Project Proposal for Building ICT Infrastructures for Rural Communities

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Telecommunication Development Bureau
                                               Document: LDC/RT/2003/04
                                               Date : 11-15 August 2003
                                               Original: English

     Partnership Round Table for Least Developed
          Coventry, United Kingdom, 11-15 August 2003

Project Proposal for Building ICT
     Infrastructures for Rural
     Communities in Bhutan
              23 May 2003

             Prepared By:
   Bhutan Telecommunications Authority
             Bhutan Telecom

   Ministry of Communications
   Royal Government of Bhutan
        Thimphu: Bhutan

                                                     Table of Contents

1.      Country background ...................................................................................................... 4
2.      Present information and communications technology (ICT) scenario ............... 5
3.      Previous projects and existing research results ....................................................... 6
4.      Project background ........................................................................................................ 6
5.      Project objectives............................................................................................................... 8
6.      Expected outcomes ......................................................................................................... 9
7.      Project beneficiaries ....................................................................................................... 9
8.      Technology choice ......................................................................................................... 10
9.      Project partners and their work scope..................................................................... 11
10. Project implementation strategy ............................................................................... 12
11. Local partner obligations and commitment............................................................ 15
12. Project budget and financing ..................................................................................... 16
13. Project management structure .................................................................................. 18
14. Project sustainability .................................................................................................... 19
15. Economic analysis ......................................................................................................... 19
16. Implementation plan .................................................................................................... 20
16. Environmental impact assessment ............................................................................ 20
17. Monitoring and evaluation ......................................................................................... 21
     Annex 1: Existing Telecommunications Network - Bhutan Telecom ...................25
     Annex 2: Kanglung IP Network Schematic .........................................................27
     Annex 3: Trongsa IP Network Schematic ...........................................................30
     Annex 4: Damphu IP Network covering Sarpang Dzongkhag ............................33
     Annex 5: Samtse IP Network Schematic .............................................................35
     Annex 6: Samdrup Jongkhar IP Network Schematic...........................................39
     Annex 7: Proposed project sites ........................................................................43

1.      Country background

The Kingdom of Bhutan lies in South Asia, in the Eastern Himalayas. It is landlocked, between
the Tibetan Autonomous Region of China to the north and India to the east, south and west, with
a total surface area of 46,500 square kilometers and a population of about 700,000. The country
is almost entirely mountainous, with land rising from about 160 meters above sea level in the
south to the high Himalayas in the north that rise to over 7,500 meters. Administratively, Bhutan
is divided into 20 Dzongkhags (or districts) which are further sub-divided into 201 geogs1.

    Bhutan has only recently ended its self imposed isolation and joined the
international community. The process of planned modern development began
   with the First Five Year Plan (1961-1966). As it has gradually joined the
     international community, Bhutan has adopted a unique approach to
  development: Gross National Happiness (GNH). Articulated by the fourth
  and present King Jigme Singye Wangchuck in the 1970s to underline that
   development has more dimensions than just those associated with Gross
  Domestic Product (GDP), GNH has served to direct change within Bhutan.
   Development is understood as a process that seeks to maximize happiness
      rather than economic growth. The five themes of GNH are human
     development, good governance, balanced and equitable development,
    preservation of culture and heritage, and environmental conservation.
Into the second year of the Ninth Five Year Plan, 9FYP (2002 – 2007) now, the basic
infrastructures in the country have been considerably improved. This in turn has allowed new
economic activities such as the sale of hydroelectric power and construction to be developed.
Indeed, the electricity sector provided almost 45% of the national revenue in 2000 – 2001 and is
increasingly pivotal to the country’s economic development. At the same time, the government
has sought to improve the basic level of education and the efficacy of government. In late 1999,
the government released a report aimed at facilitating good governance through enhancing
efficiency, transparency and accountability that has subsequently been acted upon.

A vivid demonstration of Bhutan's willingness to embrace the international community can be
found in its membership of international organizations such as the International
Telecommunications Union (ITU).         Through these organizations, Bhutan has begun to
internationalize its decision-making processes. Bhutan has also applied to join the World Trade
Organization (WTO), with a working party being established in 1999 to examine its application.2
  A geog is the smallest administrative block comprising a number of villages. A village population in Bhutan
normally ranges from 50 to 300.
  Bhutan applied to join the WTO on the 17th September 1999, with a working party being established in October
1999. However, it was not until February 2003 that the Director-General of the WTO welcomed the commencement
of 'serious work' on its accession process with the delivery of the Memorandum on the Foreign Trade Regime to the
WTO (WTO, 2003).

2.     Present information and communications technology (ICT) scenario

Telecommunications (telecom) and information technology (IT) in Bhutan is also a fairly recent
affair. The Royal Government of Bhutan (RGoB) initiated the first telecom network in 1963,
which then consisted of three separate analogue networks. Modern telecom development
process began only in the late 1980s.

