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Rural-connectivity fund should not be wasted on obsolete technologies: Reliance Jio

Eighteen years ago, the government had created the Universal Services Obligation (USO) fund under the National Telecom Policy, 1999, which aimed to provide access to telecom services in rural areas at affordable prices.

twitter-logoBusinessToday.In | March 27, 2018 | Updated 13:22 IST
Rural-connectivity fund should not be wasted on obsolete technologies: Reliance Jio

Eighteen years ago, the government had created the Universal Services Obligation (USO) fund under the National Telecom Policy, 1999, which aimed to provide access to telecom services in rural areas at affordable prices. With telcos shelling out a 5 per cent USO levy annually - as part of the licence fee paid to the government, amounting to 8 per cent of the company's adjusted gross revenue - it's not surprising that the Department of Telecommunications (DoT) has amassed a balance USO corpus of over Rs 48,549 crore as of end-January.

That is the size of the pie that Reliance Jio seems to be eyeing. "USO funds, I sincerely believe, should not be wasted on obsolete technologies; it should be on progressive technologies because rural India needs it," Jio president Mathew Oommen told The Economic Times. The hint is obvious, given that its rivals, be it Bharti Airtel, Idea, BSNL or Vodafone India, also offer older 2G/3G services along with 4G. On the other hand, Mukesh Ambani's company has bet exclusively on 4G and has emerged the market leader in the broadband segment. In fact, Jio's Voice over LTE (VoLTE) technology is way ahead of the competition.

According to the daily, Oommen also stressed upon the need to shift towards advanced wireless technologies and said that one should deliver on the pace of innovation in tandem with the creation of new infrastructure, instead of riding on old infrastructure to bridge the urban-rural digital divide.

Perhaps this is a dig at the agreement that Bharti Airtel signed with the DoT last December to set up over 2,000 mobile towers/sites in unconnected pockets of the seven north-eastern states and deliver telecom connectivity to citizens in around 2,100 villages by summer 2019. To execute the project, Airtel was supposed to receive about Rs 1,610 crore from the USO fund.
 
Would Reliance Jio have been a better partner to execute this project, and others like it? Unlikely, since there are still crores of Indians who may not be able to join the smartphone bandwagon immediately. In fact, last January, the Standing Committee on Finance released a draft report on India's transformation towards a digital economy, in which it noted that the quality of telecom coverage is unevenly distributed. It added that a whopping 95 per cent of the population is covered by the 2G spectrum, while the coverage of the 3G and 4G spectrums stood at 75 per cent and 60 per cent respectively. So, perhaps, the "obsolete" technology still has a role to play in India's digital transformation.

With PTI inputs

 

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