had recently said: "NOFN may seem to be notviable at this moment. But, this is the only way to offer broadbandconnectivity to the gram panchayat level. And this is a must to ensure thegrowth story."In any case, thegovernment is sitting on about 70% of its total USOF collection so far."

Using the money for NOFN makes more sense than keeping the USOF collectionunutilised which is actually the contribution of private operators, Mathews hadsaid.Interestingly,about 10 lakh km of optic fibre cable are there across the country (not inrural areas). It took about 15 years to cover about seven lakh km of the totalnetwork. This means, the government can put about 46,000 km of optic fibre in ayear. Also, supply may be an issue.

According to reports, India gets about 80,000 km of optic fibre annually.On the otherhand, telecom analysts say that that while BSNL has the largest presence inrural areas, it has always failed to execute projects on time. "And a projectof such a large scale...there is very little possibility that it would becompleted on time," added a senior telecom analyst with a global research firm.

Further, the DoThas approved another project to set up Government user network over NOFN forthe delivery of high speed broadband or closed user group connectivity fromdistrict headquarters and two other locations in the gram panchayats forgovernment services that can be delivered to the public along with a community access to broadband.

DoT has proposedthat the initial capital expenditure of Rs 3,750 crore the project will beprovided from the USOF, and the operating expenses of Rs 1,860 crore (excludingtaxes) will be funded by the ministry of rural development. Until the NOFN isexecuted, the proposed Government User Network is a distant dream.

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First Published: Mon, June 16 2014. 17:24 IST