TRAI recommends $6 bn national broadband network

The network will extend to the rural areas for providing better education, health and banking facilities. It would be financed by the government's universal service obligation fund and loans given or guaranteed by the government.

The network will be established in two phases, starting with all cities, urban areas and gram panchayats by 2012 and then move to habitations with a population of over 500 by 2013, TRAI said in a statement.

The recommendation envisages provision of 75 million broadband connections by 2012 and 160 million connections by 2014.  According to TRAI data for September 2010, India's broadband penetration is 0.8 percent against the tele-density of 60.99. The number of broadband connections are only 10.3 million against a target of 20 million for 2010.

To make the broadband service affordable, the regulator has also said that the duties levied on inputs and finished products used in providing broadband and internet services can be reviewed.

The regulator also proposed setting up national and state level optical fiber agencies to establish networks and said they could post an annual revenue of around $6 billion.  According to the study, a 10 percent increase in broadband penetration accounts for 1.38 percent increase in the per capita gross domestic product growth in developing economies.