The government believes that better communication services and greater access to information can help bridge the urban–rural digital divide. Therefore, telephony and broadband connectivity in rural areas have been key thrust areas for the government for a while now. While the country’s rural teledensity increased from 2 per cent in 2006 to 33.79 per cent in March 2011, a lot remains to be achieved in terms of rural telecom and broadband penetration.

The government has been trying to fast-track its wireless rural broadband rollout plan, which is aimed at connecting 500,000 villages by end-2011. The capital cost of this project is estimated to be Rs 150 billion. To cover part of the expenditure, the Department of Telecommunications has announced a subsidy of Rs 60 billion-Rs 80 billion. The subsidy will be sourced from the USO Fund and will be available to service providers for deploying wireless broadband networks in all 22 telecom circles.

However, since the subsidy payout is linked to a tendering process, there are chances of delays. The tendering process, which was originally scheduled for March 2011, has already been postponed since the government failed to compute the relevant subsidy payouts for each telecom zone.

In another recent initiative to accelerate telecom growth in rural areas, the government has brought in chief executives of leading operators like Bharti airtel, RCOM and Tata Communications; industry associations; and key government departments to oversee the implementation of the telecom ministry’s Rs 200 billion national optic fibre network project, which will take high-speed internet to rural areas.

This is DoT’s largest project to date and will be headed by telecom minister Kapil Sibal in an advisory capacity. Sam Pitroda, adviser to the prime minister on public information infrastructure and innovations; Nandan Nilekani, chairman of the UIDAI; and representatives from the ministries of education, rural development and health as well as the Planning Commission will oversee the rollout of 2,500,000 km of optic fibre cable.

An SPV will be formed to undertake the project. Though its structure is yet to be finalised, the telecom ministry seems keen to limit the holding of BSNL and MTNL in the company to 49 per cent. The remaining stake will be held by private operators, with the maximum ownership by a single firm limited to 26 per cent. DoT reportedly favours this model as it believes this will ensure a level playing field for the project’s stakeholders and encourage private players to bring in best industry practices.