A fund for fixed lines

OWING to apprehensions that with telecom reforms, the profit-driven private sector will not fulfil the social obligation of extending service to "underserved" and "unviable" rural areas, a statutory obligation to serve rural areas was made part of the licence conditions. In the New Telecom Policy (NTP 1999), the resources for meeting the USO were to be raised through a Universal Access Levy, which was to be a percentage of the revenue earned by telecom operators under various licences.

The implementation of the USO was to be undertaken by all fixed-line service providers. Consequently, the obligation got diluted when basic operators (fixed-line) were permitted to migrate to the Unified Access Licence Regime.

The USO Fund became part of the statute through a 2003 amendment to the Indian Telegraph Act (ITA) 1885. Section 3 (1A) of the ITA, relating to definitions, states: "Universal Service Obligation means the obligation to provide access to basic telegraph services to people in the rural and remote areas at affordable and reasonable prices." Section 9D (2) of the Act states: "The Fund shall be utilised exclusively for meeting the Universal Service Obligation."

Here, "basic telegraph services" is not a technological definition but relates to cost. In other words, "basic telegraph services" are the cheapest available. Mobile phone companies have always classified their services as a `value-added service' and thereby claimed a premium price over fixed-line services.

Further, the fact that earlier this year Reliance Infocomm was one of the successful bidders, along with TATA Teleservices and Bharat Sanchar Nigam Limited (BSNL), for providing services worth Rs.8,000 crores, envisaged under the USO Fund, shows that wireless service providers are not precluded from accessing USO funds as long as they provide the specified services. The services specified under Rule 525 (2) are public telecom and information services and household telephones in rural and remote areas.

It is clear that while wireless technology and cellular mobile service providers can have access to the Fund to provide any of the services envisaged, the Fund cannot be accessed to provide mobile phones, which are a means of personal communication.

TRAI itself is more than aware of this. In its Consultation Paper "Growth of Telecom Services in Rural India - The Way Forward", it is clearly stated: "Universal service means that every household in the country has telephone service - traditionally, a fixed-line phone."

Indeed, in developed countries, USO funds support services such as the Internet and are mandated to provide for any future communication technology as well. However, support for such services became available only after those countries attained universal service through fixed lines.

Although it is well established that mobile phones do not promote universal service, cellular phone service providers and mobile instrument manufacturers seem to have formed a strong lobby to increase their profit margins through rural telephony.