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Effective Support - TRAI consultation paper on increasing rural telecom penetration

June 15, 2009
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The Telecom Regulatory Authority of India (TRAI) has issued a consultation paper, "Measures to Improve Telecom Penetration in Rural India –­ The Next 100 Million Subscribers", to accelerate the growth of rural telecom services. The penetration of telecom services in urban areas is substantially higher than in rural areas. As of December 2008, rural teledensity stood at 12.59 per cent as compared to the urban teledensity of 81.38 per cent.

According to TRAI's paper, which was released after various rounds of consultation with stakeholders, the rural areas should be viewed as a big telecom market given that 70 per cent of India's population lives in villages. All telecom stakeholders, including the government, operators, equipment vendors and local bodies, need to collaborate to tap this market. Operators need to collaborate with companies in other industries, such as financial services and consumer goods, to develop innovative offerings and extend their traditional distribution channels. Operators also need new marketing strategies and customised products to tie up more rural subscribers.

The following are the major recommendations made by TRAI in its consultation paper:

Revitalisation of the USO Fund

  • The Universal Service Obligation (USO) Fund should be reorganised and revamped with wide-ranging but specific powers.
  • It needs to be separated from the Department of Telecommunications (DoT), and reorganised on a framework similar to that of the National Highways Authority of India.
  • The current USO Fund Act/Rules should be so amended that the funds accrued are directly managed by the organisation and are not routed through the budgetary mechanism of the union government. As this process may take some time, in the interim, the government should ensure that the financial requirements of the USO Fund are entirely met without any delay, as and when requested by the USO Fund administrator.

    Expediting infrastructure support in the rural areas for mobile and broadband services

  • The USO Fund should follow the bidding process only when necessary for projects to set up telecom infrastructure in the rural areas.
  • The Fund's administration should concentrate primarily on planning and monitoring of the implementation of schemes for providing infrastructure support for rural telecom services.In order to promote information and communications technology (ICT)applications in the rural areas and encourage broadband penetration, the identification process of short distance charging areas (SDCAs) should be revised. The scope for the payment of subsidy should be broadened to cover most of the geographical areas designated as rural by the latest census.
  • The USO Fund should determine the subsidy support for setting up towers in different regions, and any IP-I/cable modem termination system (CMTS)/ unified access service licence (UASL)operator setting up a tower in the designated SDCAs and sharing it should be paid a subsidy depending on the number of operators sharing the tower.
  • A reduced USO levy of 3 per cent should be charged for covering 75 per cent of the development blocks including villages in a licensed service area.
  • The USO Fund may devise a scheme to invite expressions of interest from IP-I/NLD/UASL operators to provide fibre connections from USO Fundsubsidised towers to the nearest block headquarters.
  • To reduce the delay in USO Fund subsidy disbursements, the payments should be made within a certain time-frame based on the self-certification of the service providers. If a discrepancy is found after verification, the recovery, if any, can be made from the service provider.
  • To improve broadband infrastructure, the USO Fund may enter into agreements with state governments under which broadband connections would be facilitated by the USO Fund, with a fixed number of connections being assured for government offices and public places.
  • The development of local content needs to be area specific, and the content should address the specific needs of the people.
  • DoT should review the existing procedure of various approvals for setting up VSATs and prescribe strict timelines to reduce the delay. For all VSATs installed in rural areas, the charges (except the transponder charge) may be borne by the USO Fund for three years.
  • The USO Fund should negotiate with the Department of Posts that post offices function as sales outlets for telecom service providers and bill collection centres (on a mutually agreed commission), as well as undertake subscriber verification.The service providers can offer some commission to the Department of Posts for bringing in new subscribers. A pilot scheme of three to six months for these services may be initiated in each state.
  • The USO Fund should calculate the cost of providing mobile chargers which use solar power or a limited power supply in the rural areas. Accordingly, a fixed subsidy may be extended to service providers that have already installed towers in rural areas, for setting up such mobile charger facilities in nearby villages.
  • The USO Fund should also facilitate training programmes for rural youth through the Telecom Enforcement Resource and Monitoring Cell or any other agency.

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