Indian government's Ministry of Communications & Information Technology issued a press release describing the results of the bidding process to serve “secondary switching areas”.

Out of 300 Secondary Switching Areas (SSAs), Bharat Sanchar Nigam Limited (BSNL) was the successful bidder in 184, while the Reliance Infocom won 97. However, there was competition between two service providers in only 115 SSAs.

The bidding process for providing Rural Community Phones (RCPs) through the Universal Services Obligation (USO) Fund, in 48,310 villages having a population of more than 2,000 people with no other public telephone facility has been successfully completed. The competitive bidding has resulted in bringing down the cost of the project by about 17% from the reserve price.

The USO Fund Administration is moving ahead with plans to cover all 570 thousand villages with public phones. It has already signed agreements for disbursal of subsidy from the fund towards more than 520 thousand Village Public Telephones (VPTs) already installed. The bids for the remaining 57 thousand villages have also been invited and the process leading up to the signing of agreements is likely to be completed before the end of November, 2004. Agreements have also been signed for replacement of more than 180,000 VPTs on Multi Access Radio Relay (MARR) technology.

Also, the Department Of Telecommunications will soon invite bids to set up Tele-Information Centres to provide access for both voice and data in villages having a population of more than 2,000 people. So far, about US$ 130 million has been disbursed as subsidy to the Universal Service Providers. The disbursements during the current financial year are estimated to be around US$ 60 million.

The support of the USO fund is also being provided to the capital and operating expenditures on rural households’ Direct Exchange Lines (DELs) installed after the beginning of 2002. About 3.1 million rural DELs had been installed by the end of March 2004. Bids will also be invited shortly for providing telecom facilities to new rural subscribers.

Intelecon notes that the benefits of a competitive bidding process for rural telecom deployments are clearly illustrated by the 17% cost reductions from the reserve price experienced in India.

Intelecon Research & Consultancy Ltd. 21/09/2004