Over the years, telecom growth in the rural areas has remained subdued due to their low-ARPU potential vis-à-vis urban areas. This has resulted in low operator interest and limited activity. Since the majority of operators prefer to stay away from rural markets or offer services in only limited rural pockets, the government had to step in to provide telecom connectivity in rural and remote areas.

The Universal Service Obligation (USO) Fund, established in 2002, has played a pivotal role in providing financial support to various government schemes for enhancing rural telecom connectivity. So far, the fund has disbursed Rs 373.49 billion for several projects. These projects initially involved the setting up of public telephone and household telephone connections in rural areas. However, the focus gradually shifted to providing mobile services (both voice and data) in these areas. A significant amount of in­vest­ments have been made to roll out telecom infrastructure to support voice and data services in rural areas. Since 2010, the USO Fund has been supporting pilot schemes to test new technologies and commercial models to enhance connectivity. With the industry experiencing a data revolution, the government’s focus has shifted towards enhancing rural broadband penetration and undertaking projects that can help bring rural users under the broadband umbrella.

A look at some of the key ongoing government-aided projects in rural India…


Under the BharatNet project, the government envisages providing high speed broadband connectivity (around 100 Mbps bandwidth) to 250,000 gram panchayats (GPs). The project, which is being implemented in three phases, involves the laying of incremental fibre from the fibre point of interconnect to GPs and offering non-discriminatory access to services. Under Phase I, which is currently under implementation, the government aims to connect 100,000 GPs. While Bharat Broad­band Network Limited is the executing agency, Bharat Sanchar Nigam Limited (BSNL), RailTel and Power Grid Corpora­tion of India Limited are the implementing agencies for Phase I. Under Phase II, whi­ch is expected to be completed by Dec­em­ber 2018, the remaining GPs will be covered. Meanwhile, under Phase III, which is expected to be completed by 2023, the focus will be on future-proofing of the network through ring architecture.

As of May 21, 2017, the three implementing agencies have together lit 19,095 GPs, while optical fibre cable (OFC) has been installed in around 91,082 GPs. The slow pace of progress can be attributed to delays in securing clearances and procuring equipment, as well as several implementation gaps.

In light of this, a modified implementation framework has recently been proposed based on the experience of the implementing agencies. This framework suggests the use of an optimal mix of aerial, radio, satellite mediums, in addition to the laying of fibre underground for connecting GPs. Several other agencies will now be involved in project implementation through the engineering, procurement and construction route besides the three existing central public sector units (CPSUs). This will include other CPSUs with the capacity to implement such large-scale projects, states and state agencies like distribution companies, as well as private sector players. The project will be funded through several sources, besides capex funding from the USO Fund.

Meanwhile, the government has re­ce­n­­tly increased the funds allocation for the project from Rs 60 billion to Rs 100 billion. BharatNet will also provide last-mile connectivity through internet kiosks and hotspots. These will be established throu­gh the public-private partnership model using viability gap funding. Among the proposed schemes that are under implementation is the setting up of Wi-Fi hotspots at 5,000 GPs. BharatNet will also support projects such as a DigiGaon to provide telemedicine, education and skills through digital technology.


The GyanSetu project was launched with the aim of promoting the use of internet facilities in rural areas by providing simple and easy-to-use applications. The applications would be provided through an internet-based real-time information and communication technology platform designed by the Centre for Development of Telematics. Initially, highly visual e-services such as railway reservation, online education, medical consultation and public grievance redressal would be provided in rural areas through the project. The government plans to power the system with the help of solar and wind energy, so that it does not depend solely on conventional power sources, which are not easily available in rural areas.

North-eastern region projects

In September 2014, the cabinet ap­p­roved a comprehensive telecom development plan for the Northeast with an estimated expenditure of Rs 53.36 billion, to be provided by the USO Fund. The project is aimed at providing 2G mobile connectivity to unconnected villages and national highways. It entails the setting up of around 6,673 towers, covering 8,621 of the 9,190 unconnected villages. In addition, there are plans to set up 321 telecom towers along national highways.

Under Phase I of the project, which will be executed by BSNL, 2,817 towers are to be installed to cover 4,118 remotely located villages in Arunachal Pradesh and in the Karbi Anglong and Dima Haso districts of Assam. BSNL recently partnered with Vihaan Networks Limited (VNL) and Himachal Futuristic Communications Limited (HFCL) to execute the project. Under the partnership, VNL will install 1,893 towers in Arunachal Pradesh, while HFCL will install 924 towers in the two districts of Assam. Further, VNL will install mobile towers fuelled by solar power. According to BSNL, project roll-out will start by July 2017 and the part allocated to it will be completed by end-2018.

In a bid to establish connectivity across the north-eastern states, the government launched a project for the creation of an intra/inter-district network connecting all district headquarters and blocks across the six states in the region. Under the project, Meghalaya, Mizoram, Tripura, Arunachal Pradesh, Manipur and Nagaland will be connected through OFC, which would provide a minimum 2.5 Gbps of bandwidth, which can be upgraded up to 10 Gbps. The task of implementing the project has been given to RailTel under a seven-year contract. Under the project,  of the total 2,574 km, 1,384 km of OFC, had been laid in Meghalaya, Mizoram and Tripura as of May 19, 2017. Meanwhile, only 1,894 km of OFC, was laid in Arunachal Pradesh, Manipur and Nagaland against the total of 7,806.

Further, in March 2016, the government commissioned the country’s third in­­­ter­net gateway at Agartala in Tripura. Un­der this initiative, India will lease 10 GB of internet bandwidth from Bangla­desh Sub­­marine Cable Company Limi­ted’s internet port at Cox’s Bazar. Connec­tivity will be available from Akhaura in Bangladesh to Agartala.

Left-wing extremism areas

In order to improve connectivity in areas affected by left-wing extremism (LWE), the government approved the installation of mobile towers at 2,199 locations across 10 states – Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Maharashtra, Madhya Pradesh, Odisha, Telangana, Uttar Pradesh and West Bengal. The project was a part of the government’s PRAGATI programme, aimed at boosting development in these areas and improving communication in the Naxal-affected regions.

The first phase of the project was completed in September 2016 by BSNL along with VNL and HFCL. As a part of the project, VNL has set up 1,315 solar-powered telecom towers in the region using indigenously designed and manufactured technology in a record time of less than 18 months. It will also be operating and managing the towers for a period of five years. Meanwhile, HFCL has installed 521 towers in the region. The project is expected to impact 18 million people in 22,688 villages across the 10 states.

BSNL has recently placed purchase orders for 156 additional towers to streng­then its mobile network in LWE-affected areas. The operator has invested Rs 2.75 billion, which includes capital expenditure and operational expenditure for a period of five years. According to BSNL, VNL and HFCL will be responsible for installing additional towers by July 2017.


While the government has undertaken several projects to bridge the digital divide between urban and rural areas, several impediments continue to impact progress. These include the slow disbursal of funds, lack of participation from private players and delays in procuring key equipment. Although the aforementioned projects are steps in the right direction, their execution within the proposed timeline is imperative for ensuring significant benefits for rural consumers.