The Universal Service Obligation Fund (USOF) has rejected TRAI proposal to offer Rs 2,750 crore subsidy to BSNL for its rural landline business.
USOF said it already has a running pact to provide Rs 1,500 of subsidy to BSNL to support its rural landline operations.
"The USOF has an existing pact with BSNL since January 2009 to support broadband enablement of 28,672 rural wireline exchanges, which entails Rs 1,500-crore subsidy payout over an eight-year period. Giving more subsidy in line with Trai's recommendation will amount to duplication of subsidy for the same activity," said USOF administrator N Ravi Shankar, in an internal note to the DoT.
USOF administrator also claimed that despite receiving Rs 6,000 crore of USOF subsidy from July 2008 to July 2011, the quality of BSNL's rural landline operations had declined over the years as it had failed to grapple with competition from private telcos.
USOF, according to a report in Economic Times, said such a move will result in duplication of subsidy payout to the state-run telecom operator which is making huge losses.
USOF said it already has a running pact to provide Rs 1,500 of subsidy to BSNL to support its rural landline operations.
Earlier, Telecom Lead reported that BSNL's wireline subscriber base declined to 22,752,984 in January 2012 from 23,003,744 connections from the previous month.
The telecom industry is apprehensive about offers to the state-run telecom company.
In India, rural wireline subscription is constantly plunging. It dipped by 1 percent in January taking the total rural wireline base to 7.67 million, whereas rural wireless subscription is increasing at a healthy rate. In January, rural wireless subscriber base stood at 312.62 million at 1.64 percent monthly growth.
Earlier, DoT had sought TRAI's recommendations regarding continuation of support from USOF towards the rural direct exchange lines (DELs) on expiry of Rs 2,000 crore per year subsidy on July 17, 2011.
"The USOF has an existing pact with BSNL since January 2009 to support broadband enablement of 28,672 rural wireline exchanges, which entails Rs 1,500-crore subsidy payout over an eight-year period. Giving more subsidy in line with Trai's recommendation will amount to duplication of subsidy for the same activity," said USOF administrator N Ravi Shankar, in an internal note to the DoT.
USOF administrator also claimed that despite receiving Rs 6,000 crore of USOF subsidy from July 2008 to July 2011, the quality of BSNL's rural landline operations had declined over the years as it had failed to grapple with competition from private telcos.
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