Bidding for USO Fund to Begin in Dec 2002

The bidding for the Universal Service Obligation (USO) Fund is likely to begin in December if things go as per schedule. Shyamal Ghosh, Administrator of the USO Fund, stated this. The budget support allocation from the funds would be done on the basis of the lowest support-seeking bidder. The Fund administrator has asked National Council for Applied Economic Research (NCAER) to establish benchmarks for the bidding process and ICICI to devise mechanism for the bidding process. Further monitoring and maintenance of the fund being equally important, operators would have to provide Certification as per stipulation to establish that VPTs have indeed been set up. The Fund Administrator also proposes to outsource to a third party to monitor the quality of service provided by the VPTs. Speaking about the disbursement of funds, Ghosh said, "We expect the bidding to take place in December provided the operators provide data about the expenditure incurred in setting up VPTs on a cost-based model."

While the fund has left technological options open to operators, it does lay down stipulation about the speed of deployment and the quality of service provided. Support would be provided in areas which are identified as rural, remote and underserved and where the net cost is more than the net revenue, which is true in case of most VPTs. The USO Fund was set up to meet the rural connectivity targets of private basic service operators. Operators contribute five percent of their annual revenue to the fund from which they would get reimbursement given that most VPTs are unviable for operators.

Speaking on the sidelines of a Conference organized by NASSCOM on the Telecom needs of the software industry, Ghosh explained that the three pre-requisites of providing telecommunication are availability, accessibility and affordability. Earlier the incumbent in a monopoly environment provided rural connectivity by cross subsidizing, which is not possible any more. Countries world over have adopted various means by which to secure rural connectivity. Some countries like Australia have adopted deficit charging, others like Chile do so through budgetary support. Most countries however meet their rural targets through an uniform imposition of universal service obligation. India’s USO fund would be the largest exercise since the scale of implementation is huge.

MS Verma, Chairman, TRAI said that the Body has approached the government to make it mandatory for service providers to give a cost break-up of the network to determine wholesale and retail pricing of telecom services. This would enable the Authority to develop a framework for revenue sharing in interconnect issues. Meanwhile Akhil Gupta, President, Reliance Infocomm while speaking about the company’s rollout plan in the sector indicated that the most likely leverage for the company would be prices. It is possible for Reliance to provide cheap service because of the Group’s focus on bringing down capital costs. This has always enabled the Group to provide cheap services whether in telecom or energy. 

(CNS)