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India Bans Global Network Vendors From Rs 21,000 Crore Fibre Optic Venture

By SiliconIndia   |   Monday, 21 January 2013, 07:47 Hrs   |    3 Comments
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Bangalore: Top global network vendors have been barred by India’s telecommunications ministry from supplying gear for 21,000 crore broadband venture involving the rollout of a national fibre optic network (NOFN) that will take high-speed internet to far flung rural areas, reports Economic Times.

The global network vendors— Ericsson, Nokia Siemens Networks, Alcatel-Lucent, Huawei and ZTE are not in department of telecommunications’ (DoT) certified list of vendors eligible to supply Gigabit Passive Optical Network, or GPON, which is the chosen fibre technology for this project.

As per DOT, the project is entirely given to domestic vendors that include, Himachal Futuristic Communications (HFCL), ITI, Tejas Networks, C-DoT, VMC Systems, Prithvi Infosystems, Sai Systems, United Telecoms and SM Creative. The project is overseen by a new entity called Bharat Broadband Network Limited (BBNL) and is being executed by BSNL and MTNL.

"We will comply with DoT's network security guidelines and norms to promote domestic manufacturing of network gear and will invite bids by mid-February," a top BBNL executive told ET.

This move by DoT came into force after the research body C-DoT (Center for Development of Telematics) urged the telecom ministry to shun Chinese vendors like Huawei and ZTE out of "sensitive government projects on security grounds". The research body stated that the recent reports by US Congress claimed both companies were a threat owing to their alleged links with the Chinese military.

However the DoT has gone a step further and barred all the foreign vendors from the project.

"It is difficult to understand how the suggested levels of domestic sourcing for GPON equipment have been defined when they are yet to be launched or reach a certain level in terms of economies of scale in India," said a top executive with a leading international telecom gearmaker.  

Another executive, who also declined to be named claimed that "the government may end up paying a higher amount for GPON gear as there was a 22 per cent cost disadvantage for electronics manufactured in India compared to imports".

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Reader's comments(3)
1: I can't agree with Venky. On the face of it, it appears to be encouraging indigenous production an development, which is a laudable goal. One wonders why the same attitude did not prevail with respect to allowing foreign retail concerns.

This decision not to allow international, established vendors from supplying equipment will delay development of the fibre optic infrastuure by several years, and will be fraught with sub-standard equipment, delays, cost over-runs, corruption, .....

In both the decisions, FDDI as well as this FiberOptic deal, the govt has taken wrong decisions.
Posted by:pKrishna - 21 Jan, 2013
2: DOT has taken a good decision in encouraging local suppliers to invent and innovate in national fibre optic network NFON project. This means that its not letting the '3rd party vendors outside of india' to develop this core infrastructure since this would mean to compromising its IP. Smart decision DOT.
Posted by:Venky - 21 Jan, 2013
3: I guess it makes kickbacks a lot easier with desi companies!
Posted by:Sorry For India - 21 Jan, 2013