The Hindu Business Line : BSNL unlikely to get more from USO fund

New Delhi, March 31 In what could be a fresh blow to Bharat Sanchar Nigam Ltd, the Department of Telecom has conveyed that it is not in favour of giving financial support to the PSU from the Universal Services Obligation fund for rolling out rural phones in lieu of abolishing access deficit charge.

“DoT has told us that it will be difficult to extend support from the USO Fund. This puts us in a situation where on one hand the access deficit charge has been removed by the telecom regulator, and at the same time no other means of funding our rural roll-out has been offered to us,” said a top BSNL official.

TRAI recommendation

The Telecom Regulatory Authority of India has suggested that the Government should provide Rs 2,000 crore to BSNL from the USO fund over a three year period. TRAI said that this was needed to offset any impact on BSNL from its decision to remove ADC.

However, DoT sources said that the two funds were set up for different purposes. While ADC was a levy imposed on the operators to support BSNL’s existing fixed line telephones in rural areas, USO fund is used for financing new roll- outs of telecom services in villages by any operator including private mobile service providers. “ADC is a form of subsidy to enable BSNL to continue offering low cost telephones. The cost burden on BSNL for this is a fixed one; so either there is a need for ADC or there isn’t. TRAI cannot say ADC should be withdrawn and at the same time say that the Government should compensate for it,” said an industry expert.

DoT is yet to take a final decision in this regard.

BSNL options

BSNL had earlier said that it would be left with no option but to go slow on its rural plans if the access deficit charge was withdrawn. BSNL officials said given the situation there were only two options. First, is to increase the tariffs in rural areas since the subsidy element has been withdrawn and the second is to take legal recourse against the TRAI’s order to abolish ADC.

Given the political sensitivity around increasing tariffs especially in rural areas, BSNL may be inclined towards taking legal remedy for its woes.

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