Telecoms minister Kapil Sibal, part of the financing arm of the department, the Telecom Commission, told local media sources the network could be financed by the Universal Service Obligation (USO). The USO was created by the telecoms regulator for investment in rural areas, and for grants to help the financing of commercially viable telecoms networks.
India is clearly a highly competitive market, and an infrastructure investment as big as this could go a long way to help lower connectivity costs. The move could also aid the government towards its broadband penetration target, standing at 75 million broadband connections over two years, and up to 160 million by 2014.
With competition rife in mobile in particular, new players in the market have been hit by lowering prices, and market watchers have been predicting that consolidation is all but inevitable in the market. India has approximately 14 operators in 22 areas of the country.
Sibal commented that private-sector investment would also be required to aid investments in vertical services, including e-education, e-health and e-agriculture - areas where India is relatively underdeveloped. In addition to the fibre-optic network, which will reach village level to connect and push e-services, Sibal declared an additional investment in such e-services to reach also rural areas.
