BSNL to get subsidy for mobile services in Naxal-hit areas

At the end of Dec, the govt had Rs 47,273 cr in the USO fund, with annual accruals of about Rs 6,000 cr

 

Private sector telcos which share a part of their revenues with the government through the Universal Service Obligation (USO) fund, will soon indirectly finance the setting up and running of mobile services in key regions of nine states which are affected by Left Wing Extremism (LWE).

However these services will not be run by the private telcos, who don't want to risk the lives of their employees, but by  the state owned Bharat Sanchar Nigam Ltd which will be given a hefty subsidy by the government through the USO fund to ensure mobile services in the affected states.

A draft cabinet note has sought approval to use the USO Funds to award the work of setting up network and running mobile services to BSNL on a nomination basis, waiving the requirement for open bidding process. It has argued that considering the urgent requirement of the ministry of home affairs to implement mobile services in the effected areas, and the lack of commercial viability in the project, it was decided that the project be given to BSNL.  

It has also proposed the payment of subsidy  to the state owned telco on actual basis as per the claim submiited by them which would include the entire capital expenditure as well as operational expenses, after of course deducting revenues which are expected to be very low.  

According to estimates my the Ministry of Home Affairs, currently 56,000 inhabited villages are left uncovered by any service provider. Out of this 2199 locations in nine states—Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Maharashtra, Madhya Pradesh, Odisha, Uttar Pradesh and West Bengal, which are affected by Left Wing Extremism. The mobile services will be available to the general public as well as security personnel in these areas.  

 BSNL will require about Rs 1,469.46 crore as capex to establish 1,836 towers and about Rs 1,576.67 crore as operating expenses for managing the  sites for a period of five years. So, the total outgo from the USO Fund would be Rs 3,046.12 crore. recurring and non-recurring expenditures.

The USO Fund was set  up taking a percentage from the revenue of all telecom operators to help in rural roll out and others.

Till December 31, 2012, the Government has Rs 47,273.77 crore in the USO Fund, with annual accruals of about Rs 6,000 crore.

The Government is also funding the National Optical Fibre Network from the USO Fund. The project is estimated to cost about Rs 20,100 crore. The Government has so far allocated Rs 15,784.40 crore and has disbursed Rs 15,523.57 crore from the USO Fund.

However, private operators aknowledge that they are not willing to take risk to work in these areas. Says Rajan Mathew, Director General, Cellular Operators Association of India (COAI), “Business can not be done at the cost of the lives of the employees. If BSNL can establish and manage these towers, we can always share the infrastructure to offer service. It’s the Government’s responsibility to ensure connectivity in these areas.”