Internet services were introduced in 1999 with the establishment of DrukNet, the first and only
Internet Service Provider (ISP) so far. The 77th Session of the National Assembly passed the
Bhutan Telecommunications Act 1999. Division of Information Technology (DIT) was created to
promote IT development and Bhutan Telecom Authority (BTA) to regulate the telecom sector, in
January 2000. The erstwhile Department of Telecom (DoT) was transformed into a wholly
government owned corporation, Bhutan Telecom (BT), in July 2000.

An accelerated development of the telecom sector in Bhutan started with the formulation of the
National Telecommunications Master Plan (the Master Plan) in 1989 and subsequent funding by
Japanese grant aid from 1991 onwards. This Master Plan was implemented in four phases over
a 7-year period. Bhutan now has a reliable digital telecom network interconnecting all the 20
Dzongkhag headquarters and major commercial centers. The main transmission backbone
network consists of 34Mbps digital microwave routes connected to digital switching systems at
some of the populous Dzongkhag centers and other urban areas while the lesser traffic spur
routes consists of 8Mbps microwave radios connected to Remote Line Units. Digital Radio
Multiple Access Subscriber System (DRMASS) was also deployed to extend services to some of
the Dzongkhags and few other urban centers with smaller capacity requirements. Annex 1
depicts the existing national telecommunications network.

Present connectivity is limited to the Dzongkhag headquarters, satellite towns, places with close
proximity to roads and very few rural areas. Rural services have been extended using Very High
Frequency (VHF) and Very Small Aperture Terminals (VSAT) technologies. High Frequency
(HF) wireless communications still play a vital role in serving isolated remote areas. Teledensity
is about 3% but actual penetration in the rural areas is less than 0.01%. In the fourth year of its
establishment, DrukNet has about 1,750 customers nationwide. There are at present about
7,000 computers in the country, most of which are concentrated in the capital and other urban
centers. These give a clear indication of the Digital Divide that exists between the urban and
rural areas in Bhutan.

   BT has implemented a wireless Voice over Internet Protocol (VoIP) rural
access pilot project, in 2002, with some valuable assistance from the ITU. The
 first phase of the project to introduce mobile cellular communications in the
  country is well underway and should commence operations by end of 2003.
BT is also negotiating with the Danish Government for funds to implement the
       Rural Telecommunications Master Plan (the Rural Plan). BTA is
    coordinating, a capacity building programme for new technologies and
 management, with the ITU, designed to train 20 BT middle and senior level
        technical and management staff during the second half of 2003.

The Dzongkha3 Development Commission has developed the software needed to include
Bhutan’s national language directly into the Windows Operating System. Towards the end of
2003, users around the world will be able to use Dzongkha automatically in all Windows-based
programmes, without loading any plug-ins. This will make computers and information more
accessible to users who are Dzongkha literate, and help schools teach Bhutan’s national

Meanwhile, DIT is coordinating a UNDP-assisted project to formulate an ICT
Policy and an ICT Act for Bhutan. A “Bhutan E-Readiness Report” is being
           prepared as a preliminary requirement of the project.

3.         Previous projects and existing research results

BT had conducted numerous field surveys of various sites and feasibility studies across the
country prior to implementation of the Master Plan in 1998. These reports are available for
reference. BT has valuable data and information on several remote and rural sites identified in
the process of drawing up the Rural Plan in 2000. This Plan document, updated recently, is also
readily available.

DIT has conducted a nationwide IT survey in March 2001. The findings of this survey are useful
and informative. A report to this effect is also available. DIT has successfully implemented a
wireless Local Area Network (LAN) system for the Ministry of Communications, Thimphu.
Experiences from and findings of this work can be used.

BTA has implemented a “computerization of schools” project during the first half of 2003.
Research results and valuable information can be extracted from this project experience.

Private ICT firms have the capability – manpower, technical and financial - to
   undertake networking projects and assemble computers locally. A few of
 these firms have successfully implemented fiber-optic networking projects in
the country. Some of these firms have the resources to train people in IT and
                              related applications.

4.         Project background

Bhutan as a landlocked country, far from regional markets, with no major industries, and few
export products, has everything going against it in a traditional economic model. It is further
away from opportunities, knowledge and information than many other countries. Thus, the need
for ICT is very large, as are the potential benefits.

BT has expanded the national network to provide services to some rural areas. However, as
about 80% of the people still live in rural and isolated areas, rural teledensity is less than 0.01%.
The very low teledensity in rural areas calls for the need to establish mechanisms to bridge the
gap between the rich and poor, the information 'haves' and 'have-nots', the urban and rural. The
    Dzongkha is the national language of Bhutan.

objective of the telecom sector during the 9FYP is to provide 10 telephones for each of Bhutan's
201 geogs, to enhance communications, promote e-governance and accelerate private sector
participation. Facilitating access to and enabling use of ICT for rural communities would
underpin achieving these national goals. The need to establish reliable access infrastructures,
facilitate hardware and software availability, educate and encourage rural people to use ICT for
socio-economic development, and raise awareness among ICT users, is timely.

