The Government is likely to miss the deadline for its dream project - National Optic Fibre Network (NOFN) to connect 2.5 lakh gram panchayats across the country with optical fibre for offering 100 megabit per second (mbps) broadband services.
The much-talked-about NOFN project, which was initiated in 2011 after being approved by the Union Cabinet, was to be completed within two years of Cabinet approval. Surely, it was not achievable, and the government later said that the overlaying of optic fibre would be completed by March 31, 2016. The total cost of the NOFN project is estimated to be Rs 20,000 crore, which is to be funded from the Universal Service Obligation Fund (USOF).
According to data available with the Department of Telecommunications (DoT), at the end of October 30, Bharat Sanchar Nigam Ltd (BSNL), PGCIL and Railtel, which were entrusted the job of laying the optic fibre network on behalf of Bharat Broadband Network Limited (BBNL), the special purpose vehicle which is responsible for executing the entire project, were able to float just a few notice inviting tenders in some villages. However, tenders for data centres are expected to be floated by November 30.
DoT has projected that work across 10,000 gram panchayats would be completed by December 31, 2013, while the first one lakh gram panchayats will be completed by March 31, 2015.
"The timeframe projected is most unlikely to be met. The laying work of optic fibre has not even started yet," said an official with BBNL, seeking anonymity. The official added that BBNL's internal assessment estimated that it will take at least five years from now to complete the laying of optic fibre network. BBNL did not respond officially.
According to DoT projections, the next one lakh gram panchayats will be covered by March. The remaining 50,000 gram panchyats will be covered by NOFN by December 31, 2015, while the completion of the overlaying project is targeted by March 31, 2016.
The objective of the NOFN project is to offer e-governance services and utility bill payment, etc for rural masses.
However, experts say that the NOFN project does not include service offering. It is just about the laying of optic fibres. For end-to-end services, service providers will have to set up their own infrastructure at the gram panchayat level. "While the initial cost was projected at Rs 20,000 crore for the NOFN project, private companies will need to pump in much more than this amount to offer services to end customers. This may not be a commercially viable proposition, considering the fact that these would be low revenue markets," said an analyst with a management consulting firm.
In July 2012, communications and IT minister Kapil Sibal had also made a similar statement: "The cost of the initial phase of the NOFN scheme is likely to be in the region of 20,000 crore. A similar amount of investment is likely to be made by the private sector complementing the NOFN infrastructure while providing services to individual users." So, the actual cost of the NOFN project is upwards of Rs 40,000 crore, and the entire project is actually funded by private telecom operators, considering the fact that USOF is built by taking five per cent of the operators' revenue.
There's more. Once the laying of the optic fibre network is completed, private operators will have to set up access network and most of them may require leasing of bandwidth from BSNL. "This may be helpful for the state-owned telco, but private operators may not jump immediately to offer services in remote villages, as these would be very low revenue markets," said a top executive of a telecom operator.
"Probably, the entire project is not at all well thought out," said an ex-CEO of a telecom service provider, pointing out that the government should have calculated the return-on-investment before finalising the project.
But Rajan Mathews, director general of Cellular Operators Association of India, which lobbies for GSM telecom service providers, believes: "NOFN may seem to be not viable at this moment. But, this is the only way to offer broadband connectivity to the gram panchayat level. And this is a must to ensure the growth story."
In any case, the government is sitting on about 70 per cent of its total USOF collection so far. "Using the money for NOFN makes more sense than keeping the USOF collection unutilised which is actually the contribution of private operators," added Mathews.
Interestingly, about 10 lakh km of optic fibre cable are there across the country (not in rural areas). It took about 15 years to cover about seven lakh km of the total network. This means, the government can put about 46,000 km of optic fibre in a year. And, according to projections, the government will require laying more than five lakh km of optic fibre for the NOFN project. "Even if the work is faster in rural areas, the projected timeline for the project is unrealistic," said an executive of a company that wanted to bid for the project.
Also, supply may be an issue. According to reports, India gets about 80,000 km of optic fibre annually. So, it would take more than six years to get the required length of optic fibre that the government would need for the NOFN project.
On the other hand, telecom analysts say that that while BSNL has the largest presence in rural areas, it has always failed to execute projects on time. "And a project of such a large scale...there is very little possibility that it would be completed on time," added a senior telecom analyst with a global research firm.
On another thought, is there a need for a 100 mbps network? The demand in these areas may be less than one per cent of 100 mbps, an analyst said.
He added that while the government and service providers have failed to ensure faster connectivity even in the metro and urban areas while there is consumption of data, there is no need for this infrastructure for a faster network. "This may not be useful now. But, we are getting ready for the future," said an executive of a telco.
