The USOF is an independent body within the telecom department that subsidises telecom infrastructure rollouts in rural India.
Industry body COAI has said that the Universal Service Obligation Fund (USOF) contribution should be kept in abeyance till the full amount of the said corpus is disbursed. In a recent letter to the telecom department, the Cellular Operators’ Association of India (COAI) said that alternately USO contribution should be immediately brought down to 3 per cent with ultimate objective of doing away with the levy in the next 2-3 years in line with the recommendations of the telecom regulator. “Further, we earnestly request the Department of Telecom (DoT) to kindly reduce remaining licence fee from three per cent to one per cent of adjusted gross revenue…This will bring the total licence fee to four per cent from the present eight per cent,” the COAI said in the letter to DoT dated July 19.
At present, the USOF levy is five per cent and licence fee is pegged at 3 per cent – taking the overall incidence of levy to eight per cent. The COAI pointed out that of the Rs 99,674 crore collected for the USOF between FY2003 and FY2019, as much as Rs 50,554 crore remained unutilised as on June 2019.
The USOF is an independent body within the telecom department that subsidises telecom infrastructure rollouts in rural India. “In this regard, we are of the view that the existing contribution available in USO fund, that of Rs 50,554 crore is more than the requirement to connect 43,000 unconnected villages,” the COAI said in the letter. The industry body said it is of the view that USOF should not exceed three per cent of the Adjusted Gross Revenue (revenue earned from sale of telecom services alone).
The COAI said that the regulatory levies were “additional costs to the consumers”. The reduction in these levies will act as incentives for operators to roll out more network in rural areas. “Thus considering that reduction in levies will act as incentive for telecom service providers to roll out more network in rural areas, we are of the view that the USOF should be reduced immediately,” COAI said.