USO project defaulters face 5-year ban

New Delhi | Updated on November 04, 2011


RCom biggest defaulter with 65% shortfall in target, says DoT

The Department of Telecom may impose a five-year ban on Reliance Communications, Bharti Airtel, and Aircel from participating in future rural telephony projects supported by the Universal Services Obligation fund. This is because these operators have failed to meet their roll out targets under a GSM project floated by the USO fund in 2007.

The project essentially involved covering 2.5 lakh villages in remote areas with GSM mobile sites.

Against a target of commissioning mobile services on 21,607 tower sites, the operators have done 15,309 even after being given repeated extension by the USO fund administrator. The biggest defaulters are Anil Dhirubhai Ambani Group companies Reliance Communications and Reliance Telecom, which have fallen short by 65 per cent and 47 per cent of their respective targets.

Violation of pact

The Communications and IT Minister, Mr Kapil Sibal, had earlier appointed a committee headed by the DoT Secretary to look into the issue. The panel has found all the operators in violation of the agreement signed with the USO fund and has suggested imposing a penalty apart from the 5-year ban.

The operators have blamed their failure to meet the targets on the delays in setting up tower infrastructure and change in market dynamics in rural areas.

“BSNL delayed the roll out of tower infrastructure, which was also part of this project, by more than two years. By this time other operators rolled out services into these areas on their own and grabbed whatever little market was available,” said an RCom executive. “when we bid for the project, we had seen the opportunity in going into these rural areas but the delay has made the project unviable,” he added.

RCom and Reliance Telecom had approached DoT in 2009 seeking to exit from 4,537 and 751 mobile sites, respectively, on grounds of un-viability. Bharti Airtel had also put in a similar request for 81 sites.

However, the DoT panel has trashed the reasons given by the operators saying that the companies knew at the time of bidding for the project that the USO support is being offered to go into economically non-feasible areas.

Lack of power supply

Some operators also blamed non-availability of uninterrupted power supply but the DoT panel has held that out of the total shortfall of 6298 sites, this reason may be relevant for only 1,500 base stations.

“The failure of service providers to perform and deliver has not only adversely impeded the implementation of USO fund scheme but made it expensive too on account of times and opportunity lost,” the panel has concluded adding that DoT should take legal view before penalising the defaulters.

According to sources, the DoT is likely to meet the operators before finalising its action. The primary concern is that if DoT blacklists five top operators then it will leave only one or two players for future USO projects.

Published on November 04, 2011

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