The Administrator of the Universal Services Obligation Fund (USOF) has rejected TRAI's proposal to give additional subsidy to Bharat Sanchar Nigam Ltd to run its fixed line phones in rural areas. The USOF said that providing monetary support to BSNL would be tantamount to duplication of subsidy for the same activity.

The telecom regulator had suggested giving Rs 2,750 crore to BSNL over a two year period. This was for running fixed line telephones installed before April 2002. The fixed line rural network that existed prior to April 2002 was primarily set up with Government funding at high cost and was always supported by USO or Access Deficit Charges. According to BSNL, it had to take a hit of Rs. 4,876 crore in 2011 on account of these phone connections.

But the USO fund Administrator does not want to part with any more money to BSNL. “We have already signed a deal with BSNL in 2009 to support broadband enablement of 28,672 rural wire line exchanges. This scheme envisages subsidy support of about Rs 1,500 crore to be disbursed against proof of functional connections. To that extend USOF is already supporting BSNL's rural wire line connections,” said an official source.

The USO Fund Administrator has sent a communication to the Telecom Commission opposing the TRAI proposal on grounds that BSNL's subscriber base is declining despite all the support already given. “It is considered view of the USOF that rural telephony density can be improved by investing primarily in provisioning and improvement of general telecom infrastructure schemes such as shared mobile infrastructure scheme and taking optical fibre network to Panchayats and villages,” the USOF Administrator said in his letter to DoT.

USOF said that BSNL should quantify the number of rural lines that need subsidiy, if at all support has to be given.

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