Telecom regulator recommends reducing USO levy to 3 percent

India's telecom regulator Tuesday recommended that Universal Service Obligation (USO) levy, a portion of the licence fee paid by the telecom service operators, should be lowered to 3 percent of the adjusted gross revenue from the present 5 percent.

Telecom operators pay 8 percent of its AGR as licence fee to the government, out of which 5 percent goes to the USO Fund (USOF).

"Share of USO levy in license fee should be reduced from the present 5 percent to 3 percent of AGR for all licences with effect from April 1, 2015. With this reduction, the applicable uniform rate of licence fee would become 6 percent (from the present 8 percent) of AGR viz. the 3 per cent of LF that directly accrues currently to the government will not change," the official statement said.

The Telecom Regulatory Authority of India (TRAI) said USO funds have not been utilised fully in the past few years.

"Of the Rs.58,579 crore collected for the USOF between 2002-03 to 2013-14, Rs.33,683 crore remained unutilised as on March 31, 2014, representing 57 percent of the USO levy collected," the statement added.

The TRAI added that even after the lapse of more than 10 years, utilisation is below 50 percent.

It said from 2010, around Rs.1,50,830 crore has been mopped up from spectrum auctions and telecom operators, excluding BSNL and MTNL, have paid around Rs.18,075 crore as spectrum usage charges (SUC) between 2010-11 to 2013-14.

"It is ironical that the industry is expected to continue a low tariff regime even as it asked to pay out high auction-determined spectrum prices. And, these spectrum prices are amongst the highest in the world," TRAI added.