Succumbing to pressure from private telcos the government may not renew the Rs 2,000 crore annual subsidy payout from the Universal Service Obligation Fund (USOF) to Bharat Sanchar Nigam Ltd (BSNL), which the state-led telecom firm uses for its rural landline operations. This is a clear departure from the government's earlier commitment for giving preference to the state-run telecom firm.
BSNL was to receive the Rs 2,000 crore payout for a period of three years ending July, 2011. Sources revealed that the Telecom Commission, the highest policy-making body of the department of telecommunications (DoT), is unlikely to renew the subsidy.
"We have been trying hard to get the USOF subsidy renewed. We have been discussing the issue with the DoT," R.K. Updhayay, chairman and managing director (CMD), BSNL , told Mail Today. Earlier, the Telecom Commission had provided Rs 2,000 crore as annual subsidy for three years starting July 2008 out of the USOF to support BSNL's rural landline operations to compensate BSNL, which lost out on access deficit charges (ADC) three years ago. Since then the government has been under pressure from private telecom operators to reverse its decision.
Private telcos have been lobbying hard for the upcoming bidding process for its Rs 20,000 crore rural broadband project to lay an optical fibre network across the country, funded through the USOF.
The objective of the scheme titled National Optical Fibre Network is to extend the existing optical fibre network from district headquarters and block headquarters to the gram panchayat level by utilising the USOF.
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A top DoT official said that if BSNL's USOF project is renewed by the Telecom Commission, it would be given preference to undertake majority of the rural broadband project as it is the only agency developing telecom network in the rural areas in India. In August this year, telecom minister Kapil Sibal had announced that the nationwide broadband will initially be executed by BSNL and other institutions like RailTel. If necessary, at a later stage, it would involve the private sector as well.
This would be a reversal of the government's earlier stand of giving preference to BSNL and some state-led organisations to carry out the rural broadband project in comparison to private entities. Private telcos have been furious on their exclusion from the nationwide broadband project.
They contend that since they too contribute to the USOF, they have a right to participate in the upcoming bidding process for the broadband project. A similar amount of investment is likely to be made by private sector complementing the infrastructure while providing services to individual users.