Sunday, November 28, 2010

BSNL will get Fund Rs.2395 crore for rural WiMax Deployment

BSNL will be given a grant of Rs 2,395 crore with a list of riders to enable the telco to complete the rollout of its wireless broadband services, an official in the telecom ministry aware of the development told ET.

Last month, BSNL had blared its disgust at operating as a social workhorse without compensation, and the state-owned telco had bluntly told the government that it would continue building wireless internet services across rural India only with a grant of Rs 2,395 crore more to support an unviable business.

The state-owned telecom company, which offers services in all parts of the country except Delhi and Mumbai, had written to the telecom department stating that it is against rolling out services on the rural WiMAX project on a no-profit/loss basis without adequate financial support.

The telecom department in a November 16 communication to BSNL had asked it to rework its estimates for its WiMax initiative and spread the costs associated with the project over a 20-year time frame, while also adding that the additional spectrum cost of Rs 1,662 crore must not be front loaded as this resource can be used over two decades.

The telco has also been asked to scale down its projections that 5% of its total revenues from this service would be incurred towards distribution and 2% towards marketing. It has also been asked to work out infrastructure sharing deals with other operators to lower costs.

The project is divided into three parts, and under phase-I about 1,000 towers for WiMAX are to be set up, followed by 6,863 units in the second phase.

So far, the Department of Information Technology , has agreed to provide subsidies to the tune of Rs 710 crore for the two phases — Rs 160 crore for setting up the first 1,000 towers and Rs 550 crore for the remaining. But BSNL has said that it can support a maximum of 1,798 towers with this level of funding.

This implies it can only build 798 towers when compared to the requirement of close to 7,000 units for completion of phase-II. BSNL’s move to stop the project will see only 17,000 Computer Service Centres (CSCs) get WiMAX-based internet connectivity across rural India against the government’s commitment to link over 62,000 CSCs through this project.

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