December 14, 2016 4:12:44 am
With less than 25 per cent of the 65,475 gram panchayats in the country with optic fibre connectivity having active internet under the BharatNet project, the success of Centre’s push for digital payments is expected to depend on the status of this key programme of the government to improve broadband penetration in India.
Out of the 65,475 gram panchayats where optic fibre cable has been laid, only 14,569 gram panchayats across 22 states have active connectivity as on December 6, according to Bharat Broadband Network Ltd.
A senior official involved with the implementation process told The Indian Express that with the current model of BharatNet, while the government may succeed in getting infrastructure laid as per its target of covering 1,00,000 gram panchayats by March 2017, it may not be able to provide active connectivity in these hinterland areas.
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“Connectivity is a very serious problem. Not much thought has been put into connectivity. BharatNet cannot function till public-private partnership (PPP) model is not implemented. Now wherever the infrastructure has been laid down, it should be bid out to operators to find customers, maintain, collect payments, and then give a fixed amount to the government. It is not the government’s job to do marketing, it should be done by these service providers,” the official said.
In February this year, the Telecom Regulatory Authority of India (Trai) in its recommendations for an implementation strategy for BharatNet had said that a PPP model should be the preferred means for implementation.
“A PPP model that aligns private incentives with long term service delivery in the vein of the Build-Own-Operate-Transfer (BOOT)/Build-Operate-Transfer (BOT) models of implementation will be the preferred means of implementation. The scope of the concessionaire’s work should include both the deployment and implementation of the OFC and other network infrastructure as well as operating the network for the concession period. Concessionaires shall be entitled to proceeds of revenue from dark fibre and/or bandwidth,” Trai had said in its recommendations.
The official cited above said that as per the current model, one party is creating the infrastructure, another party will maintain it, then government will sell this infrastructure. The buyer will ask for a service-level agreement and if that agreement is not fulfilled, he will complain to the government. The government will then ask the party maintaining it to fulfill the service-level agreement. “This could cause a contention between the operating and the maintaining parties, and the government will be stuck in between,” the official said.
Consultancy firm Deloitte in its suggestions for implementation of the BharatNet project had said that under the BOOT model telecom service providers, if part of consortiums, would leverage their existing network assets, where available, to reduce the extent of greenfield fiber deployments. “This improves utilisation of their existing assets while reducing cost and saving time for the programme,” Deloitte said.
The Broadband India Forum (BIF) had also suggested PPP means to make the BOOT model more attractive. “The implementation/execution agency has the right to earn revenues from the project and hence the issues related to cost, time & quality of work can be overcome. However, to make it more attractive, PPP model with long term lease (at least 25-30 years instead of the proposed 10 years) should be permitted,” the BIF said in its suggestions to Trai.
As per the current model, three public-sector undertakings – Bharat Sanchar Nigam Ltd, RailTel Corporation of India, and Power Grid Corporation of India – are laying down the optic fibre cable, and as of December 11, have installed 1,50,189 km of optic fibre cable throughout the country. Under the first phase of the BharatNet project, these state-owned firms are expected to install another 2,22,854 km of optic fiber cable.
The argument for the PPP mode also comes in the backdrop of the fact that PPP models have largely been successful for the purpose of infrastructure development in the country, alongside effective implementation of large-scale projects. According to the PPP Cell of the Department of Economic Affairs, 249 road projects worth over Rs 2.87 lakh crore have been undertaken under the said model in the last 11 years. Also, 60 per cent of the airport traffic in the country is managed under the PPP model.
“PPPs seek to combine the private sector’s capacity for delivery with the government’s role as an enabler and regulator to overcome market failures,” the Trai had said.
However, the telecom sector regulator also said that adequate precautions must be taken to minimise the risks arising out of the PPP models. “In India, unsuccessful PPPs have suffered from weak feasibility studies, over aggressive bidding, lengthy conflict resolution mechanisms, ambiguous risk allocation, and ambiguous tariff adjustment guidelines,” it said. To implement the PPP model, it suggested that tendering be carried out at the level of each telecom circle.
The BOOT model of public-private partnership also runs the risk of monopoly during the implementation of the project by the way of vertical integration between telecom company, equipment provider and a managed services provider, if these parties collude.
Deloitte also suggested that in the BOOT model, the demand generated for these services would be built-in. “Wholesale only model of private consortium requires them to develop regional demand and services ecosystem to be profitable,” it said. “Management of network rollout by the private sector may not necessarily reduce the overall budget of the programme. However, the efficiencies of private sector organisations will ensure better value for money and ROI (return on investment),” the consultancy firm added.
Currently, the issue for private operators arises out of a lack of suitable market in the rural areas of the country. Merely laying down infrastructure without having an operator might not ultimately result in citizens in these gram panchayats receiving internet connectivity.
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