The Hindu Business Line : $ 2-b of USO Fund unutilised in India

Underutilisation
Despite the high rate of revenue share and the huge amount of money lying unused in the USO Fund, India still has low telephone penetration.
High duties and regulatory charges in India combined with low tariffs meant low cash flows for operators, which may hold back expansion in rural areas.

Singapore , Oct. 22

India accounts for nearly 50 per cent of the money lying unused in various Universal Services Obligations funds across 15 developing countries.

Of the $4.4 billion lying unutilised across countries such as Brazil, Malaysia and Pakistan, the Indian USO Fund has nearly $2 billion waiting to be pumped back into the telecom sector, according to a new report released by the GSM Association.

Indian operators also contribute the highest amount for universal services compared to their counterparts in other developing countries. The report on universal access said that India and Brazil account for 78 per cent of the money collected by the various USO Funds.

"A total of 15 funds in the developing markets that have already levied and distributed resources were studied in detail.

They have collected a total of approximately $6.2 billion from operators, beginning in the late 1990s but mostly since 2001-02.

As much as 78 per cent of the total collections ($4.8 billion) came from two countries (India and Brazil), 9 per cent ($548 million) from Malaysia and 2 per cent ($111 million) from Peru.

The remaining 12 countries totalled less than 12 per cent ($725 million). The total contribution of mobile operators to this amount has been $2.1 billion, approximately one third," said the GSMA report.

Higher revenue share

The Indian operators also pay a higher revenue share to the USO Fund compared to other countries.

While the Government in India has set a USO Fund levy of 5 per cent of the operator's revenues, most other countries such as Venezuela, Peru, Brazil, Argentina and South Africa charge only one per cent of the annual revenues from the operators.

However, despite the high rate of revenue share and the huge amount of money lying unused in the USO Fund, India still has low telephone penetration. While telephone density in India is around 15 per cent, countries such as Kazakhstan, Malaysia, Chile and Argentina have more than 40 per cent mobile penetration.

While the Government has taken a decision to allow mobile operators to take benefit from the USO Fund,

GSMA said that the policy needed to be market friendly to induce operators to make use of the fund. GSMA also said that other duties and regulatory charges in India are also extremely high and this combined with low tariffs meant low cash flows for mobile operators, which may hold back expansion in rural areas.

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