The government is allowing private internet service providers to connect rural households under the BharatNet project to fix the last-mile gap. ISPs will retain 95% of subscription revenue and receive subsidies up to ₹12,900 per connection. While this shift aims to scale adoption beyond the current 1.64 million connections, companies must manage strict bank guarantees and operational challenges like slow fault restoration.
The Indian government has opened the BharatNet optical fiber network to private internet service providers (ISPs) to address the slow pace of rural internet connectivity. With only 1.64 million households connected against the target of 15 million, the government is moving away from the state-led model to invite private players to handle last-mile delivery. This policy change allows ISPs to build direct customer relationships and manage service delivery at the village level.
Revenue and Subsidy Model
Under the new guidelines, private ISPs will gain significant financial autonomy. Instead of acting as sub-contractors for BSNL, these providers will be able to keep 95% of the monthly subscription revenue generated from their subscribers. To encourage investment in underserved areas, the government is offering direct subsidies ranging from ₹8,900 to ₹12,900 per connection. BSNL, which previously managed operations and revenue, will now transition to the role of a project management agency, focusing on oversight rather than daily service operations.
Operational Risks and Maintenance
While the move provides a new market for ISPs, the industry is closely watching the strict requirements attached to this model. To ensure that services remain active, the government requires ISPs to provide bank guarantees or insurance surety bonds equal to the subsidy amount, which must be held for 30 months. These companies will also face rigorous audit standards. Furthermore, the Comptroller and Auditor General (CAG) has previously highlighted systemic issues with the existing network, noting that faults take an average of 17 days to resolve.
For investors, the success of this model depends on whether private companies can make rural broadband profitable while handling high maintenance costs. The 17-day average for fault repairs reported by the CAG is a significant operational challenge. If private ISPs cannot maintain the network reliably, they risk losing the subsidy and facing penalties due to the strict guarantee requirements. Investors may track whether major telecom players participate or if the market is dominated by smaller, regional ISPs. The key monitorable will be the actual uptake of these connections and whether private providers can improve maintenance times compared to the previous state-run model.