Govt holds back cut in telecom licence fee; to hit rural cove

Govt holds back cut in telecom licence fee; to hit rural cove
PTI
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First Published: Sun, Mar 22 2009. 03 03 PM IST
Updated: Sun, Mar 22 2009. 03 03 PM IST
New Delhi: The government is understood to have held back its decision to lower the licence fee by about 33% with effect from April 1, for those telecom operators who have 95% or more coverage in a circle, a move that would affect state-run BSNL as it has maximum penetration in rural and other cities.
In October last year, the Department of Telecom (DoT) had announced a cut in the fee contributed towards Universal Service Obligation Fund, a subsidy given to telcos to offer services in rural areas, to 3% from 5% now and had been kept in abeyance till further order.
Asked about the reason to reverse the decision, sources in the know said that the existing GSM operators had opposed the move saying that the decision would benefit only one operator that is BSNL and had demanded removal of a clause that this would be applicable only on coverage of 95% of the development blocks in a circle.
One of the telecom operators said that since the unutilised sum in the USOF kitty has already crossed Rs20,000 crore, any reduction in this levy should to be applicable to all players. The telecom operators said that by inserting a rider of 95% coverage, the DoT was favoring BSNL.
India’s telecom sector has been demanding a lower tax burden for several years as the cellular industry in India is confronted with one of the highest taxes in the world. The cut in USOF levy would not help any of the private telecom operators as none of them has covered 95% of the area in a circle.
The data compiled by the telecom regulator TRAI shows that telecom operators pay up to 30% of their gross revenues towards different levies, as compared with 5-7% paid by the counterparts in other Asian countries.
Sources said that the Cellular Operators Association of India (COAI), the body representing all GSM players, had asked the DoT to rework the coverage clause.
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First Published: Sun, Mar 22 2009. 03 03 PM IST