The Internet/World Wide Web allows access to countless resources, including community,
national, and world facts, reference materials, and information on any topic. Simply providing
access to ICT use isn’t enough. Experiences elsewhere show that technology must be
integrated with local activities if learning is to take place, meaning that users must make use of
technology’s powerful ability to gather data, expedite communication, and analyze information.

In Bhutan, there exists a unique environment that greatly improves the chances for development
of a knowledge-based society to succeed: widespread knowledge of English language; good
national telecommunications network; significant and relatively well-educated population; limited
previous computerization and networking, allowing the adoption of new and open standards;
manageable amount of data; and the Royal Government’s commitment to adopt ICT as a
development tool. This favorable environment sets Bhutan apart from other countries in the
region and therefore presents an opportunity for the development of ICT.

   Donors have realized Bhutan’s potential in ICT, and several have already
 supported a number of ICT initiatives. Others are keen to join, and help the
 country in its quest to develop ICT and bridge the Digital Divide. Compared
   to other countries in the region, they feel Bhutan stands a good chance to
                     achieve its goals of going “ICT-savvy”.

The main factor that has aggravated the Digital Divide in Bhutan is the huge amount of
capital investment required to extend ICT services into rural areas, at very low commercial
returns. The difficult geographical terrain and sparsely distributed population pose
additional hurdles. The lack of commercial power supply facilities, in rural and isolated
areas, escalates project costs, as solar power supply systems need to be deployed at repeater
and terminal sites.

  The demand, however, for ICT services in the rural areas is ever increasing.
The new rural population realizes that the three basic infrastructures required
  for balanced development are motor roads, electricity and ICT access. It is
 thus likely that demand would far exceed the Rural Plan forecasts depending
                   on the number of villages under each geog.

The initial Rural Plan envisaged coverage of 90% of the rural villages. The plan proposed
deployment of DRMASS, as this technology was widely used in Bhutan then and BT employees
were familiar with its installation, operation and maintenance. However, this technology was
becoming obsolete and the manufacturer discontinued further production of such equipment. BT
therefore had to study the possibility of deploying various technologies for rural connectivity,
including the widely acclaimed and rapidly evolving wireless Internet Protocol (IP) technology,
which supports both voice and data.

      BT has satisfactorily deployed VoIP over wireless technology in two
  geographically distinct sites in Bhutan during 2002, as a pilot project. This
  ICT infrastructures project utilizes the findings of the pilot project and will
 complement the new Rural Plan through building ICT access infrastructures
   to serve about 46,400 inhabitants in 29 rural communities geographically
                            located in 7 Dzongkhags.

5.       Project objectives

     This project is designed to connect 29 isolated rural communities to the
 “global information infrastructure” through facilitating individual access and
    establishing networked Community Access Points (CAPs) using low cost
      wireless IP networking technology. These communities could not be
incorporated in the Rural Plan due to their difficult geographic conditions and
   limitations of the technology that would be used for implementation of the
       Rural Plan. Some of these sites are almost physically inaccessible.

 With the proposed wireless IP network interconnected to the Public Switched
      Telecommunication Network (PSTN), these rural communities can
communicate with the outside world. It is an initiative dedicated to closing the
Digital Divide gap, aimed at linking rural people to their families, relatives and
friends who live far apart in the country and abroad. It will lay the foundation
 for an inclusive Information Society and will go a long way in complementing
                                 the Rural Plan.

The specific objectives of the project are to:

     •    Promote ICT at the grassroots level.
     •    Improve access to ICT up to 9% of the total rural populations, of which penetration is
          currently 0.01%
     •    Develop ICT applications through networked CAPs in rural areas: e.g.,
                Promote e-learning and increase access to education facilities;
                Increase access to information and knowledge;
                Stimulate the development and growth of local businesses; and
                Develop ICT skills among the local population.
     •    Give impetus to RGoB’s decentralization initiatives and rural development activities.
     •    Contribute towards progressive achievement of GNH.
     •    Foster partnerships among all stakeholders.

6.       Expected outcomes

With the implementation and commissioning of this project, 29 isolated rural communities
with about 46,400 people would have access to ICT services. The priority policy of the
RGoB is to decentralize developmental activities to the grassroots. Hence, facilitating ICT
services would not only accelerate this noble objective but also foster information sharing
among all stakeholders and users.

The expected outcomes of the project are to:

     •    Establish wireless IP networks covering 29 rural communities.
     •    Establish a networked CAP in each of these communities.
     •    Provide low-cost ICT access to a rural population of about 46,400 inhabitants.
     •    Penetrate into rural areas not covered under the Rural Plan.
     •    Enhance literacy, in particular ICT literacy, in the country.
     •    Facilitate ICT user training, awareness and support.

