The Hindu Business Line : Raja rejects telecom industry plea to cut USO levy

The Communication and IT Minister, Mr Andimuthu Raja, has rejected telecom industry’s plea to reduce the collection for Universal Services Obligation fund. Telecom operators had urged the Ministry to reduce the USO levy from the current 5 per cent of their annual revenues to 2.5 per cent.

Operators had said that since the USO fund has over Rs 10,000 crore lying unused, the Government should consider lowering the contribution made by the telecom firms. “We realise that USO is an important tool to enable telecom services in rural areas. We have been contributing 5 per cent of our revenues annually towards it for the past so many years. However, now that the fund has surplus amount, which is enough to finance the new mobile and broadband projects, the levy should be reduced,” said a CDMA operator.

The operators proposed that if the levy was reduced, they would reciprocate by dropping tariffs even further. Telecom industry generates revenues of Rs 80,000 crore and a 2.5 per cent reduction in the levy would have meant savings of around Rs 2,000 crore for the operators.

Senior DoT officials, however, said that the levy could not be reduced at a time when the tele-density gap between urban and rural is really high.

“There are also political compulsions due to which the Government cannot consider the operator’s request. The USO fund will use the money that is available to it for a number of new projects. We have asked all the operators to suggest ways to utilise the fund rather than looking for reducing the size of the fund,” said a DoT official.

DoT officials also said that the operators’ request could be considered at a later stage once the existing projects are completed. “Let the operators participate and complete the cellular and broadband projects being undertaken by the USO fund, after that we can look at their proposal for a reduction in the levy,” said DoT officials.

Operators however pointed to the recent bidding for rural mobile project where some of the telecom companies put in negative bids.

“It is not that by reducing the levy, operators will not go to rural areas. What we are saying is that technology and cheaper equipment today enables us to reach remote areas at much lower costs for which we do not need a USO fund with such a large corpus,” said an operator.

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