Connecting rural India to the internet

**Akshara** (0:04)
In today's episode, we'll break down two important stories. First, we'll talk about the unfinished broadband project, and then we'll talk about the flip side of India's power problem. Welcome back to The Daily Brief by Zerodha, where we cut through the noise to help you understand what's actually happening in the most important stories from business and markets. I'm your host Akshara, and today is Wednesday, 1st July. Coming to the first story.
Back in 2011, the government set out on an ambitious project, to give telecom operators and internet providers an open, shared connection point in every part of the country. So it had approved the National Optical Fiber Network, later named Bharatnet, and this would connect block headquarters to Gram Panchayats through fiber optic cables, enabling connectivity and internet enabled services in each village. 15 years on, the program is still unfinished, and the cabinet has been trying to course correct. So in 2022, it approved a merger of BBNL, the company built specifically to run Bharatnet, into BSNL, the state owned telecom operator. The formal amalgamation took years to complete, but came to a close in May, June, 2026 But what's the government trying to do?
Did it work? And if not, why?
And what does that mean for the project ahead? So when you use the internet on your laptop, data is reaching you through a chain of cables. At one end is the global internet, and at the other end is your device. In between are layers of physical infrastructure. Thick cables running between countries, thinner ones between cities, and then those that run to individual homes. Now, much of that chain was built by private telecom companies, but naturally, they only built these chains where it was commercially profitable in urban areas with dense populations, decent incomes, and short distances between customers. That's where the economics worked best. Villages were a different story. With sparse populations spread over large areas, laying cables there came with high costs and low returns. So, private operators had little reason to fund such a build-out. BSNL did lay some fibre optic cables in rural areas, but it usually ended at the local telephone exchange. And from there, the connection to someone's actual home ran over the old copper telephone wire used for landline calls, not fibre. Now, a copper wire carries weaker signal than fibre, which gets even weaker the further it travels. So, a home close to the exchange could perhaps get usable broadband speeds over copper. But a few kilometres further, the connection would be too slow to use properly. And so, by 2011, most homes in rural India still lacked a fast, reliable internet connection. Bharatnet was the government's answer to that gap. So, it would do what the private sector wouldn't. Run a network of fibre optic cables from towns into rural India, ending at the Gram Panchayat. Some of this fibre would be owned by the government, while some of it would run on existing cables borrowed from other companies. So, the point of this network was to build the most expensive, unprofitable part, running cables to each village. And it wouldn't actually try to sell internet itself. This is why the connections would stop at the Gram Panchayat. And to go any further, the government would have to build a retail telecom company that could sell connections to every rural household. That would involve hiring staff, billing customers, and fixing problems door to door across hundreds of thousands of villages. A massive capacity sink. So that job was instead left for private telecom operators, internet providers, and cable companies to handle on commercial terms. So these companies could offer some services such as e-governance, e-health, and e-education directly from these nodes. And they could then decide for themselves whether extending the connection to actual homes was worth the cost. Now the government approved the project in October 2011, and to actually build and manage this network, it set up a company called Bharat Broadband Network Limited or BBNL. In its first stage, now called Phase 1, it connected over a lakh gram panchayats by the time it wrapped up in December 2017
Especially back then, it was too expensive to lay entirely new cables across the whole country. So the project used underground fibre that BSNL, Railtel, and Power Grid Corporation of India had already laid. And each of those cables was a bundle of dozens of individual glass trans inside one protective sheath, and Bharatnet was allocated a few dedicated strands within them. The host, meanwhile, continued using the remaining strands for their own services. And new fibres were largely laid where existing cables did not reach a gram panchayat all the way. Now, in 2017, it began a second stage, phase two. The approach now was wider. States and private companies were brought in to help build the network, and with the internet, these new fibres would mix in radio and satellite links. And to deliver that last stretch of connectivity, Wi-Fi hotspots would be added within each gram panchayat. But there was a challenge. BBNL lacked field staff, customer-facing systems, or day-to-day maintenance machinery. It lacked the ability to keep a live network running. And this is why the cabinet approved merging BBNL into BSNL in 2022 Now, none of this came cheap. Not the cable, not the merger, and not the years of delay.