The Department of Telecommunications (DoT) is working on a plan to restructure the Universal Service Obligation (USO) Fund’s modalities, under which the share of the revenues of private telecom operators will be reduced from the current 5 per cent. DoT will take the final decision in this regard by end-October 2014.

The move comes after the Cellular Operators Association of India (COAI) requested the government to reduce the payments toward USO Fund to one per cent of the revenue of telecom operators. COAI is of the view that USO Fund payments are much lower in other countries, including some with lower mobile penetration. For instance, the payment stands at two per cent in Colombia and Pakistan, one per cent in Brazil and 0.8 per cent in Canada. On the other hand, the level of utilisation of the fund is much higher in other countries.

According to DoT, so far, the government has collected Rs 527.23 billion under the USO Fund. However, over the past 10 years, it has allocated only Rs 157.84 billion to the industry. Between 2002-03 and 2005-06, Bharat Sanchar Nigam Limited received Rs 69.49 billion from the fund to improve connectivity in rural areas. Thus, the current level of untilisation of the fund stands at about 30 per cent.