The National Optical Fibre Network (NOFN) is an attempt to bring broadband connectivity to the remotest corners of the country by connecting 2,50,000 gram panchayats in a network. To oversee the project, a special purpose vehicle, Bharat Broadband Network Limited (BBNL), was created. Under it three agencies, BSNL, Power Grid Corporation of India and Railtel, were chosen as the implementing entities. At an estimated cost of '20,000 crore, the government of India will dip into the Universal Service Obligation Fund (USOF) to deliver this project to the citizens. The man responsible for the project, N Ravi Shankar, administrator, USOF, and CMD, BBNL, talks to Ankita Lahiri about the status of the project and its future. Excerpts from the interview:

The deadline for the NOFN project is October 2013, but apart from the three pilot projects, not much has happened. Why is that?

In October 2011, the national optical fibre network (NOFN) project was approved by the cabinet. A time frame of two years was given for implementing this project at a cost of '20,000 crore. But there were two important things which had to be done. One, the project included incremental optical fibre. When you have incremental optical fibre, you have to do a survey of what exists on the ground in order to optimise (the resources) by taking the minimum length.

The assumption was that on an average two kilometres of fibre per gram panchayat would be needed, which for 2,50,000 gram panchayats is about 5 lakh kilometres of extra fibre.

This primary work (survey) has reached a fair degree of maturity. They (BSNL, Railtel and Power Grid) have completed about almost 95% of the survey which will be completed by the end of December. Next, we undertook pilot projects in three locatio whcih were completed in October 2012. We found that the response of the telecom industry had been pretty lukewarm. However, the department of electronics and IT (DeitY) came forward with counterpart funding. In 110 locations, DeitY has taken the bandwidth from the NOFN terminal so that e-Governance applications can be populated there.

However, creating the bandwidth is one thing and using it is another. The former is easy to do. But the latter is the most challenging part.

What is the current status of the project?

In such a huge project, trying to do things in a short time has its limitations. We are deliberating whether we can really complete 2,50,000 gram panchayats in two years. It is a tall order though every sincere effort has gone into it. BBNL has put out tenders for the optical fibre. The tenders have been a little over schedule (pricing) thus we have to see if there is a mechanism for negotiation. That process is underway. Second is electronic equipment for which we have put out the tender.

But with the dollar situation and the fact that we import most of our equipment, won’t that be a hurdle?

The optical fibre cable is a product where the market is 100 percent preferential to those who produce within the country. In April/May, they (department of telecommunications) put out the tenders. The raw material in some of these cases may be imported.

The second thing is electronic equipment. Therein we have decided that 75% of the product will be made in India and the rest can be imported. So we would be able to get a fairly competitive prices. If international prices are high then correspondingly, it will be reflected in the quote. But we will look for it as we open the tenders.

The third is with regards to ducts. Ducts are the casings through which the pipe is put. The three entities (BSNL, Airtel and Power Grid) were asked to do it directly. They have found that there are variations in the schedule prices, to the extent of 30% to 50%. So there was a suggestion that maybe a centralised tender could be put out by BBNL.

The most important element is the trenching and laying. There has been slow movement in this regard because it has to be done by individual units of BSNL. The rates of trenching and laying vary from location to location.

Will that mean that you will overshoot the budget?

That question is too premature at this point of time. Because only when we get the tender rates, will we know where we stand. I will put it this way that there have been two broad variables. One variable is the average length (of fibre) and cost. The average length, I know, is 20% above our original estimation. The average cost can be calculated by factoring the extra five lakh km of fibre needed. The two together, in conjunction with each other, could give us the idea of what could be the probable cost.

There may be an inflationary increase. We will have to factor in the administrative costs. We had taken it up before the telecom commission and all the recommendations of the telecom commission will be going to the cabinet.

The project is of such a vast nature that we would like to implement it in three phases. We plan to complete the first phase by March/April 2014 – connecting one lakh gram panchayats. In the second phase we plan to connect another lakh gram panchayats by March 2015. The balance, which is about 50,000 panchayats, would be done by September-December 2015. This is a fairly realistic time frame. And we have done a lot of groundwork.