In the Information Age, access to ICT is as vital as the basic human needs. The shared and
common use of the CAPs in these rural areas will ensure affordable and sustainable access to
ICT services. Furthermore, the availability of ICT facilities provides equal opportunities for both
genders to exploit the benefits of the digital age.

7.       Project beneficiaries

The beneficiaries are the general public in the service coverage areas, including geog
employees, teachers and students, health workers, agriculture, animal husbandry and forestry
agents and local entrepreneurs. About 6,600 households, i.e. about 46,400 people, in 29 rural
communities located under 7 Dzongkhags will ultimately benefit from the project. This is about
7% of the total population, which is about 9% of the total rural populace.

Table 1 shows the beneficiary sites proposed to be covered under the project. Refer Annex 7
for geographical location of these sites on the country map.

                                Table 1. Beneficiary communities

 Sl.       Dzongkhag                           Number of households        Total population
 No                             Name of                                     @ 7/household
  .                           community
  1      Samtse              Tendu                       470                      3290
                             Biru                        142                       994
                             Gumouney                    401                      2807
                             Bindu                       85                        595
                             Denchuka                    193                      1351
                             Dorokha                     463                      3241
                             Mayona                      185                      1295
                             Bara                        474                      3318
                             Sengdeng            Included in Dorokha                -

                              Jumsa              Included in Tendu geog             -
                              Lahereni                     347                    2429
                              Dumtoe                       252                    1764
  2      Zhemgang             Bjoka                        153                    1071
                              Pangkhar                     203                    1421
                              Ngangla                      517                    3619
                              Gongphu                       50                    350
  3      Haa                  Sombekha                     258                    1806
  4      Samdrup Jongkhar     Samrang                       41                    287
                              Martsala                     512                    3584
                              Dalim                        158                    1106
                              Debarli              Included in Martsala
                                                          geog                      -
  5      Pema Gatshel         Chongshing                   123                    861
  6      Mongar               Thangrong                    280                    1960
                              Ngatshang                    268                    1876
                              Chaskhar                     401                    2807
                              Yadi                Included in Chaskhar
                                                          geog                      -
                              Sherimuhung                  269                    1883
  7      Sarpang              Deorali                      249                    1743
                              Nichula                      124                     868
         Total                                            6,618                  46,326

8.       Technology choice

Facilitating ICT access to rural and remote areas is a challenging task. Choosing the right
technology is a much more difficult task. A feasible and future-safe technical solution must
emphasize scalability, cost-effectiveness and a choice of vendors offering compatible
equipment. Furthermore, the solution should provide adequate reliable connectivity capabilities
for both voice and data.

Rural Bhutan is characterized by settlements dispersed over wide areas across mountains and
narrow valleys. Thus, wireline telecom is not a feasible option. BT has successfully integrated
and tested multi-vendor IP (packet) radios on a pilot basis at two geographically distinct sites in
the country and found it feasible for satisfactory rural connectivity.

The IP over wireless LAN is a forward-looking technology and promises to be the most cost-
effective. This utilizes wireless LAN as the transport mechanism (using repeaters) to deliver
services. The low power requirements and falling costs of wireless LAN equipment make this
ideal for multiple repeaters. IP is run over this infrastructure to provide voice services to rural
and isolated areas.

IP over wireless infrastructure (also called Wi-Fi) for rural communications is being tested in
many parts of the world with the cooperation of the ITU. Advantages include:

     •    Global trend towards IP-based networks;
     •    Ability of the network to carry both voice and data effectively;

     •    Low power consumption of the wireless LAN equipment making them ideal for
     •    Faster rollout times;
     •    Lower maintenance costs;
     •    Greater network flexibility and scalability;
     •    Cost-effective for rural deployment;
     •    Wirelines extendable up to 7 km from the nearest wireless access point;
     •    Possibility of remote network management; and
     •    Power saving mode features.

9.       Project partners and their work scope

Potential project partners include:

     •    Funding agency(ies) – the source(s) of funds to facilitate implementation of the
     •    International Telecommunication Union (ITU) – the international organization within
          the United Nations System, which coordinates and facilitates governments and the
          private sector for development of global telecom networks and services.
     •    Bhutan Telecommunications Authority (BTA) – the telecom regulatory body in
     •    Bhutan Telecom (BT) – the incumbent and only telecom operator and service provider
          in Bhutan.
     •    Division of Information Technology (DIT) – the body responsible for promoting IT
          development in Bhutan.
     •    Private ICT firms – the business community.
     •    Rural communities – the beneficiaries, comprised of the local population including
          schools, geog-based governmental and other agents.

