Govt aid to telcos for rural telephony

The government on Wednesday reached a landmark deal with telecom companies under which it will fund operators to create telecom infrastructure in rural India from the Universal Service Obligation Fund.

As per the agreement, the government will extend financial support for both passive (land, tower and power back-up) and active (BTS, antennae and a portion of the backhaul) infrastructure, which will then have to be shared between operators. However, bids for the two will have to be separate.

In yet another first in the sector, the government has allowed standalone infrastructure providers to bid, but only for setting up the passive part.

On the other hand, access providers bidding for setting up this sort of infrastructure must also compulsorily bid for the active component.

DoT officials told Business Standard that tenders for the bids would be announced by February end. Bids will be received simultaneously for both active and passive infrastructure. "The bids shall be invited for every secondary switching area on per tower basis," they added.

This can lead to a rapid rollout of telecom services in rural India as only Rs 1,800 crore of the USO Fund has been utilised so far against the total collected non-lapseable sum of over Rs 8,000 crore.

In the first phase, the DoT is likely to call for bids to cover around 100 of the 323 short-distance calling areas in the country. The towers and the land will be jointly owned by the government and the successful bidder, which cannot sell, alienate and lease the infrastrucure without prior permission from the USOF administrator.

Under the agreement, if an access service provider is the lowest bidder for passive infrastructure, the company shall also get the opportunity to start commercial services at L-1 rates for active infrastructure, irrespective of its position in the bids for the same.

It will then have to share its passive infrastructure with the lowest bidder for active infrastructure. But, if the access service provider is the lowest bidder for both, its passive infrastructure will have to be shared with the next lowest bidder (L2) and subsidy will be extended to both companies at L-1 rates.

In case of a standalone infrastructure provider being the lowest bidder for passive infrastructure, the two lowest bidders for the active component will be given an opportunity to share the infrastructure.

The government also said that companies that share the infrastructure will have to arrive at a mutually agreed amount for its maintenance.