Govt holds back cut in telecom licence fee

The government is understood to have held back its decision to lower the licence fee by about 33 per cent with effect from April 1, for those telecom operators who have 95 per cent or more coverage in a circle, a move that would affect state-run Bharat Sanchar Nigam (BSNL) as it has maximum penetration in rural and other cities.

In October last year, the Department of Telecom (DoT) had announced a cut in the fee contributed towards Universal Service Obligation Fund (USOF), a subsidy given to telcos to offer services in rural areas, to three per cent from five per cent now and had been kept in abeyance till further order.

Asked about the reason to reverse the decision, sources in the know said that the existing GSM operators had opposed the move saying that the decision would benefit only one operator that is BSNL and had demanded removal of a clause that this would be applicable only on coverage of 95 per cent of the development blocks in a circle.

One of the telecom operators said that since the unutilised sum in the USOF kitty has already crossed Rs 20,000 crore, any reduction in this levy should to be applicable to all players. The telecom operators said that by inserting a rider of 95 per cent coverage, the DoT was favoring BSNL.