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Thursday, Mar 28, 2002

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DoT issues guidelines on universal service obligations

G. Rambabu

NEW DELHI, March 27

THE Department of Telecommunications (DoT) has announced the creation of a Universal Service Fund (USF) starting April 1, 2002, to extend support to the basic and cellular service providers for meeting their universal service obligations (USO).

As recommended by the Telecom Regulatory Authority of India (TRAI), five per cent of adjusted gross revenue will be allocated out of the licence fees collected by Government for the USF.

In its much-awaited guidelines on USO issued on Wednesday, the department has, however, noted that in the event of an increase in the requirement of USO, the percentage of contribution towards the fund can be raised to meet such additional requirement.

The support from the fund shall be provided to basic service operators and cellular mobile service providers to meet their net cost (cost minus revenue) in rural and remote areas on both the public access telephones and individual household telephones in net high-cost rural/remote areas. Priority will be given to meet public access telephones.

DoT has stipulated that the service providers can avail of resources from the fund through a multi-layered bidding process on the least quoted subsidy support basis. For this purpose, the first round of bidding will be amongst the existing access providers (BSOs and CMSPs) of the concerned service area.

Where no bids are received from any of BSO/CMSP in the area concerned, or the lowest bid is higher than the benchmark, then a fresh round of bidding shall be called from where all BSOs and CMSPs in the country can participate. However, the award of contract as a result of bidding will not be treated and taken as grant of fresh licence.

The lowest bid offering the least subsidy shall be accepted subject to the ceiling of the benchmark cost. For calculation of benchmark cost, DoT has noted that fully allocated current cost methods shall be adopted, considering the most effective solution for a particular location. For operating expenses, the cost will be calculated on the basis of operations run most efficiently.

The universal service support shall be reimbursed on the basis of actual physical performance. Such reimbursement shall be made on completion of the targets. Liquidated damages shall be imposed for any shortfall, the guidelines note.

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