The government will come out with a revised public-private partnership (PPP) model for BharatNet project in a couple of months as no company took part in the tender that was floated in July last year to provide optical fibre connectivity to cover 3.61 lakh villages across 16 states with a total cost of Rs 29,430 crore. Of this amount, the government was providing Rs 19,041 crore as viability gap funding.

When the tender was floated, around 50 companies, including telecom operators, internet service providers (ISPs), over-the-top (OTT) players and original equipment manufacturers (OEMs) engaged with the government during two rounds of bid interactions. The government issued clarifications for around 3,000 queries from the prospective bidders but despite that no bid was received.

The industry had highlighted that some of the terms and conditions of the tender were too onerous for the private players while the revenue sharing model proposed by the government also made no business sense. The industry had repeatedly asked the government to relax certain conditions but when the demands were not met, most of the players decided to stay away.

“An analysis with reasons for failure has been done after listening to the industry. A revised PPP strategy along with other options is being worked out and a final decision in this regard is expected in a couple of months,” said a source aware of the details.

Further, going forward, it is possibile that instead of Bharat Broadband Network (BBNL), BSNL may become the implementing agency of BharatNet. Bharat Broadband Network (BBNL), a special purpose vehicle was primarily formed to implement the BharatNet project but recently, the government is deliberating merging BBNL with BSNL. According to sources, the idea to wind up BBNL and assign its functions to BSNL was mooted a few months back and few meetings around the issue has already taken place, but so far, no final decision has been taken.

The BharatNet project has always been plagued with several delays and quality issues. Earlier also, the government decided to lease BharatNet fibre to private telecom operators in rural areas and firms like Bharti Airtel had taken the fibre on lease. But running operations on BharatNet fibre turns out be a difficult task for telecom operators.

Recently, Bharti Airtel CEO (India and South Asia) Gopal Vittal had highlighted that there were challenges in BharatNet in terms of service-level agreements (SLAs). “We have seen that wherever we have taken BharatNet fibre, we have had a lot of issues around the SLAs in relation to our own fibre that we have rolled out, which means serious issues around quality,” Vittal said during a recent meeting.

As earlier reported by FE, with this additional allocation of Rs 19,041 crore for BharatNet project, the total outlay for it has increased to Rs 61,109 crore, which includes the already approved amount of Rs 42,068 crore in 2017. However, this does not strain the government’s finances in anyway as funds for BharatNet are provided from the universal service obligation fund where around Rs 55,000 crore is lying unutilised.

Telecom operators contribute 5% of their adjusted gross revenue to the USO fund.