TRAI suggestions to revive India’s optical fiber project

National Broadband plans in countries
Telecom regulator TRAI has recommended public-private partnership (PPP) model to revive Bharat Broadband Network (BBNL), India’s national optical fiber project.

The NOFN project aims to connect 250,000 Gram Panchayats (GPs) by laying 600,000 km of optical fiber in 3 phases: 100,000 GPs by March 2015, 100,000 GPs March 2016 and 50,000 GPs by March 2017. Due to bad management of government officials, the connectivity project suffered and TRAI took up the issue by issuing another set of recommendations.

According to BBNL, the tenders for activities of trenching, ducting and laying fiber have been signed for over 50,000 GPs, but only 3,384 GPs had been connected as of November 2015.

The BBNL project has already negatively impacted India’s broadband projections. India has more than 120.88 million broadband subscribers — largely concentrated in Andhra Pradesh, Delhi, Karnataka, Kerala, Maharashtra and Tamil Nadu, with 27.20 million rural subscribers.

The National Telecom Policy of 2012 (NTP 2012) aims to ensure broadband on demand by 2015, and 175 million broadband subscribers by 2017 with a minimum speed of 2 Mbps and up to 100 Mbps on demand.

The negative impact on the cost of the project is significant. According to estimates, there will be increase in cost of the project under the BharatNet from the previous cost estimate to Rs 72,778 crore, and increase penetration by 1.9 percent of the estimated population in 2018-19.

Last year, an expert committee had suggested a model involving the participation of Central public sector units in some states and the private sector for the engineering, procurement and construction (EPC) contracts for the fiber program.

Telecom Regulatory Authority of India (TRAI) – headed by RS Sharma, said that a PPP model works better than EPC model.

BBNL targets

Connect 2.5 lakh Gram Panchayats with broadband
Lay 600,000 km of incremental optical fiber in three phases by 2017
To spend more than Rs 72,778 crore

“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 be the preferred means of implementation,” said the telecom regulator in its recommendation titled Implementation Strategy for BharatNet.

At present, a special purpose vehicle Bharat Broadband Network under the Telecom Ministry – headed by Ravi Shankar Prasad — is handling roll out of optical fiber network. State-run telecoms such as BSNL, RailTel and Power Grid are running the broadband network project.

TRAI said the task of rolling out broadband network should be given to a concessionaire selected through reverse bidding process to arrive at fund to be provided by the government.

“A BOOT operator having incentive to complete the project in time, as his revenue stream from the project starts only on its completion, is more likely to anticipate problems and make all the efforts to resolve them early so as to complete the project well in time. The risk of delay in completion of the project is relatively less in such model than in EPC model,” TRAI said on Monday.

TRAI added that the current proposal envisages the network to be auctioned at the district level. This concept is fraught with the 28 danger of creating an administrative nightmare. Implementation of this proposal will result in a complex and unmanageable web of contracts. Assuming that one entity is auctioned one pair of fiber, there will be a minimum of a dozen contracts at each district. This will put the total contracts pan-India at 6,000 at the minimum.

The telecom regulator said it is desirable to structure the private sector’s involvement in a manner that aligns long-term incentives with the State’s social and public service delivery objectives.

The TRAI recommendation primarily focuses on the implementation part of the optical fiber project in India.