Given the thrust towards increasing telecom penetration in rural India, the Department of Telecommunications (DoT) and the Telecom Regulatory Authority of India (TRAI) are exploring ways to promote quick rural rollout of telecom services. In fact, DoT’s draft new telecom policy (NTP), 2005 expects to cover all villages by 2007.
However, with rural telephony not taking off the way it was expected, TRAI initiated a consultation process for accelerating rural telecom penetration and bridging the urban-rural divide. It also recently issued a directive to streamline disbursement from the Universal Service Obligation (USO) Fund, to which all service providers contribute about 5 per cent of their revenue. The fund is used to provide subsidy support for rural telephony.
All operators and particularly Bharat Sanchar Nigam Limited (BSNL) are required to disclose how the money received from the USO Fund has been used. The directive states that with telecom services funded by the centre through the USO levy, it will come under increased surveillance as it is now mandatory for all operators to disclose details on their activities in rural areas on their website. They have also been asked to keep the USO administrator informed about the use of the money on a monthly basis.
According to TRAI, this step is important. “Effective disbursement of the USO Fund will accelerate the pace of growth of telecom services in rural and remote areas,” says a senior TRAI official. Further, under this fund, operators are awarded contracts to set up rural telecom infrastructure on the basis of competitive bidding. “It is therefore necessary to evolve a transparent mechanism for activities supported by the USO Fund, viz. village public telephones (VPTs), rural community phones, public telecom and information centres, high speed public telecom and information centres and rural direct exchange lines in order to ensure effective compliance of universal service obligations as per the TRAI Act,” states the directive.
Following this directive, BSNL and other beneficiaries of the USO Fund have to submit the names of the villages they are servicing, the number of VPTs installed, their date of installation, technology used, etc. This effort is expected to bring more transparency in the management of the fund. It will also help monitor the contributions of operators and projects undertaken.
Needless to say, private operators have welcomed the directive as, according to them, BSNL has for long been walking away with the lion’s share of disbursements from the USO Fund, being the only operator with widespread rural networks. The directive will “verify BSNL’s claims on rural telephony”, they note.
BSNL officials say they are willing to comply with the directive and have been doing so routinely by providing information on its USO-related activities to both the government and the fund administrator.
What is more worrying for BSNL is the fact that it may be allotted lower grants from the USO Fund during the year. Already, this fiscal year onwards, BSNL will no longer be the sole recipient of grants from the USO Fund for rural activities. The 12 billion earmarked for the USO Fund for this financial year will be split among telecom operators who have won bids to provide fixed lines in rural areas like Reliance Infocomm and Tata Teleservices for providing rural household lines in 1,685 short distance charging areas (SDCAs).
On its part, DoT is considering the proposal to provide shared passive infrastructure for mobile services with financing from the USO Fund to lower entry barriers for private operators in the 1,685 commercially unviable SDCAs.
Also, in it new draft policy, DoT has asked the government for a seven-year exemption in the revenue share of service providers on revenues generated from rural subscribers.
Though piecemeal, these efforts to push rural telephony are expected to go a long way in connecting India.