The scope of work of partners is as follows:

     •    Funding partner(s) will provide funds necessary to implement the project. Partner
          strategic interest lies in the global initiative to bridge the Digital Divide and open up
          digital opportunities. Linking rural communities to the Internet and each other is a
          gracious step in this direction.
     •    ITU will coordinate and mobilize funds necessary for implementing the project. One of
          the six programmes of the Istanbul Action Plan (IsAP), to be implemented by the
          Telecommunication Development Bureau of the ITU, is the Special Programme for the
          least developed countries (LDCs) “aimed at integrating LDCs into the world economy
          through telecommunication development”. The IsAP is a comprehensive package that
          will enable developing and least developed countries to promote the equitable and
          sustainable deployment of affordable ICT networks and services.
     •    National coordination is in the capable hands of BTA. Recognizing that ICT is an
          enabler of social growth and economic development, BTA's interests lie in achieving
          local delivery of universal, affordable ICT access through creating an enabling
          regulatory policy environment and stimulating investment in reliable ICT infrastructures.
     •    BT has experienced engineers and managers capable of choosing the appropriate
          access technologies and establishing networked CAPs. As the incumbent and only

         telecom operator in the country, BT is driven by both commercial interest and social
         obligations. DrukNet under BT is the only ISP, as of date, operating throughout the
   •     DIT has the capacity to establish LANs (both wired and wireless), initiate and develop
         content and applications, train and raise awareness among users.
   •     Bhutan's private ICT firms have undertaken several networking projects and have
         successfully implemented them. They possess local computer assembling capabilities.
         Most of these firms and their businesses are concentrated in the urban areas. This
         project will let them learn, explore and draw best practices and configure business
         models for sustainable investment in a setting relevant to rural and sub-urban Bhutan.
   •     Local people are keen to learn new things and use these for individual progress, social
         growth, and economic development. Governmental organizations at the local level
         must be encouraged to participate in ICT development programs in the context of their
         job responsibilities. ICT literate locals must be encouraged to share their know-how
         with their fellow villagers willing to learn and use ICT in their daily lives.

BTA is responsible for preparing the project document in close coordination with DIT and BT.
However, BTA will require assistance in preparing tender documents, drawing up technical
specifications and evaluating the tender proposals for the project (if applicable). This would
require hiring consultants. It may be necessary to hire experts in IP radio, switching, and power
plant system during the implementation of the project. Costs to cover these professional
services have been included in the overall project budget estimate. ITU will be responsible for
fielding two experts/consultants, one international and a local counterpart, to guide during project
initiation and through the installation and commissioning processes.

BT, BTA and DIT will be directly involved in the implementation of the
project. It is also in the interest of BT to train as many people during the
implementation process, as BT would be operating and maintaining the system
after commissioning and handing-taking over of the facilities. This would
offer good opportunity for project members to gain firsthand knowledge on
the system installation works, testing procedures, operation and maintenance.
The costs for on-the-field training will be borne by the local partners.

10.    Project implementation strategy

The main objective of the project is to facilitate ICT access to rural areas. In doing so, the
strategy is to use the existing primary links, build new point-to-point backbone wireless
links and add-on wireless point-to-multipoint secondary infrastructures for ‘last-mile’
connectivity to homes and CAPs in rural communities.

   The project budget is roughly estimated at US$ 4.139 Million. IP-PSTN
   gateways would be installed at Kanglung, Trongsa, Damphu, Samtse and
  Samdrup Jongkhar. Refer annexes 2, 3, 4, 5, and 6 for network schematics
corresponding to the five gateway locations. A CAP will be established at each

of the 29 selected sites. The CAP system requirement with associated costs is
                               shown in Table 2.

               Table 2. Community Access Point (CAP) system requirements

                           Cost/unit                Total cost         Additional
        Component                       Quantity
                            (US$)                    (US$)            Information
Access Point                1,500          1          1,500      With antenna
Switch                       700           1           700       12-port
Gateway                      400           1           400       Wireless IP to analog
Personal computer           1,000          5          5,000
IP and analog telephones     400           1           400       385 + 15
Printer (Basic Laser)       1,500          1          1,500
Solar power supply          7,500          1          7,500      Solar panels, charger,
                                                                 batteries, Inverter, etc.
Total                                                17,000

Figure 1 shows the generic schematic of a networked Community Access Point

          Figure 1. Generic schematic of a networked Community Access Point (CAP)


                                DrukNet              PSTN
                                                              Radio Tower

                                  Networked CAP

                   Gateway                Switch            Access Point

               Analog phone   IP Phone
                                           PC               PC    Laser printer

Figure 2 below depicts solar power supply system configuration. Each CAP site would need
about 10 solar panels (70W/17V), 5 batteries (150AH), a charger, and an inverter.

                       Figure 2. Solar power supply system configuration





            Pr                          PC            PC                PC

The project will be implemented within a 2-year timeframe. The details of coverage areas
are indicated in Table 3 below.

