The Hindu Business Line : Telecom users to bear USO burden for another 5 years

TELECOM users will have to bear the burden of funding the universal services obligation until 2010 by when the Government is planning to phase out the fund set up to finance rural telephone projects. At present, telecom operators contribute 5 per cent of their revenues towards the USO Fund, which adds to the cost of offering services.

The USO Fund was set up as part of the New Telecom Policy, 1999 to achieve penetration in rural areas. With most of the objectives laid out being met by the USO policy, the Government now feels that the fund could be phased out in the next 5 years. The fact is that while urban tele-density today is 31 per cent, in rural areas it is just about 2 per cent.

In a bid to hasten the process of connecting rural India, the Telecom Regulatory Authority of India (TRAI) had earlier suggested a slew of measures, including sharing of infrastructure, discount in licence fee and spectrum charges to mobile operators, development of local content and automatic clearance for deployment of towers in rural areas.

TRAI has suggested supporting the creation of mobile infrastructure in rural areas through the Universal Services Obligation Fund, which will reduce the subsidy to Rs 8,000 crore compared to a projected subsidy of Rs 25,000 crore by 2010 under the existing regime.

Under the present scheme, the USO Fund is being used only to support rural fixed line telephones. "Due to technological and market developments, the USO policy, which provides rural telecommunication in a limited manner, may need some revision. Mobile telephony has been the key driver in boosting urban tele-density, one also notes the low penetration of cellular mobile services in rural areas due to the inadequate BTS infrastructure," TRAI had said. TRAI had also suggested a reduction in USO levy from the existing 5 per cent of the operator's revenue since the total subsidy is set to come down.

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