 "Private help may not hasten BharatNet rollout")
Last month, the Telecom Regulatory Authority of India, or Trai, suggested that the private sector should be involved in the implementation of BharatNet, the ambitious project to link all the 250,000 gram panchayats through broadband. As rural broadband is prone to "market failures as well as government failures", private-public partnership is the "only viable option," Trai said.
The market failure it talked about was the unwillingness of private telecom service operators to put up an optical fibre network in the rural areas because the costs outweigh the benefits. And the government failure Trai referred to was the inordinate delay in the project.
Started in 2011 by the United Progressive Alliance government, BharatNet, earlier known as the National Optical Fibre Network, was supposed to get fully implemented in the space of two years. Till date, there is only one fully digital state in the country: Kerala. Apart from the southern state, BharatNet has managed to digitally connect only Chandigarh, Puducherry and parts of Karnataka.
While the project entailed laying about 700,000 kilometres of optical fibre, the distance covered till the end of February was just 124,797 km, or less than 18 per cent. Worse, BharatNet has faced huge cost overruns: against the initial estimate of Rs 20,000 crore, it is now expected to cost Rs 75,000 crore.
The government says the tardy progress is over issues such as the right of way and problems with contractors.
Whatever be the reason, the result is poor connectivity over large swathes of India. According to the International Telecom Union 2014 State of Broadband Report, India is ranked 142nd out of 166 nations in internet usage, below Sri Lanka and Bhutan. Also, India is among the 42 least connected countries in the world, with 11 countries from Africa ranked higher than it.
This is what has perhaps prompted Trai to suggest involving the private sector to speed up the project. "A PPP model that aligns private incentives with long-term service delivery in the vein of the Build-Own-Operate-Transfer/ Build-Operate-Transfer models of implementation should be the preferred means of implementation," Trai said.
Currently, a special purpose vehicle, Bharat Broadband Network, incorporated in 2012 under the Union communications and IT ministry, is handling the rollout of the optical fibre network. The project is being executed by state-owned BSNL, Railtel and Power Grid in the ratio of 70:15:15. Till date, no private player has been taken on board for laying the optical fibre.
The opportunity for the private sector sure is there if the government accepts Trai's suggestions - the money for BharatNet is coming from the Universal Service Obligation Fund to which all telecom companies contribute.
Nagging problems
But experts are doubtful if handing over the work to the private sector will help because they too will face the core obstacle of the right of way. Private companies say the problem needs to be addressed before they come on board.
To resolve this, Telecom Minister Ravi Shankar Prasad has been actively seeking the participation of the state governments in BharatNet. About 18 state governments have already agreed to the Centre's proposal to set up SPVs in conjunction with states for laying down the optical fibre network, which may put the project on the fast lane.
Trai has stressed that the right of way must be provided free of cost by all states to the executing agency. This is the most fundamental requirement for this project.
There could be other issues as well. A senior executive from a telecom company says there is no clarity on monetisation for private players in the PPP model, which is why it may not attract huge investments from the private sector.
Cellular Operators Association of India (COAI) Director General Rajan Mathews says there has to be more clarity on the current network status of BharatNet and where private players will be involved for development and implementation.
In an interview in December, Prasad had said the government would consider private players for marketing. The department of telecom is now in the process of finalising the marketing strategy for BharatNet.
According to a senior officer in the ministry, the government might outsource the marketing activities to private players and not involve them fully in the project despite the regulator's recommendations. "The government may bring in private players for outsourcing operations and management of BharatNet in a contract estimated to be worth about Rs 1,000 crore," the official says.
BharatNet needs to be completed quickly. A recent report by BMI Research, a Fitch Group company, has said that any further delay in BharatNet poses a risk to the returns on investment in new large capacity data centres by global players such as Amazon's Web Services and IBM.
