The government is unlikely to provide fiscal concessions to broadband service providers in the broadband policy to be released shortly. The proposal to unbundle the local loop in the last mile is also expected to be turned down.

The move is likely to harm private broadband service players who were planning to piggyback on Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd for last-mile connectivity.

"The Finance Ministry is unlikely to allow these benefits to broadband providers, as this will put a heavy burden on the government exchequer," a senior Department of Telecommunications (DoT) official said.

"No private sector player is interested in investing in infrastructure. They haven't even been able to fulfil their rural telephony obligations. We don't want the public sector players to unbundle their last mile connections immediately," he said.

The official said that the policy was in the final draft stages and would be announced soon after the assembly elections in Maharashtra and Arunachal Pradesh.

"We are analysing the physical, financial and security implications of the policy before releasing it. We have to ensure that all the stake holders are better off with the new policy," he added.

The DoT would also liberalise specific spectrum bands used in wi-max services inside a campus, the official said.

He also said that the department was looking at several other viable spectrum bands for these services, which could be released by the defence services and that equipment and services would be easily available for these bands.

He added that immediate withdrawal of these bands from the defence might not be possible.

Communications and Information Technology Minister Dayanidhi Maran had called on the Finance Minister last week to discuss fiscal concessions for broadband services. The finance ministry had earlier objected to the fiscal benefits recommended by the Telecom Regulatory Authority of India.

TRAI, in its recommendations, had pushed for a number of fiscal sops for broadband service providers like a service tax holiday for Internet service providers and a reduction in duties on inputs and finished goods, to bring down the cost of these services. These fiscal sops, if implemented, will result in a Rs 200-crore (Rs 2 billion) revenue loss to the government.