‘Operators don’t need rural subsidy anymore, so why USO fund’

Gupta added the USO fund wasn’t required as the operators did not require subsidy anymore and this was evident in the recently held bidding projects for rural areas by the government where the players had bid in the negative —meaning instead of seeking subisidy they were interested in paying the government if awarded with the projects.

India is amongst the countries with the highest USO charge at 5 per cent, while in countries like Argentina the charge is around 1 per cent of the AGR.

Making a case for better utilisation of the USO fund, Kuldeep Goyal, chairman and managing director of state-owned BSNL, said in India, like in other countries, the corpus should lie with the regulator rather than being credited to a consolidated fund.

Emphasising that the whole debate on rural penetration is centered around increasing connectivity in the rural areas and making telephony accessible to the rural masses, Rajat Mukarji, chief corporate affairs officer, Idea Cellular Ltd, said the services had to be made cheaper and that would in itself spur the usage and consequently result in innovative application. He said the operators did not need to have a separate blue print for rural telephony as had often been said.

Pegging the tariff pricing as the single-most important factor along with value-added services in the rural areas, Anil Sardana, Tata Teleservices Ltd (TTSL) managing director, said while in urban India the telephony cost was around 2 per cent of the income, in the hinterland it was as high as 14 per cent and this differential of almost 12 per cent had to be bridged.

Making the case for government participation in spreading rural telephony, Bharat Bhatia, Motorola India regional director, said consumer durables and telecom equipment constitutes as much as 14 per cent of the GDP in countries such as Israel and Malaysia while in India it was less than 1 per cent. He added that the hardware component had to be subsidised for spreading of rural network.