Economy

Rural ministry rejects plan to link broadband project with job scheme

Thomas K. Thomas New Delhi | Updated on June 14, 2011

Mr Sam Pitroda

DoT to seek telecom panel's nod for USO funding





The Ministry of Rural Development has rejected a proposal to use funds under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) for bearing the cost of labour for laying optic fibre cable broadband network. The project, envisaged under the National Broadband Plan, aims to roll out five lakh route km of optic fibre cable across the country to boost broadband uptake.

The Department of Telecom had suggested linking the MNREGA with the broadband project in a bid to meet the costs related to digging and laying the cables. The proposal was backed by a high powered committee headed by Mr Sam Pitroda. However, the Ministry of Rural Development has refused to link the two although it has backed the overall broadband plan.

“The dovetailing of financial resources from MNREGA for labour component of laying OFC project is not possible with the existing provisions of the scheme. Similarly, there are no provisions in the programme guidelines of Pradhan Mantri Gram Sadak Yojana to incur additional cost from the allocated funds to provide for OFC tranches along with the rural roads,” the Ministry said in its response to a draft Cabinet note circulated by DoT on the issue.

SPV to be set up

According to DoT sources, the department will now seek Telecom Commission's approval to finance the entire project from the Universal Services Obligation fund. The optic fibre cable network is expected to cost around Rs 18,000 crore over a three-year period. The USO fund currently has about Rs 20,000 crore in its kitty, which is expected to grow up to Rs 30,000 crore in three years' time.

A high powered committee under Mr Pitroda has been formed to oversee the execution of this project. Another committee comprising senior officers from BSNL, RailTel and PowerGrid has also been formed to finalise the plan for rolling out the cable network. BSNL will be given the mandate to execute the plan.

Once the network is completed, it has been proposed to set up a Special Purpose Vehicle to operate the network. The SPV will have equal participation from all the PSUs which have optic fibre cable in ground. Later, private operators may also be given equity stake in this SPV to make the playing field level. The cable network will be available for all operators on a commercial basis.

However, there are differences between the DoT and the telecom regulator on the way to execute this project. For example, TRAI wants the cable to reach all villages with more than 500 inhabitants, but DoT wants the cable network to reach only up to the village panchayat level. While there are six lakh inhabited villages, there are only 2.5 lakh village panchayat. TRAI had also suggested setting up an independent agency – National Optic Fibre Agency (NOFA) – to execute the project. DoT, however, wants BSNL to take up the job.

The Telecom Commission, the apex decision making body of the DoT, will take a final view of the TRAI suggestions before the project details are sent to the Cabinet committee on infrastructure for ratification.

Published on June 14, 2011

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