Telecom Commission, the decision making arm of the Department of Telecom, on Friday cleared the Rs 20,000-crore project to provide broadband connectivity to all villages in the next three years.

"The Telecom Commission has approved the project that will be funded through the Universal Service Obligation (USO) Fund. We will take the proposal to the Cabinet soon," Telecom Minister Kapil SIbal told reporters on Friday.

The objective of the scheme -- National Optical Fibre Network -- is to extend initially the existing optical fibre network which extends up to districts Head Quarters/Block Head Quarter level up to gram panchayat level by utilising USO Fund.

"The cost of the initial phase of the scheme is likely to be in the region of Rs 20,000 crore. Similar amount of investment is likely to be made by private sector complementing the infrastructure while providing services to individual users," he said.

The broadband project will initially be executed by state owned Bharat Sanchar Nigam Limited (BSNL) and other institutions like RailTel, he said.

"If necessary, at a later stage, we will involve the private sector also to ensure that the project is completed within the stipulated period of three years," Sibal said, adding that this would help in brining in e-education, e-medicine and e-governance.

As per a study conducted by the World Bank, with every 10 per cent increase in broadband penetration, there will be an increase in GDP growth by 1.4 per cent, Sibal said.

"This is a historic step... we will take it to Cabinet and complete the project within three years," he added. Asked about the USO Fund's corpus, Telecom Secretary R Chandrashekhar said the current corpus is about Rs 15,000 crore and it gets up to Rs 6,000 crore in its kitty every year from the operators.

He also clarified that no other project relating to voice telephony under USO Fund would be sacrificed due to National Optical Fibre Network scheme. In three year, the corpus would be close to Rs 35,000 crore to implement all projects, he added.