                                Table 3. Project coverage areas

 Sl.     Gateway Location             Geogs/Communities Covered                Remarks
  1     Kanglung            Yadi, Chaskar, Ngatshang, Sherimuhung (4)        See Annex 2
  2     Trongsa             Gongphu, Bjoka, Ngangla, Pangkhar (4)            See Annex 3
  3     Damphu              Nichula, Deorali (2)                             See Annex 4
  4     Samtse              Gumouney, Biru, Lahereni, Tendu, Bindu, Bara,    See Annex 5
                            Jumsa, Sombekha, Denchukha, Dorokha,
                            Sendeng, Mayona, Dumtoe (13)
  5     Samdrup             Chongshing, Thangrong, Dalim, Samrang,           See Annex 6
        Jongkhar            Debarli, Martsala (6)
        5 Gateways          29 Communities                                   Total

11.      Local partner obligations and commitment

    Development and field training of human resource is a key factor in the
      operation and maintenance of the rural ICT infrastructures during
 installation and commissioning of the project. The local project team will be
    comprised of 7 BT, 2 BTA and 2 DIT members. The team will provide
     installation support activities, coordinate with local communities for
   equipment accommodation, furniture and utilities (where available) and
        participate in formal project evaluation exercises with the ITU.

      BTA can assist the ITU in recruiting a local counterpart expert to guide
    through and supervise the implementation of the project. Cost components
    related to local transportation, on-the-field training, installation, site access,
    etc. will be managed locally through coordination among the local partners
         and target beneficiaries. See Table 4 for cost contribution details.

12.        Project budget and financing

This project is designed to complement the implementation of the Rural
Telecom Master Plan during the ongoing 9FYP and covers 29 communities in
7 Dzongkhags. Financing is sought for this project to the tune of US$ 4.139
Million (equivalent to local Nu. 194.533 Million, US$ 1 = Nu. 47) 4. The
detailed project cost estimate for implementing the project is shown in Table

                 Table 4. Detailed cost estimate for implementation of the wireless IP network

No                 Item Description                     Rate                      Total              Remarks
 .                                                      US$
1       Network Equipment
        IP Router                                        12000         8             96000
        Ethernet Switch                                   4000         4             16000
        IP-PSTN Gateway Platform/Application             40000         8            320000
        Gate Keeper Platform and Application             20000         4             80000
        Network Management Platform and
        Application                                      25000         4            100000
        CDR Data Collection Platform and
        Application                                      80000         4            320000
        Wireless Switch/Hub (802.11a/b/g
        compatible)                                       1000        29             28000
        Packet Radio (802.11a/b combo)                    3000        72            216000
        Antenna and Accessories                           1000        72             72000
        Terminal Gateway with FXS Interface (4
        ports)                                            2000        29             58000
        19-inch Rack and Accessories                      3000         9             27000
 2      Network Power Subsystem
2a      Repeater Sites (-48 V DC)
        Solar Panel                                        300        326            97800       Packet radio sites
        Battery 150 AH                                     600        168           100800       located   at   the
        Charger -48V 40Amps                                800        21             16800       existing Microwave
                                                                                                 repeater sites will
        Cables and Accessories                            1500        21             31500

    Nu. is the abbreviation for Ngultrum, the Bhutanese currency. Nu. 1 = 100 Chhetrums (Ch.).

     Antenna Pole and Mounting              150   21         3150   use the       existing
     Accessories                                                    power          supply
     Outdoor Weatherproof Enclosure         500   21        10500
2b   Terminal Sites (12V DC)
     Solar Panel                            300   29         8700
     Battery 60 AH                          150   29         4350
     Charger (12V 10 Amps)                   25   29          725
     Cables and Accessories                 500   29        14500
     Antenna Pole and Mounting
     Accessories                            150   29         4350
     Outdoor Weatherproof Enclosure         500   29        14500
                                                                    See Figure 1, Table
3    Community Access Point (CAP)         17000   29       493000   2
     Total 1                                            2,134,675
4    International Freight & Insurance                     320201   15% of Total 1
     (CIF Phuentsholing, Bhutan)
5    Consultancy/Expertise (IP radios)             2       100000   1 international (6
                                                                    months) and 1 local
                                                                    (18 months)
6    Factory training                     5000    12        60000   Training at supplier’s
                                                                    / manufacturer’s site
7    Field study visits                   5000    12        60000   To     sites    where
                                                                    wireless             IP
                                                                    technology has been
                                                                    deployed for delivery
                                                                    of both voice and
     Total 2 (External component)                       2,673,876
8    Installation costs                                    320201   15% of Total 1
9    Local transportation                                  100000   P/ling to Thimphu to
                                                                    sites: To be borne by
                                                                    BT and BTA.
10   On-the-field training                15000   12       180000   8 BT staff, 2 BTA
                                                                    staff, and 2 DIT staff
                                                                    for 18 months: To be
                                                                    borne by BT, BTA
                                                                    and DIT.
11   Training of trainers and end-users    1000   145      145000   Assuming 5 trainees
                                                                    per site for 1 month.
                                                                    DIT will be involved.
12   Antenna mounting mast and erection     300   40        12000   Couple of sites use
     cost                                                           existing towers and
13   Earthing/grounding                    2000   29        58000
14   Land acquisition                      1665   40        66600
15   Fencing of repeater and terminal      1415   40        56600
16   Other local inputs (access road to                    150000
     repeater and terminal sites, site
     clearance, CAP sites, equipment
     accommodation, furniture, etc.)
     Total 3 (Local component)                          1,088,401
     Total 4                                            3,762,277 Total 2 + Total 3
17   Contingency                                           376228   10% of Total 4
     Grand Total                                        4,138,505

