TRAI for PPP model for Bharat Net Project

The regulator says Central and State govts. can be anchor clients of the project

Published - February 02, 2016 02:05 am IST - NEW DELHI:

The Telecom Regulatory Authority of India (TRAI) on Monday recommended public private partnership (PPP) model for the roll out of the Bharat Net project that has been marred by delays.

Bharat Net seeks to connect all of India’s households, particularly in rural areas, through broadband by 2017, forming the backbone of the government’s ambitious Digital India programme.

“…as rural broadband provision is prone to market failures as well as government failures (as is evident by the slow implementation of National Optical Fibre Network or NOFN), employing a PPP-based model to expand broadband coverage is the only other viable option,” the regulator recommended.

At present, a special purpose vehicle, Bharat Broadband Network Ltd (BBNL), under the telecom ministry is handling the roll out of optical fibre network. The project is being executed by BSNL, Railtel and Power Grid.

A PPP model that aligns private incentives with long-term service delivery in the vein of the Build-Own-OperateTransfer/Build-Operate-Transfer models of implementation be the preferred means of implementation, TRAI said.

The concessionaire’s should be handed over task of deployment and implementation of the optical fibre cable and other network infrastructure as well as operating the network during the period of contract, it said. “Concessionaires shall be entitled to proceeds of revenue from dark fibre and/or bandwidth,” the regulator said.

“There is no doubt that private sector participation should be there. It should be used for executing the project besides marketing and monetising it. The viability of a rural broadband is less compared to urban broadband. The demand risk should be with the government not private players,” Neel Ratan, Leader- Government and Public Sector at PwC India said.

The regulator has also suggested that contract period should be of 25 years, which can be further extended in block of 10, 20 or 30 years.

The UPA Government had approved Rs. 20,000 crore for laying optical fibre network in 2011. However, it missed all the deadlines. The new NDA Government re-examined the project status with a deadline of 2016 end. A committee set up by the DoT proposed increasing the scope and scale of the project at an estimated cost of over Rs.70,000 crore and extending the deadline to December 2017.

TRAI has also said that the task of rolling out broadband network should be given to a concessionaire selected through reverse bidding. The funding should be done to bridge the loss incurred due to higher operational expenses and lower commercial accruals.

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