NEW DELHI: The finance ministry has asked the telecom department not to entrust state-owned BSNL with the Rs 20,000-crore project to build a national broadband network to take high-speed internet to the hinterlands. It has recommended that a special purpose vehicle (SPV), consisting of many mobile phone companies, be entrusted with implementing this project, while adding that all stakeholders should be chosen through a transparent and competitive bidding process.
The telecom department had identified three business models to build the national broadband network. Its plans included funding existing operators to expand their data networks to rural India, creating a special purpose vehicle that will be supported by the government to roll out this initiative and subsidising state-owned BSNL to build this infrastructure.
In July, communications and IT minister Kapil Sibal had said that the telecom commission, the apex decision making body of the department, had approved the project to build this network that would connect all the gram panchayats utilising the Universal Service Obligation Fund (USOF). Sibal said that the initial phase of this project would cost about Rs 20,000 crore and added that a similar amount of investment was likely from the private sector towards this.
Mobile phone companies contribute 5% of their annual revenues towards this fund, which is used to support rural telephony, and the unutilised amount in this kitty is estimated to be about Rs 25,000 crore. The finance ministry has also pointed out that this will increase to Rs 36,000 crore over the next three years and added that the national broadband project would have no liability on the state exchequer.
"An SPV incorporated under the Indian Companies Act may be entrusted with the responsibility of executing the programme from stage one itself. The SPV will select the implementing agency through competitive bidding from amongst the eligible operators.
In order to expedite the process, assistance of BSNL may be taken for carrying out a detailed survey and preparation of detailed project report. BSNL may be separately paid for this work. However for abundant caution, the same may be technically vetted by a separate set of experts," the finance ministry said in its communication to the DoT.
Under the SPV model, as envisaged by the DoT, state-owned telcos will have a 49% stake with the remaining being owned by private companies, where the maximum holding by a single firm is limited to 26%. However, the finance ministry has asked the DoT to ensure that state-owned telcos have majority stake in the SPV.
The finance ministry has also said that laying the optic fibre cable and its maintenance may be done in the public private partnership model with selection of the private entity based on transparent bidding.
"The concession agreement will stipulate that the private entity will provide open access to all service providers involved in providing the last mile in the catchment area to rural households through copper wire, wireless network and cable," its communication added.
Earlier this year, Trai had called for investments of Rs 60,000 crore, which includes support from the Centre, to build a national broadband network, and proposed that a state-run agency create and run this infrastructure that will connect every village with more than 500 people by 2013. "There is an urgent need for a nationwide broadband network to reach education, healthcare and other services to all the villages," Trai had said.
The telecom department had identified three business models to build the national broadband network. Its plans included funding existing operators to expand their data networks to rural India, creating a special purpose vehicle that will be supported by the government to roll out this initiative and subsidising state-owned BSNL to build this infrastructure.
In July, communications and IT minister Kapil Sibal had said that the telecom commission, the apex decision making body of the department, had approved the project to build this network that would connect all the gram panchayats utilising the Universal Service Obligation Fund (USOF). Sibal said that the initial phase of this project would cost about Rs 20,000 crore and added that a similar amount of investment was likely from the private sector towards this.
Mobile phone companies contribute 5% of their annual revenues towards this fund, which is used to support rural telephony, and the unutilised amount in this kitty is estimated to be about Rs 25,000 crore. The finance ministry has also pointed out that this will increase to Rs 36,000 crore over the next three years and added that the national broadband project would have no liability on the state exchequer.
"An SPV incorporated under the Indian Companies Act may be entrusted with the responsibility of executing the programme from stage one itself. The SPV will select the implementing agency through competitive bidding from amongst the eligible operators.
In order to expedite the process, assistance of BSNL may be taken for carrying out a detailed survey and preparation of detailed project report. BSNL may be separately paid for this work. However for abundant caution, the same may be technically vetted by a separate set of experts," the finance ministry said in its communication to the DoT.
Under the SPV model, as envisaged by the DoT, state-owned telcos will have a 49% stake with the remaining being owned by private companies, where the maximum holding by a single firm is limited to 26%. However, the finance ministry has asked the DoT to ensure that state-owned telcos have majority stake in the SPV.
The finance ministry has also said that laying the optic fibre cable and its maintenance may be done in the public private partnership model with selection of the private entity based on transparent bidding.
"The concession agreement will stipulate that the private entity will provide open access to all service providers involved in providing the last mile in the catchment area to rural households through copper wire, wireless network and cable," its communication added.
Earlier this year, Trai had called for investments of Rs 60,000 crore, which includes support from the Centre, to build a national broadband network, and proposed that a state-run agency create and run this infrastructure that will connect every village with more than 500 people by 2013. "There is an urgent need for a nationwide broadband network to reach education, healthcare and other services to all the villages," Trai had said.
