As those who have followed the discussion on universal service fees on this blog know, universal service fees are usually charged from a company (actually the company collects the money from customers and gives it to the government). The payments go to dedicated fund, from which it is disbursed (or not, for the most part) to connect more people to the network. India has one of the highest universal service fees in the world–5% of total revenues. We were hopeful, after years of presenting evidence to the government, that this would be reduced (though our preference is for its complete phasing out). The reduction of the rate from 5% to 3% was almost done, but suddenly it has been halted due to Finance Ministry objections.
India’s Department of Telecommunications, or DoT, Friday said the auction of radio bandwidth for third generation, or 3G, mobile phone services will take place as per schedule on Jan. 30 and that there will be no further delay. Analysts and industry players, however, expect the process not just to be further delayed, but also to attract fewer participants for the bidding process. Their apprehension follows recent media reports, citing government documents, that the finance ministry has sought to double the auction price for pan-India 3G radio bandwidth, or spectrum, to INR40.40 billion.
Joji Thomas of the Hindu Buisness Line reported this on August 21, 2006. LIRNEasia research by Payal Malik had recommended USO funds should be technology neutral as well as fund infrastructure creation, but the funds from the USF are not being released as mentioned in this report. Read on… JOJI THOMAS PHILIP NEW DELHI [ MONDAY, AUGUST 21, 2006 10:27:47 AM] DEPARTMENT of telecom has demanded that the finance ministry allocate an additional Rs 2,000 crore towards the Universal Service Obligation Fund (USOF), over and above the Rs 1,500 crore that has been allocated in the Union Budget. It has also said that all telecom companies should pay 5% of their adjusted gross revenue towards the USOF, which is used for building and supporting telecom infrastructure in rural India. DoT move is likely to cause a showdown with the finance ministry .
May 26, 2005 (Economic Times via NewsEdge) India’s Ministry of Finance has asked the Department of Telecommunications (DoT) to allocate a 3G spectrum to mobile operators through the auction route. According to the ministry, it is DoT’s responsibility to price spectrum as per international practices, citing the example of Europe and the US, where governments fetched billions of dollars in revenue by auctioning spectrum. The ministry has also said that pricing of spectrum should not be in TRAI’s domain. The finance ministry has taken the position that pricing of radio spectrum is not a regulatory issue, and hence, should not have been referred to the telecom regulator. Instead, it has argued that receipts from radio spectrum should accrue to the government as non-tax revenue.