It is difficult to see whether the BBNL-BSNL merger will spur efforts to provide broadband to villages in India.
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| Photo (https://unsplash.com/photos/OP2EQ5g-Zkw) |
In April 2022, it was announced that India’s flagship rural broadband project: Bharat Broadband Network Limited (BBNL), a special purpose vehicle set up to operate BharatNet, would be merged with Bharat Sanchar Nigam Limited (BSNL), the national telecom service provider.
Three connected arguments have been made for the merger. First, repeated failures to meet BharatNet's implementation targets have slowed progress towards its goal of providing high-speed broadband connectivity to 250,000 gram panchayats in India. Second, the cost of the project has skyrocketed due to these delays. For example, the cost of laying one kilometer of optic fiber cable (OFC) has doubled between 2020-21 and 2021-22, and the total cost of the project has tripled from Rs 20,100 crore to INR 61,100 crore. Third, the merger of BBNL with BSNL is expected to improve project coordination, incur costs and accelerate results.
The journey so far
BharatNet's approach to the deadline set by the government exemplifies the idea that the sooner one falls behind, the longer it will take. The project started in 2011 as the National Optical Fiber Network (NOFN) but did not make much progress in 2011 and 2014. The present government inherited the initiative, renaming it as BharatNet in 2015 and launching 2018 as its completion date. Operational setbacks and poor implementation soon made this seem unrealistic and on various issues, target dates for 2020 and 2021 were agreed upon. The National Digital Communication Policy expects connectivity of 1 Gbps for each panchayat by 2020, which will be upgraded to 10 Gbps by 2022. Yet there was another suspension in the store. In his Independence Day speech last year, Prime Minister Modi announced that in the next 1,000 days, That means by mid-2024, every Indian village will be connected by OFC. These plans are now uncertain, and 2025 is being touted as the new date by which villages are expected to get broadband.
Across the country, the quality of service (QoS) of BharatNet has long plagued panchayats and villages. Complaints from village officials about frequent line breakdowns, disconnections and non-response to service and repair requests have generally increased.
There is now widespread consensus that BharatNet's project management so far has been poor. As per a recent Cabinet statement in the Rajya Sabha, by March 2022, only 27 per cent of the expected number of villages had got network connectivity. The idea of connectivity ratio (CR) is crucial to take into account here. CR is terms as the actual ratio between ...
(a) The number of villages in a state equipped by BharatNet and
(b) The total number of villages in the state of interest. The 25 per cent connectivity ratio, i.e, 25 villages out of every 100 villages are currently service-ready. Out of 33 States and Union Territories (UTs) in India, only two: Punjab and Chandigarh have achieved 90 per cent CR, the other eight states have more than 60 per cent CR and at the lower end, Himachal Pradesh has achieved CR. Only 2.1 percent.
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| Photo (Rajya Sabha, Analysis of Business Standards) |
Moreover, there is a significant difference between the villages in which OFC has been installed and those that are actually connected to OFC and are enjoying broadband. This discrepancy has existed since the early stages of Bharatnet and reached its peak during the epidemic. Since the second half of 2020, however, there has been a decline in both the rates of installing OFC and providing connectivity.
Across the nation, BharatNet's cumbersome quality of service (QoS) has long tormented village panchayats and remote residence. Complaints from village officials about frequent line breakdowns, disconnections, and non-response to service and repair requests have generally increased. These QoS issues are partly explained by the CAG report of 2021 which states that the agreements regulating the implementation of BharatNet do not include any provision to penalize the agencies responsible for maintaining the OFC network. Efforts by state governments and project staff to contact the central administrators of BharatNet to rectify this inefficiency have not yielded much result. This has led to a split in operations through which many states have built special purpose vehicles to operate the projects themselves.
Will the merger help?
It is not clear how the BBNL-BSNL merger will act as an elixir for rural broadband. BSNL itself has suffered huge losses in the last five years and has developed some notoriety for slow decision making and red-tape. The telecom company is currently in the process of raising INR 44,720 crore as part of a revitalisation plan to get it back on its feet, support infrastructure, technological upgrade, and enable the allocation of 4G spectrum.
BBNL and BSNL have been involved in the past, and the results are less than inspiring. BBNL relies heavily on BSNL to provide connectivity and bandwidth at the block, panchayat and village level, but on many occasions, BSNL is unable to fulfill its commitment. For many years now, BBNL has been cutting back on BSNL outsourcing of IndiaNet-related work as the latter does not always use BBNL's funds effectively, sometimes even for unapproved reasons. BBNL had to “take back” the project originally entrusted to BSNL to maintain OFC for 120,000 panchayats and instead hand it over to another agency. Given this background of unsettled and sometimes completely failed cooperation, BSNL is accepting all the responsibilities that BSNL is currently managing and it is also difficult to ensure the operation, maintenance and use of the already laid OFC network.
It is not clear how the BBNL-BSNL merger will act as an elixir for rural broadband. BSNL itself has suffered huge losses in the last five years and has developed some notoriety for slow decision making and red-tape.
The only advantage BSNL gets to BharatNet after the merger is that it already has 2 million fiber-to-the-home (FTTH) connections and is adding about 100,000 new connections per month. This growing base of fixed-access platforms can prove invaluable. In other cases, BSNL has underestimated its ability to support BBNL. It now appears that some of Bharatnet's weaknesses and delays may have been caused by BSNL's inertia.
In such a scenario, one cannot wonder whether the merger of BBNL and BSNL will be a case of disturbance to a real estate. The shortcomings of operating BharatNet primarily in partnership with public sector undertakings have been exposed over the years. But in July 2021, BBNL finally issued a tender for a public-private partnership (PPP) and started bidding with potential private partners. The private sector response was protected. The companies were well aware of the flaws in the project. By making it responsible for operating and upgrading BharatNet in 16 states for the next 30 years under PPP terms, they knew they could solve a large number of problems without adequate incentives. Surprisingly, no bids were received and the tender was finally canceled in February 2022.
The lack of interest from the private sector is a strong sign of distrust on BharatNet. Following the BBNL-BSNL merger, the government intends to issue a revised PPP plan after 2022. But unless the new plan is significantly different from the last plan, there is no reason to believe that it will be achieved differently.
Conclusion
The project stands strong by solid political will, national interest and commitment. "Rural and remote digital connectivity is merely not an average political or election aspiration but a crucial necessity," he said. In addition, while presenting the Union Budget 2022, the Finance Minister said that 5 per cent of all collections under the Universal Services Obligation Fund (USOF) would be used to enable broadband and mobile services across India and the OFC structure under BharatNet would go ahead. Accelerated in 2022-23.
Whether the BBNL-BSNL merger will enable BharatNet to become a fast, fast enterprise is an important question. The recent performance history of both organizations, considered separately or in combination.
On-ground implementation, however, has always been the achilles heel of the project. Whether the BBNL-BSNL merger will enable BharatNet to become a fast, fast enterprise is an important question. The recent performance history of both organizations, considered separately or coincidentally, is subpar. And meanwhile, despite the good intentions of running BharatNet, it has become a byword for operational inefficiency, unreliable QOS and missed targets. Unless these factors are addressed in the post-merger phase, broadband will remain inaccessible to all and an important chapter in India's development story will remain unwritten.
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