USO fund may finance rural mobile telephony

Posted on April 18, 2005  /  1 Comments

NEW DELHI, APRIL 13: The government is in the process of amending the Indian Telegraph Act to extend the Universal Service Obligation (USO) fund support to cellular mobile services (both GSM and CDMA).
As of today, the government is giving USO fund support to only the fixed line operators offering services in the rural areas.

“We are looking at amending the Telegraph Act to accommodate the cellular services and CDMA-based services to reach the rural areas. We are looking at sharing of the passive infrastructure with the cellular service providers,” communications and information technology (C&IT) minister Dayanidhi Maran told reporters.

Besides covering the villages, the minister is of the opinion that the wireless services should also provide connectivity to the Railways and highways especially in rural areas. When asked about the time frame for amending the Act, Mr Maran said, “We have just started the process.”

Cellular Operators’ Association of India (COAI) welcomed the Wednesday’s announcement. COAI director general TV Ramachandaran said, “This will make the expansion into the rural and semi-urban areas by cellular operators economically viable. We need more cash surplus to fund capital expenditure in rural areas.”

So far, the state-owned Bharat Sanchar Nigam Limited (BSNL) has received the lion’s share of the USO fund as it has covered around 80% of the villages in the country by offering fixed line services. The private operators share in offering rural connectivity has been low in the past.

But if the Telegraph Act is amended then the private sector could play a major role in offering wireless services in rural areas. This is largely because the private players have a stronger presence in wireless services than in fixed services. Also while the urban areas getting saturated in terms of telecom coverage, the rural areas present a largely untapped market. Around Rs 1,814 crore have been made available to the operators for rural telephony of which Rs 1,314.50 crore have been provided during 2004-05. For the year 2005-06, a provision of Rs 1,200 crore has been made available for the USO support.

The minister on Wednesday announced that India has crossed 100 million phones. “The US, Japan and Germany have almost 100% tele-density, while China has a tele-density of 55%. India, with a tele-density of about 9%, is bound to surpass the growth in these countries by a wide margin over the next 4-5 years,” he said.
The minister said the country was likely to have 250 million phones by 2007 with a tele-density of 22%.
“Of the additional 150 million that would be added by 2007, almost 80 million will be done by BSNl and MTNL alone,” he said. On the present access deficit charges (ADC) regime, Mr Maran said the ADC regime will continue for at least another two years. “There is no rush to abolish the ADC. ADC will be reduced with the passing of time and the benefit would be passed on the users,” the minister said.

1 Comment

  1. Did they fund it in the end?