Thomas K. Thomas

New Delhi, April 21 The Department of Telecom has sought the approval of the Cabinet to exempt fixed line operators from paying annual licence fee on revenues earned from rural areas. The DoT has decided to approach the Cabinet after the Ministry of Finance objected to the exemption on the grounds that it was not consulted before the sop was announced.

The DoT had earlier announced that fixed line operators would get a relief if they were to offer services in rural areas. Fixed line players pay 6 per cent of their annual revenues to the Government as licence fee. It had said that they would not have to pay licence fee on revenues earned from rural telephone lines. This was to be implemented from October 1, 2008 but was later withdrawn after the Finance Ministry raised objections.

The Finance Ministry wanted to have a say in this regard because the proposed exemption would cost about Rs 200 crore a year to the national exchequer.

However, the DoT had taken a view that this was a policy related to the telecom sector and therefore the Telecom Commission had the authority to take decisions. DoT had pointed out that the policy to exempt fixed line players was approved by the Telecom Commission, which had a representative of the Finance Ministry as a member.

To end the impasse, the DoT has now taken the proposal to the Cabinet seeking ratification of its decision to take out revenues earned from rural telephones while calculating the annual licence fee. The DoT’s move comes after the Cabinet Secretariat instructed the department to approach the Cabinet since the concurrence of the Finance Ministry has not been obtained.

If DoT’s proposal comes through then state-owned BSNL would be the biggest beneficiary since it has the largest number of fixed line phones in rural areas. Private operators including Reliance Communications, Bharti Airtel and Tata Teleservices would also gain.

(This article was published in the Business Line print edition dated April 22, 2009)
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