India’s Budget Impact on Universal Service Obligation

Posted on March 1, 2005  /  1 Comments

By Payal Malik

In his budget speech the Finance Minister of India promised a release of Rs. 1,200 crores (USD 275 million) for the Universal Service Fund. While it is heartening that the funds are being released and are not being gobbled by the Contingency Fund of India, what is however disheartening is that competition and liberalisation has not achieved its full potential in bridging the rural urban divde and like in the monopoly era one has to wait for budgetary pronouncements for rural telephony to jumpstart. An extract from his speech:

Telecommunication is the best way to provide connectivity in urban and rural India. By the end of January 2005, we had achieved a tele-density of 8.75 per cent. However, we are concerned with the low tele-density in rural areas. So far, Government has released Rs.1,700 crore to the Universal Service Obligation (USO) Fund, which has been fully utilized. A provision of Rs.1,200 crore has been made for 2005-06. 1,687 subdivisions will get support under the USO Fund for rural household telephones. 5.20 lakh village public telephones (VPTs) have been installed so far, and BSNL has undertaken to provide VPTs in the next three years to the remaining 66,822 revenue villages

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  1. BSNL, Tata, Reliance bag Rs 8,000-cr rural phone project

    Thomas K. Thomas

    New Delhi , March 16

    BHARAT Sanchar Nigam Ltd, Reliance Infocomm and Tata Teleservices have bagged the Government sponsored Rs 8,000-crore plan to provide 8 million fixed line telephones to rural households by 2007.

    Mr Shyamal Ghosh, Administrator, USO Fund, told Business Line, “The competitive bids have brought down the cost of the project by 60-75 per cent. This will allow us to use the kitty to roll out 8 million telephone lines instead of 6 million lines proposed earlier. The bids from private operators show that there is a market in rural India.”

    While the Government had worked out a cost of Rs 17,000 per line, the operators have quoted between Rs 4,500 and Rs 7,000 per line.

    The USO Fund administrator had invited expression of interest from telecom operators across 20 States to bid for the largest project envisaged under the USO scheme. The project covers 274 secondary switching areas (SSAs), which are equivalent to a district.

    While there was competitive bidding in 215 SSAs, BSNL was the sole bidder for the remaining sectors in Assam and North East. In areas where there was competitive bidding, it emerged the most successful bidder winning in 171 SSAs across 19 States.

    The telecom operator did not win any sectors in Haryana. Reliance Infocomm emerged the winner in 61 SSAs spread across 15 States while Tata Teleservices got the project in 42 SSAs across 9 States. Tatas had bid for villages in 16 circles. Bharti, which had expressed interest in 11 circles, did not win any. Letter of intent has been issued to the successful operators.