Telecom sector questions FM's rural commitment

Budget allocation of Rs 1,500 cr for rural telephony faces criticism.

The allocation of a mere Rs 1,500 crore in 2006-07 for rural telephony from the Universal Service Obligation Fund (USOF) has raised eyebrows in the telecom sector as the unutilised amount in this fund is estimated to be over Rs 7,000 crore at present.

Telecom companies pay 5 per cent of their adjusted gross revenues towards the USOF, which is used for building telecom infrastructure in rural India.

Operators have also pointed out that this announcement comes even as the Telecom Regulatory Authority of India (Trai) has estimated that the unutilised amount from the USOF will swell to Rs 25,044.2 crore by 2010.

While the figures for the current fiscal are yet to be computed, operators had generated Rs 7,254 crore towards the USOF by March 2005, of which only 25 per cent has been disbursed so far.

"We had expected a much higher allocation, especially following the recent landmark deal between the department of telecom (DoT) and operators, under which they will be funded for telecom infrastructure in rural India from the USOF through a bidding process," an industry analyst told Business Standard.

The telecom sector is also concerned about Trai's estimates, which states that the sector will generate a total of Rs 37,541 crore as USOF by 2010, of which, only a maximum of Rs 17,936.80 was likely to be utilised.

Against these projections, Trai, in its recent recommendations on rural telephony, has calculated that it will take a support of Rs 9,000 crore to connect up to 90 per cent of rural India.

"The telecom industry expected the entire amount collected as levy for the USO fund to be utilised for the development of rural communication thereby reducing the digital divide," said S C Khanna, Secretary General, Association of Unified Service Providers of India, the body representing all CDMA players.