Aiming to push the growth of broadband services in rural areas, the Department of Telecommunications (DoT) is working on a new proposal to give incentives from the universal service obligation (USO) fund to support wireline services in rural areas.
The new move would nullify the earlier directive of DoT, which had exempted the licence fee on wireline services provided by all the operators in rural areas. The exemption was announced in August 2008 through an amendment to the licence conditions. State-run telecom major BSNL was the main beneficiary from this as it enjoys the largest presence in such areas.
However, the finance ministry did not support the waiver, which could have a financial implication of Rs 1,400 crore (for 2008-09). This impact is unlikely to be agreed upon in the present budgetary situation where the 3G auction is also being postponed, the department said.
“There are some practical difficulties in implementing the waiver of licence fees for wireline services in rural areas…it has been accepted to rescind the decision of waiver,” DoT said in an internal note.
The USO fund can be used to give a targeted scheme subsidising the wireline business to make it more viable, it said, adding that any amount that forms a part of the total income but removed from the adjusted gross revenue statement can cause a situation of arbitrage, causing an opportunity to shift of revenue.
Hence, it was felt that further discounts on the licence fee was not desirable.
DoT, however, has already given a waiver of about Rs 100 crore to the service providers under the exemption. It is also thinking of ways to recover this amount.
Defending its move to provide incentives, the department said this mechanism would work better if incentives were given in the form of subsidy.
In the interest of promoting rural telephony and the national e-governance programme through 100,000 common service centres and bridging the digital divide between the rural and urban areas, it is imperative that rural wireline networks be supported, it said.
