Three public sector utilities with extensive, countrywide optic fibre infrastructure –­ Gas Authority of India Limited (GAIL), Power Grid and RailTel –­ have decided to combine their resources in a strategic alliance to offer telecom services.

A memorandum of understanding (MoU) was signed recently to form a consortium to draft and establish a blueprint for telecom opportunities that the companies could tap into.

The wherewithal to do so is of course there. GAIL owns 13,000 km of optic fibre cable (OFC) network, Power Grid has 19,000 km of cables connecting 60 major cities, and RailTel has a 27,500 km cable network across 2,200 towns.

The consortium's network, which can provide connectivity to even remote areas such as the Northeast and to Jammu & Kashmir, is second only to Bharat Sanchar Nigam Limited's (BSNL) formidable 400,000 km telecom network.

The idea behind the consortium is that the three PSUs can coordinate their marketing and future OFC development efforts in a manner that will give them a pan-India footprint. "Our coming together is for offering reliable, quality and affordable services," said Power Grid chairman and managing director R.P. Singh at the MoU-signing ceremony.

To this end, the companies will be setting up a joint working group that will develop a viable business model. It will also study, plan and implement all activities, and devise and recommend mechanisms for utilisation and expansion of their infrastructure.

The marketing plan will depend on either segment-wise categories, such as education and telemedicine, with each PSU responsible for certain specific segments, or be divided according to the regional network.

The details will be worked out over the next three months, according to GAIL chairman Proshanto Banerjee. At that time, a viable business model will also be worked out on the basis of revenue sharing.

At the moment, the focus is on providing broadband, an area in which the consortium expects to become a leading broadband player. It is looking to provide a viable alternative to the government for its elearning/e-governance rollout plans. Besides, the consortium aims to target the enterprise segment for broadband, virtual private network and managed services.

Of the total broadband business in the country projected at about Rs 90 billion, the consortium is looking to corner at least 10 per cent, which works out to roughly Rs 10 billion in revenue over the next threefour years.

This should not be difficult as the consortium is looking at an integrated network, which will be increased to 75,000 route km over the next two-three years from the present 60,000 km. The companies' combined networks currently cover 340 district headquarters out of a total of 600 districts in the country, with more than 2,300 points of presence.

Longer term, says RailTel managing director K.K. Bajpayee, the PSUs are hopeful of venturing into the long distance service sector, both domestic and international. The opportunities clearly are many. For the alliance partners, it seems to be a promising beginning.