Telecom firms' claim for subsidy questioned

Private telecom firms Reliance Communication and Tata Teleservices have been found making "false" claims and drawing excess subsidy from the Universal Service Obligation (USO) Fund for providing services in rural areas.

Inspections in various circles revealed they claimed urban lines falling within municipal limits as rural lines. No subsidy is given for urban lines.

"The proportion of wrong claims by universal service providers (USPs) in certain areas was found to be 48-70 per cent of the rural lines claimed. Action to disallow subsidy was taken in accordance with the terms of the agreement," Shantanu Consul, the administrator of USO Fund, said in a note to the department of telecom (DoT).

In a particular case, Reliance claimed a subsidy of around Rs 7.63 crore for 12,469 lines installed in four districts of Kerala, the administrator's note said. "On verification, it was found that a large number of these lines were working in urban areas," it said.

The operator submitted a revised claim of about Rs 2.26 crore pertaining to 3,694 lines, the note pointed out.

Tata Teleservices has also been found making "false" claims. One of the example was in Bharthana village in Uttar Pradesh (East) for the quarter ended December, 2006, where it claimed to have installed 647 rural lines. During verification, it was found that all these lines were in urban areas.

According to the administrator's note, an inspection conducted by the deputy administrator (USO Fund) found that what was being claimed as a village (Bharthana) was actually a tehsil/sub-district headquarters, an urban area since 1974.

In the revised claim submitted to the USO office according to a decision taken in a meeting with the administrator, the number of rural lines was reduced to 338. "Even now, doubts exist regarding the true nature of the rural lines," the note said.

The USO Fund was created by the government to offer subsidy to operators to encourage them to offer services in rural areas. Total subsidy payable under the scheme works out to around Rs 2,186 crore and the players claim to have installed 3,657 towers covering about 200,000 villages.

According to the USO Fund administrator, despite the tricky monitoring issues, the scheme has been successful in bringing about various positive results such as introduction of competition in rural telephony and familiarity with the rural telecom market, a hitherto unknown territory for private players.