This budget would be utilized for building ICT infrastructures for 29 rural communities with a
population of about 46,400 people through facilitating individual connections and establishing
CAPs at each of these sites. The costing takes into account all costs associated with the project
including costs for network equipment, power subsystem, installation, international freight and
insurance, local contributions, training requirements and professional services. BTA will
coordinate local commitments and obligations. Local cost components are reflected in Table 4
above under serial numbers 8 through 16.

13.       Project management structure
The project team will be comprised of 11 members, led by a Project Manager. Given BT’s
experiences with the VoIP pilot project and familiarity with IP radios, the Project Manager will be
recruited from within BT. He/she will work in close cooperation with the experts fielded by the
ITU. Other prominent project partners and stakeholders are BTA, DIT, private ICT firms and
rural communities. Each partner is a part and parcel of the project.

The project management structure is shown in Figure 3 below.

                            Figure 3. Project management structure

           Local counterpart            Project Manager             International expert
                            4 (2 + 2)
                                        Project Team (12)       7
            BTA/DIT                                                      Bhutan Telecom

      •   Preparation of project document                   • Collaborate     in   project
      •   Mobilizing funds                                    document preparation
      •   Tendering (if applicable)                         • Technical support through
      •   Procurement                                         implementation
      •   Delivery                                          • Operation & maintenance
      •   Training of trainers                              • Evaluation inputs
      •   Monitoring and evaluation                         • Future expansion

      Private ICT firms:
      • Equipment supply
      • User training

 Rural communities:
 • CAP
   accommodation,                  International
   furniture, etc.              Telecommunicatio            Ministry of Communications
 • Other commitments                  n Union               Royal Government of Bhutan
   and obligations.

Note: Numerals denote project team manpower contributions.

14.    Project sustainability

ICT business is very capital intensive and hence will require prudent planning to optimize on
investment and at the same time meet national objectives. This is especially the case for rural
Bhutan where sparsely distributed population and mountainous terrain make it extremely difficult
to provide ICT infrastructures. Rural ICT access, thus, does not present a commercially viable
business case but has proven to sustain through revenues generated from associated ICT
opportunities inherent in providing access.

Multipurpose access points could be established, additional connections can be provided at very
minimal or no cost to BT, e-learning and e-health facilities could be established, and e-business
opportunities could be explored into. Facilitating ICT infrastructures in rural and remote parts of
the country integrates the population and fosters multi-sector business partnerships and
ventures. ICT can be used as a tool to expose small-scale cottage industry products to an
international audience.

In essence, ICT, as an industry and as a tool, has the potential to create immense digital
opportunities for village entrepreneurs, women and men, who at present are further away from
basic knowledge and information.

Given the commitment of the Royal Government to encouraging affordable access to ICT for all
Bhutanese, and in particular the enthusiasm shown by the rural populace, the sustainability of the
project is assured.

Communities can access the Internet via a negotiated monthly flat rate DrukNet dial-up
connection at the CAPs. Nominal fees can be charged to users to recover subscription cost,
monthly call charges and rental. These fees charged to users will also support costs for personnel,
paper and other consumables, making the project fully sustainable immediately upon
commissioning of the project.

Other resources in the local communities can lend assistance, and local businesses may
underwrite some of the operational costs.

15.    Economic analysis

Social cost benefit analysis is a perfect necropsy where the identification and determination of
the best among project alternatives is made with reference to a country’s economic and social
priorities. It is a systematic procedure for comprehensive review of all costs, benefits and effects
of the project. It is therefore important to identify the major economic, environmental, social and
other factors that may be influenced, directly or indirectly, by a project. Telecommunications is
viewed as a catalyst to help enhance socio-economic development.                     Hence, rural
telecommunications is viewed from the social point of view rather than commercial returns.

The rollout of this rural ICT connectivity initiative will provide affordable access to data and voice
services. The social cost and benefit of the project is viewed by its influence on other
developmental activities in the rural areas and expected indirect socio-economic benefits.

16.    Implementation plan

The importance of realizing the objectives of the 9FYP through implementation of the rural
telecommunications network has been time and again stressed and is a priority project. This
ICT infrastructure project will contribute, in whatever small and valuable ways, towards achieving
these national objectives.

