The government is expected shortly to unveil a scheme to loop the country with fibre-optic lines that will support internet access at up to 100 megabytes a second, ten times the speed of the technology being replaced. Mr Son argues that to guarantee fair access to this network—and thus the most efficient use of it—it should be run by an infrastructure firm hived off from NTT, owned jointly by all the telecoms operators. Instead, the government is likely to let NTT continue to run the network, but erect “Chinese walls” between those operations and the business of selling telephony and internet access. The communications ministry is uneasy with Mr Son’s plan because it eliminates incentives to build alternative infrastructure—although in practice, the chances of any other operator building a fibre-optic network to compete with NTT’s seem slim.

The Department of Telecommunications (DoT) has signed a memorandum of understanding (MoU) with state-owned telecom operator Bharat Sanchar Nigam Ltd (BSNL) to provide wireless broadband in rural areas.

Under the MoU, BSNL will provide wireless broadband at 29,000 rural exchanges throughout the country. Each exchange will have 31 connections along with one kiosk for public use. A DoT official said, “Out of these 31 connections, 6 will be used by institutions like schools, while the rest will be for individual users.”

The implementation of the entire project is expected to be completed by 2011. Currently, there are over 5.45 million broadband subscribers in the country. This move comes as a catalyst in the government’s aim to reach 20 million broadband subscribers by 2010.

The DoT is planning to provide funds worth around Rs 1,800 crore to BSNL for its various activities. According to sources close to the development, approximately Rs 700 crore are being provided for upgrade of the 2,700 BSNL exchanges across the country for provisioning of wireline broadband, Rs 700 crore for kiosks and Rs 400 crore for computers.

However, private telecom operators have opposed the extra funds being allotted to BSNL from the Universal Service Obligation (USO) Fund. In a letter to the Union telecom secretary, the Cellular Operators’ Association of India (GSM operators’ lobby) and Association of Unified Telecom Service Providers of India (CDMA operators’ lobby) have alleged that there is huge corpus lying unutilised under the USO Fund (approximately Rs 15,000 crore).

The USO fund is created from a 5 per cent universal service obligation levy that the government charges all telecom operators in India. The fund is meant to support extension of connectivity to areas where private operators do not enter due to lack of adequate profitability.

Private operators have asked the DoT to disburse the USO funds to all operators rather than restricting it to state-owned operators.

The letter stated: “BSNL is as much a commercial operator like any other private operator …In fact, they are making all out efforts to aggressively roll out their networks and services across the length and breadth of the country …any step at this stage that is aimed at advantaging only the public sector operator will be a huge blow to the principles of level playing field, natural justice and fair competition.”

“After our application for a full-fledged CDMA mobility licence is approved, we plan to roll out CDMA services in all major cities and towns. The initial investment will be about $500 million,” BSNL managing director Kuldeep Goyal said. Read more.

Interestingly, Telus of Canada is spending $500 million to migrate from CDMA to GSM early this year. Calling CDMA technology the “Betamax of wireless” the Toronto Star gives details.

“However, there’s more to lifetime offers than meets the eye. First, call charges at Rs 1.99 per minute for local and Rs 2.99 per minute for STD are not necessarily low. Customers with ordinary prepaid cards pay anything from Rs 0.70 (local) to Rs 1.20 (STD). As BSNL Finance Director S.D. Saxena puts it, these schemes do not benefit customers who make outgoing calls. They are for those who don’t (but receive lots of calls), such as an aged parent or a chauffeur who have traditionally opted for ‘free-incoming’ schemes. Then, the talk time offered by lifetime schemes (between 12 minutes in the case of private telcos and 49 minutes for BSNL) is too low for the Rs 999 they charge. Most telcos claim that customers will not have to pay any transaction charge on future recharges and that they will get the entire talk time they pay for.

Next is the whole question of ‘lifetime’. As far as we can make out, all the telcos stipulate that the cards must be recharged at least once in six months for you to stay connected. And, at least one telco has stipulated that the scheme remains valid only as long as the subscriber has a minimum charge of Rs 5 in the account. If the amount falls below that, the subscriber pays the entire Rs 999 again.”