Are you selecting gram panchayats in the initial phases on the basis of geography?

The total gram panchayat work is being distributed almost in the ratio of 70:15:15 among the three entities – 70 percent to BSNL, 15 percent to Railtel and 15 percent to Power Grid. BSNL has given us an indication of their break-up of the 70,000 (gram panchayats) according to the various states and where they are planning to do it. Railtel and Power Grid are yet to finalise their plan. BSNL’s survey work has been far in excess of the other two because BSNL has an in-house team while the other two are getting it done through agencies.

Is the funding of USOF all from one source?

All funding comes in from the Universal Service Obligation Fund (USOF). The USO Fund balance as on April 1, 2013, is '28,000 crore approximately. The money is held in the consolidated fund. We get annual budgetary allocation. For the current financial year, the allocation is '3,000 crore. Depending on our utilisation, the government may like to enhance it.

As the tenders get passed, they (three agencies) will be able to project how much is required. For the one lakh gram panchayats, as per the existing schedule, it would require '11,000 crores. But the amount for this particular phase 1 may not be needed at one go. The funds will be released as per the mobilisation. Now once the BBNL makes the projection to the USOF, they will release the funds.

You mentioned that the initial response from the telecom industry had been lukewarm. Was there any specific reason for that?

Their focus at that point of time, sometime in October 2012 had been around the spectrum allocation. That has been resolved. Now there is a rejuvenation in the industry. We have also constituted a joint working committee with the industry. Kiran Karnik, reputed administrator, is the chairperson. And we are trying to build an enabling ecosystem where broadband can move on.

Broadband ecosystem is trying to look at confidence building measures. An infrastructure unless built cannot trigger a broadband growth. But an infrastructure built and not utilised is also not good economics. We have to strike the right balance to see that the infrastructure has the right response from the other stakeholders.

Will there be a policy for public-private partnership?

This particular network is open for all, so the private sector was something that we thought would be at the forefront. We had to trigger it through government action because the private sector had not shown adequate response. As mentioned earlier, we have formed a joint working committee with the industry to engage them in the project.

How about people’s participation at the ground level? Is that working out to your expectations?

There is a demand for broadband. This demand for broadband is felt from the bottom up. People are buying electronic goods. Those who until yesterday had simple phones are now going for smartphones. The three pilot projects have given us a sense of what the ground realities are. People are thirsty for information. It will be our ability to package information and apply it, which will be the trigger point for broadband growth. Today, the common services centres see a lot of footfall because that is where the department’s NeGP programme is undergoing. But the moment we have movement away from the kiosks, in the hands of individuals you will have more people accessing broadband.

I would also like to mention the corresponding activities going on in the government of India, which is the digitalisation of the information and broadcasting (I&B) sector. Ultimately entertainment will be the driver of broadband. I know that in the past 20 years, we are used to a fairly good level of cable television, where we pay about Rs 250 a month.

Once digitalisation is done, people are going to switch to IP based acquisitions and the optical fibre becomes the best instrument for pumping in data. Once you get the digitalisation of the I&B sector, I think there is going to be a revolution of sorts. While this infrastructure of optical fibre is being built, corresponding activities like the information and broadcasting sector digitalisation will see that demand and the use of NOFN remains.

I believe the digitalisation process will also go on till 2015. As NOFN grows in India, and the I&B sector digitalisation converges with it, both will be simultaneously helping one another in the growth of the entertainment sector and the utilisation of this particular infrastructure.

Is there any overall coordination from the government?

The government is working on a coordinated effort to pull in the aggregate demands of various government departments. There is a committee under the secretary of telecom. The secretary of IT is also a major stakeholder. And we have an alliance with the ministries of rural development, panchayati raj, HRD, health and family welfare and women and child development so that the demand aggregation will be such that the NOFN infrastructure will be very well utilised by all.