The Hindu Business Line : DoT working out plan to improve rural coverage

New Delhi, Oct. 11 In a bid to encourage cellular operators to expand their coverage in rural areas, the Department of Telecom is working out a graded scheme which may allow operators to contribute only 2 per cent of their annual revenues to the Universal Services Obligation fund if they complete their roll-out obligation.

At present, they contribute 5 per cent of their annual revenues to the USO fund. A three per cent reduction in charges would mean savings of nearly Rs 2,000 crore for the entire industry.

As per the scheme being worked by DoT, operators who cover below 50 per cent of the district will continue to pay 5 per cent of their revenues. Those who complete 70 per cent will get 1 per cent rebate, while those who cover 90 per cent of the district blocks will have to pay 3 per cent of their revenues to the USO fund.

While the telecom regulator had earlier suggested that all operators completing up to 75 per cent of their roll-out obligations should be given a 3 per cent rebate, DoT is of the opinion that the incentive should be given to only those who complete 100 per cent roll-out. “If we give incentive for covering only 75 per cent of the obligation, then it is feared that the toughest 25 per cent of the district blocks would be left out by the operators,” said a DoT official.

Licence condition

As per the licence condition, mobile operators are required to provide network coverage in each block of a district in a circle. The obligation also stipulates that the coverage should be available within buildings. However, most of the existing operators have defaulted in their obligation.

Defaulters

Recently DoT had issued show cause notice to seven operators with a suggested penalty of about Rs 450 crore for not fulfilling the roll-out conditions. Despite stringent penalty norms stipulated in the licence conditions, operators have not been able to improve their connectivity especially in remote areas.

By reducing the licence fee, the Government is now trying to set incentives for connecting the rural areas since punitive measures are clearly not working. Tele-density (number of phones per hundred people) in urban areas is nearly 40 per cent compared with just around 3 per cent in rural areas.