Trai could help drive broadband penetration
In a departure from the past, the Telecom Regulatory Authority of India (Trai) has recommended a public-private-partnership (PPP) mode for the national broadband project, BharatNet, that aims to build a highly scalable network infrastructure to provide affordable broadband connectivity nationwide by 2017. It aims to provide 2-20 Mbps connections for all households and on-demand capacity to all institutions. Trai’s decision comes after repeated delays in rolling out the National Optic Fibre Network (NOFN)—that aimed to connect 2.5 lakh gram panchayats—by state-owned Bharat Broadband Network Limited (BBNL). Trai has suggested that the role of the private sector company should include not just deployment but also implementation of the optic fibre cable (OFC) network. It considered three models—central PSUs-, state government- and private sector-led—before it suggested the PPP model. The regulator believes that since rural broadband provision is prone to market as well as government failures, employing a PPP-based model to expand broadband coverage is a viable option.
But, for that to happen, the private sector has to have control of the network for a concession period of at least 25 years. The regulator has suggested quite rightly that the period could be extended in blocks of 10/20/30 years on the mutual agreement of the government and the concessionaire. However, it all hinges on how concessionaires are selected. Trai has suggested that they be picked through a reverse-bidding process to determine the viability gap funding (VGF) sought. The concessionaire that seeks the lowest VGF would ensure that support from public funds is rational. The biggest problem that the private sector faces relates to right of way (RoW). Trai has rightly stated that provision of free RoW is a necessary and non-negotiable pre-condition to the successful deployment of BharatNet. While the introduction of the PPP model could ensure the success of BharatNet, Trai wants capacity enhancement in BBNL—that can be achieved by bringing in professional management to restructure the organisation, on the lines of, say, the Delhi Metro Rail Corporation. While the private sector can execute the project, one needs to factor in the high probability of the viability of rural broadband being much lesser than that in urban areas. It remains to be seen how demand-risk can be handled by the private sector. Or, is that something that the government needs to factor in right at the beginning?