In the event of a funding agency coming forward to finance this Digital Divide bridging ICT
initiative, a concrete implementation plan could be negotiated. The project will be implemented
within a 2-year period.

A tentative schedule of implementation of the project is shown in Table 5.

                               Table 5. Tentative implementation plan

 Sl.                      Activities                               Tentative schedule
  1 Submission of project proposal by RGoB/BTA             Month 1
     to the LDC roundtable meeting organized by
  2 Final appraisal of project by ITU                      Month 2
  3 Approval of the project by ITU                         Month 3
  4 Tendering (if applicable), procurement, factory        Month 4 – Month 6
     training, field study visits
  5 Installation of the project                            Month 7 – Month 20
  6 Testing and commissioning of the project               Month 21
  7 Training of trainers/users                             Month 22
  8 Monitoring and evaluation report                       Month 24 (Month 30, Month 36)

16.    Environmental impact assessment

The ICT infrastructures project will have very little or no impact on the
environment in Bhutan.

Rollout of ICT infrastructures to rural areas will have slight environmental
and visual impact in areas currently not served by BT. Repeaters and
terminal sites will need to be installed on hilltops and protruding positions,
which will give a maximum area of coverage. This will require site clearance
by way of minimal flattening of hilltops (in some areas) and felling of few
trees. Likewise, the secondary networks connecting terminal sites with the

primary backbone network will make use of ‘thin’ radio links consisting of one
or more hops. The masts of these links will also be visible. Fencing will
protect repeaters and terminal sites physically.
It may be necessary to erect poles and pull wires to individual customers to provide the ‘last mile’
connectivity but in any case the visible installations of the access network will appear to be
vanishing in the dramatic landscape of rural Bhutan.

Environmental impact assessment requirements, if any, would be locally coordinated with the
National Environment Commission and other concerned parties.

17.    Monitoring and evaluation

       BTA, as the coordinating national agent, will closely monitor the
   implementation of the project. On completion and commissioning of the
  project, BTA will submit an evaluation report to the ITU and other project
 stakeholders after thorough study, observation and assessment of the project
   outcomes. Local and national partners will participate, with the ITU and
         project experts, with inputs for the project evaluation report.

 SES & VSAT DAMA                                                                                                      Annex 1: Existing Telecommunications Network -
 M/W terminal/Switch/ELU
 M/W Active repeater                                                                                                  Bhutan Telecom
 M/W Passive repeater
 M/W Routes
 DRMASS base
 DRMASS repeater
 DRMASS terminal
 DRMASS routes
 Planned routes DRMASS                                 Gasa

                          Dechenchholing                                      Changkha
                                                   Dobchu     Punakha                              Yotula                 Namnapan      Ngalamdun
                                                                              Pelela                            Jakar
                                                                                       Tashiling                                      Tangmachu
                                Thimphu           Dochula Lobesa                                          Chummey
                                                                    Limukha     Pelela P                Trongsa           Tangsbi                            Tshenkharl
                     Damthang                        Yusipan Wangdue
                                                   Semtoka        Tsemila                            Terang                   Thrumsingla       Yangmeer              Rangjung
                                                                                       Bubja                                                                                           Sakten
                          Ha                          Hebisa
                                          Khasadrapchu              Rurichu                                             Tandi P             Korila       Trashigang       Samchellin
                            Chelel          J.J Peak                                                        Baling
                                                                                                                            Yongkol            Kanglung        Rangshikh
                                                                                           Panjurmani                                       Mongar             Yongphula
                                                 Chapcha                                                        Zhemgang                       Khaling
                                                                                                                                    Gyelposhin               Kharungla
                       Takti Peak
                                                 Chimakoti                                      Samkhar                                               Yongla
                                       Gedu                        Dagana         Setipokhari                 Tamal                                   gompa
                                                Padechu                Damphu                                                               Pemagatsh
                                                  Dagapela                       Darechu
                                                Sinchekh           Drujegang
                        Saure        Pepch               Namchella                                          Surey
                        Gomtu              Tala                          Sarpang                                                                               Deothan
                            Phuentsholing Pasakha                                            Gelephu
                                                                                                                          Panbang         Nganglam
                                                                                                                                                                   Samdrup Jongkhar

              Source: Bhutan Telecom (2003)

Annex 1: Existing Telecommunications Network - Bhutan Telecom

Annex 2: Kanglung IP Network Schematic

Annex 3: Trongsa IP Network Schematic

Annex 4: Damphu IP Network covering Sarpang Dzongkhag

Annex 5: Samtse IP Network Schematic

Annex 6: Samdrup Jongkhar IP Network Schematic

                                                                        Annex 7: Proposed project sites

  Bara      Sombekh
      Lahereni Dumtoe

  Biru             Mayon
                            T                                 Gongphu                      Chongshing
    Ghumo       Denchukha                                                                               Martsala     Debarli
            Sengden                                                     Bjoka
                Dorokha                                  Pangkh
                                                             ar                                                    Dalim