http://economictimes.indiatimes.com/news/news-by-industry/telecom/BSNL-may-find-a-lifeline-in-Rs-18000-cr-govt-project/articleshow/6156970.cms

• Is the esteemed Economic times Reviews went in parleys to write for Private Telcos?
• What is its motivation for The privatisation of Not the company (BSNL) but its Breadearner (Infrastructure) only?
• Is 18000 cr to Loss Making PSUs like Feeding before Slaughter?

Note the letters in RED !

NEW DELHI: The government plans to award BSNL a Rs 18,000-crore project to improve broadband connectivity in the country, throwing a lifeline to a company whose snail-like expansion plans have left it groping in the dark against fleet-footed private rivals.

The boadband for all project involves building WiMAX networks across rural India and laying a 5 lakh km optic fibre cable (OFC) to ensure that broadband connectivity reaches every panchayat, says a new proposal that is to be circulated for a meeting of secretaries on Monday. Though BSNL can strengthen and extend its own fibre and WiMAX networks, it must share the infrastructure with all private telcos.

Enhancing BSNL’s existing networks negates the need to create an independent company and duplicate infrastructure, as was originally proposed but abandoned after government officials thought it to be a waste of money. The proposal explores the wireless broadband option as well as involvement of the private sector in a bid to pre-empt howls of protests from critics.

The earlier plan called for a new infrastructure company carved out of BSNL, Power Grid Corporation of India and RailTel to execute this project with support from the Universal Service Obligation(USO) Fund. The infrastructure was then to be shared by all telecom companies and monitored by an independent agency.

The government also plans to double the subsidy that BSNL receives to maintain its unviable landline business in rural India and other far-flung places to Rs 4,000 crore a year. The money comes from the USO Fund, made up of telecom companies’ 5% annual revenues.

The government is expected to dig into the USO Fund, established in 2002, to improve rural connectivity, and launch the broadband project. It is estimated that nearly Rs 25,000 crore is lying idle in the USO Fund.

The project will not come at a better time for BSNL, once a monopoly in domestic telephony, but now a pale shadow of its former self. The company’s financial performance has been declining over the years due to a ponderous expansion plan caught in the grip of red tape and trade union activity.

While private mobile phone firms such as Bharti Airtel, Vodafone and others left it behind by adding customers by the millions a month, BSNL could not even buy equipment required to serve a growing market, despite being the only telco to have a pan-India presence only a decade ago.

BSNL’s original tender for 63 million global system for mobile communications (GSM) lines in 2006 was slashed to 12 million by telecom minister A Raja. The next tender for 93 million GSM lines, the world’s largest equipment order, was cancelled after a series of controversies erupted. The project, depending on how it pans out, is expected to boost broadband penetration, which is less than 1% compared to a mobile penetration of nearly 60%.