The Hindu Business Line : Money idling in USO kitty rises to Rs 15,000 cr

High rates
Indian operators contribute the highest amount for universal services compared to their counterparts in other developing countries.
While in India the USO Fund levy is 5% of the operator’s annual revenues, other countries such as Venezuela and Argentina charge only 1%.

Thomas K. Thomas

New Delhi, Jan. 20 The money lying unused with the Universal Services Obligation fund has increased to Rs 15,000 crore.

During 2007-08, Rs 5,800 crore was collected from operators for funding rural telephony but only Rs 1,800 crore was allotted.

India’s tele-density is just over 20 per cent, with only 60 per cent of the population having access to a telephone.

If the unutilised money is pumped back into the telecom sector, then it can address the urban-rural digital divide to a large extent.

India accounts for nearly 50 per cent of the money lying unused in various Universal Services Obligations funds across 15 developing countries estimated at $4.4 billion.

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

Higher revenue share

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

While in India the USO Fund levy is 5 per cent of the operator’s annual revenues, other countries such as Venezuela, Peru, Brazil, Argentina and South Africa charge only one per cent.

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.

Countries such as Kazakhstan, Malaysia, Chile and Argentina have more than 40 per cent mobile penetration.

Indian telecom operators have written to the Finance Ministry, seeking a reduction in the revenue share to 3 per cent from 5 per cent on the grounds that the Government should first utilise the money lying idle in the USO kitty.

Broadband coverage

DoT has announced plans to use the fund to provide mobile and broadband coverage in rural areas. While the first phase of the rural mobile project is under way, the second phase will be rolled out this year.

However, the broadband project is stuck as there is no clarity on the spectrum policy for wireless technologies such as Wi-Max and Third Generation services (3G).

DoT had also invited proposals from private operators for new rural projects but did not find too many takers.