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.
Click on the links to see the full articles covering LIRNEasia’s book, ICT Infrastructure in Emerging Asia: Policy and Regulatory Roadblocks. ‘BSNL’s monopoly over infrastructure a hindrance to growth’ – Financial Express (India) Rural connectivity is now the focus of every telecommunication player in the country. Almost all stakeholders, from handset manufacturers to service providers, believe that the next wave of growth is in the rural areas.”However, India’s roll out (of telecom services) in rural areas has been slow. BSNL has the backbone infrastructure but is not yet ready to share it with private players,” he added.
LIRNEasia‘s next colloquium is on May 20th at 6:00PM SL Time/2:00PM Copenhagen/10:00PM Canberra/Singapore 8:00PM/5:30PM India/6:00PM Bangladesh/09:00AM Montevideo at LIRNEasia’s premises (SLIDA Campus, 28/10 Malasekera Mawatha) and via live blogging on this web site. Payal Malik & Harsha De Silva will present their progress on the research project titled Diversifying Participation in Network Development: Moving Beyond the Market which is being conducted under this year’s WDR theme–Diversifying Participation in Network Development. The researchers will present their preliminary findings from their review of the current subsidy mechanism for expansion of rural telephony in India. This mechanism is implemented through two instruments: (a)Access Deficit Charge (ADC), which is a surcharge on Interconnection fees to compensate the [primarily] the incumbent for below cost regulated tariffs in the rural areas and; (b) Universal Service Fund (USF), a fund created through a statute to finance network expansion in net high cost rural areas. The disbursement from this fund is made through a competitive least-cost subsidy mechanism.
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.
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.