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Exit Route: RCOM, Bharti want out

February 15, 2011
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Reliance Communications (RCOM) and Bharti airtel have approached the Department of Telecommunications (DoT) to allow them to prematurely exit the rural telephony scheme under the Universal Service Obligation (USO) Fund without fulfilling the required obligation of providing telecom services in villages.

According to an RCOM spokesperson, the company is looking to exit low-revenue regions where its operations are not financially viable. USO Fund administration officials have confirmed that of the approximately 8,000 base stations committed by the company, less than 500 are active.

Bharti airtel has stated that the inability of infrastructure providers to build towers in certain areas in a timely manner is the underlying reason for the company wanting to exit the scheme. “We have been facing issues in many regions where passive infrastructure providers were not able to provide the required infrastructure on time. We have presented our concerns to the USO Fund administrator and are seeking an exit option,” the company noted in a statement.

“As on date, we are providing services through around 900 of the total 1,174 sites assigned to us. We are awaiting infrastructure support for the remaining sites, of which we would like to exit from around 180 sites as we have already built/arranged for infrastructure,” the statement added.

However, the operators’ requests have been rejected. According to DoT, there is no provision for operators to unilaterally exit the agreement. In fact, DoT is in the process of framing an exit policy, which may take some time.

According to reports, the USO Fund administrator is contemplating changing the criteria to ensure that operators and infrastructure providers do not exit without fulfilling their commitments and are offered subsidy accordingly.

Also, DoT may ban operators whose performance has been below par from participating in the next round of bidding for rural licences.

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