The Telecom Regulatory Authority of India (TRAI) has recommended an investment of $6 billion to set up a national broadband network for faster Internet connectivity after it missed its target of 20 million broadband connections within 2010 as it has managed only 10.3 million.

The Indian telecom sector regulator said the network will be established in two phases, starting with all cities, urban areas and village panchayats by 2012 and then move to habitations with a population of over 500 by 2013.

The network will extend to the rural areas for providing better education, health and banking facilities.

The Indian government will finance the plan by universal service obligation (USO ) fund and loans given or guaranteed by the government.

The objective of national broadband network is to provide optic fibre to homes in 63 cities covered under Jawahar Lal Nehru Urban Renewal Mission (JNURM), and within half a km distance from homes in all other cities.

The recommendation envisages provision of 75 million broadband connections by 2012 and 160 million connections by 2014.

The regulator said these recommendations are aimed at inclusive growth, easy access to high speed data and increase broadband penetration in India.

India's broadband penetration is 0.8 percent against the teledensity of 60.99 percent, TRAI data for September showed.

The TRAI has also said duties levied on inputs and finished products used in providing broadband and Internet services could be reviewed to make broadband service affordable.

The telecom watchdog has also recommended 100 percent depreciation in the first year for modems and routers used for Internet and broadband that could make services more affordable.

The TRAI has also proposed establishment of national and state-level optical fiber agencies to establish networks and said they could post an annual revenue of around $6 billion.

According to the study, a 10 percent increase in broadband penetration accounts for 1.38 percent increase in the per capita gross domestic product growth in developing economies and the optical fibre network will support huge bandwidth requirement for provision of broadband and facilitate broadband growth.