With mobile operators adding more subscribers from rural areas and the government unable to utilise the proceeds collected as part of the universal service obligation fund (USOF) effectively, analysts and industry veterans feel that it is time that the fund is scrapped.
Almost all operators FE spoke to said on condition of anonymity that if the government stops this charge on them, they would be able to spend this money better to enhance rural coverage.
However, the government feels that the fund can now be used to push broadband services instead.
Telecom analyst Mahesh Uppal agrees that the fund should either be scrapped or its focus changed. ?The fund?s purpose was to provide telephony services by creating infrastructure in areas which were unviable. However, with infrastructure in place now, companies themselves find it viable to push services in these areas,? Uppal said.
Sample the mobile growth data released by the Telecom Regulatory Authority of India for June. Urban centres added a mere 0.60 million subscribers, while rural areas contributed 4 .12 million users.
The fund, towards which all mobile operators annually contribute 5% of their adjusted gross revenue, has an unutilised amount of R21,840 crore. During the current fiscal, the government expects to garner another R7,000 crore.
The idea behind creating the fund some 10 years back was to provide telephony in rural areas and villages through a village public telephone (VPT) model. The idea made sense then as it was assumed that operators would not be able to reach far-flung areas. The concept of utilising the fund was that the government creates the infrastructure and the private operators utilise it for services.
However, as mobile services boomed, the VPT model never took off in a big way. With falling tariffs and saturation in urban centres, operators fanned out to rural areas for new customers. With the fall in handset prices and mushrooming of local handset makers, the growth of rural subscribers started gaining momentum, leading to a rural teledensity of 39.80%.
In the last five to six years, the government has not been able to come out with any worthwhile project where the money in the USOF could be effectively used and this explains the huge unutilised amount lying in the fund.
Its last project a few years ago was of creating shared passive infrastructure in rural areas, from which also operators now want to exit.
During the current fiscal the department of telecommunications has allocated Rs 3,000 crore from the USOF to continue laying the optic fibre network in the northeast and Assam under the OFC 1, OFC II and OFC Assam projects. However, fund administrator Ravi Shankar told FE that the expenses for these three together will not exceed Rs 500 crore.
Shankar said that the government plans to use the fund to create ?information highways?, which can then be used by telecom service providers and IT companies. Highlighting a World Bank study, which has found a strong correlation between broadband penetration and the GDP growth rate, Shankar says that for a 10% increase in broadband penetration, there is a 1.63% growth in GDP. In spite of the telecom revolution in the country he says broadband penetration is minuscule, with just 13 million users.
The government has also decided to fund its Rs 20,000-crore national optic fibre network, which would create a pay-and-use model for broadband services, through the USOF. Though the idea is welcome, industry players says the purpose of giving a push to broadband could have been better served by simply ending the monopoly of BSNL over its last-mile linkage optic fibre network, which has also been created using national resources.
?The least the government should do is to announce today that once the national optic fibre network is complete the fund would be scrapped,? said an official of a mobile firm.
