Trai for consultations on ADC-USO merger

Telecom Regulatory Authority of India (Trai) will release consultation papers seeking views on whether acess deficit charge (ADC) should be merged with the universal service obligation (USO) fund, and how an optimum utilisation of the ADC revenue could be used to determine tariffs in the future.

Nripendra Misra, chairman, Trai, said: "Rural penetration is about 7-8% while urban penetration is 50%. This wide gap needs to be bridged. We are therefore looking at various ways to ensure this."

Though the government took various initiatives to increase rural
penetration and make available telecom services to the rural masses,
there have been impediments and the success rate was limited. The major
concern was huge capital investment with less remunerative returns.
Therefore, the government announced the universal service obligation (USO) policy in 2002 under which telecom service providers (except pure value-added service providers) were asked to contribute 5% of
their adjusted gross revenue (AGR) toward the fund. This fund has been set up to provide required resources for development of telecom services in rural and far-flung areas.

Currently, the USO fund collection is Rs 14,000 crore of which Rs 5,600 crore has been utilised.

Trai will also publish a report this year giving details of project-wise
utilisation of the USO fund.

According to Misra, rural teledensity is low because there is not enough need-based survey which could explain the usage pattern and the
needs of consumers in rural areas.

"Upfront payment is difficult for rural consumers. Any user has to make an
initial payment of Rs 500-1,000 for starting up a mobile connection. So,
Trai is exploring the possibility of a reduction of initial tariff for the
rural population. Unless this is done, teledensity in rural areas cannot
catch up."