The Hindu Business Line : ISPs may be tapped to raise rural teledensity

IN a drastic re-haul of the universal service obligation (USO) policy, with basic service providers showing little interest in setting up village telephones, the Department of Telecommunications (DoT) is likely to allow Internet service providers (ISPs) to bid for funding from the universal service fund (USF).

According to official sources, while a final decision has not been taken as yet, it has been felt that doing so would bring in more competition and quick coverage/increase of rural teledensity at a competitive cost.

"The feasibility of widening the definition of universal service provider to providing services in smaller geographical units instead of a telecom circle as is being done now is being considered if there are no successful bidders within the guidelines for certain activities covered under USO. ISP licensees or their franchisees having local presence in smaller geographical units may be willing to provide services like Public Telecom and Info Centres (PTIC) in the areas of their presence if encouraged and provided support from US fund. The establishment cost and overheads for such small-time players, due to the local presence could be much less, which may make a business case for them. Lower overheads and reduced cost operations will lead to faster coverage and achieving the targets specified in the guidelines, ultimately resulting in increased teledensity in rural areas," they noted.

As per the present guidelines, only the existing basic service operators can dip into the resources of the USF. This will involve regulatory and licensing changes that would have to take place. However, allowing the ISPs to participate in the programme could, therefore, meet with opposition from the basic providers, since the ISPs do not contribute to the fund at present.

The telecom operators, on the other hand, pay up 5 per cent of the licence fees every year for the fund. DoT is, therefore, thinking of charging the levy from such ISPs to bring about a level playing field with other eligible for support, the sources said.

"Most of the access providers, both basic and cellular, normally do not operate the VPTs and PTICs themselves but through franchisees or custodians. However, if these access providers choose to operate it themselves the overheads and cost of their operations could be high, which may not be a viable business proposition for them. On the other hand, ISPs are more conversant with data services and are authorised to provide both data and voice services. It may, therefore, be worth considering inviting bids from ISPs and other capable entrepreneurs for providing services like PTICs," they said.

DoT has set a target, by 2004, for data transmission facilities within 5 km of every village and at least in all those villages where regular post offices are located. A phased programme is being drawn and implemented to upgrade about 35,000 VPTs to function as PTICs by end-2004.

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