KOLKATA: State-owned BSNL's rural landline operations could soon bite the dust as the government is about to freeze the Rs 2,000-crore annual subsidy that has been a veritable lifeline for the telco's loss-making business.
"The Rs 2,000 crore annual subsidy payment to BSNL has been stopped as we have not received any instruction from the Department of Telecom (DoT) to renew it for supporting its rural landline operations," a top official close to the Universal Services Obligation Fund (USOF) Administrator told ET.
The Telecom Commission, the highest policy-making wing in the communications ministry, had provisioned a payment of Rs 2,000 crore annual subsidy for three years out of the USOF to support BSNL's rural landline operations, starting July 2008. This was aimed to compensate the stateowned telco which lost out on access deficit charges ( ADC) three years ago.
Under the terms of an MoU between BSNL and USOF, such subsidy payout was to stop from July 2011 unless the telecom department decided to renew the agreement.
Subsidy payout for BSNL's loss-making rural landline operations is conspicuously absent in an internal telecom department note that gives a detailed lowdown on the USOF's near Rs 35,000 crore payment commitments over the next three years.
Virtually, the entire USOF corpus is proposed to be channeled to finance two major projects - the communication ministry's Rs 20,000-crore national optic fibre network venture that will take high-speed internet to the hinterlands.
In another internal note to the DoT, BSNL may have unwittingly come up with a solution to save its rural landline operations. It has suggested that subsidy for the upcoming rural wireless broadband project should be limited to only one player and not two operators as has been proposed by the team managing the USOF corpus. BSNL feels subsidising the rollout of two potential rural wireless broadband networks would be a huge waste of national resources.
"The cost of setting up parallel (rural broadband) infrastructure by two operators in rural areas will be wastage of national resources. It would be better that only one operator is allowed to roll out the network and other operators share the same by embracing the MVNO model," says BSNL in a note to the DoT, which was reviewed by ET.
In the event, the government buys BSNL's argument, some funds may be available with the USOF to continue supporting the state-owned telco's loss-making rural landline operations.
Incidentally, MVNOs are firms who do not own any cellular infrastructure but buy airtime from existing mobile phone companies and sell it under their own brand. The USOF administrator has pegged the peak subsidy requirement for two potential operators rolling out rural wireless broadband networks at Rs 16,000 crore which will be payable over five years.
It will shortly invite bids and one slot is likely to be reserved for BSNL. .......ET
"The Rs 2,000 crore annual subsidy payment to BSNL has been stopped as we have not received any instruction from the Department of Telecom (DoT) to renew it for supporting its rural landline operations," a top official close to the Universal Services Obligation Fund (USOF) Administrator told ET.
The Telecom Commission, the highest policy-making wing in the communications ministry, had provisioned a payment of Rs 2,000 crore annual subsidy for three years out of the USOF to support BSNL's rural landline operations, starting July 2008. This was aimed to compensate the stateowned telco which lost out on access deficit charges ( ADC) three years ago.
Under the terms of an MoU between BSNL and USOF, such subsidy payout was to stop from July 2011 unless the telecom department decided to renew the agreement.
Subsidy payout for BSNL's loss-making rural landline operations is conspicuously absent in an internal telecom department note that gives a detailed lowdown on the USOF's near Rs 35,000 crore payment commitments over the next three years.
Virtually, the entire USOF corpus is proposed to be channeled to finance two major projects - the communication ministry's Rs 20,000-crore national optic fibre network venture that will take high-speed internet to the hinterlands.
In another internal note to the DoT, BSNL may have unwittingly come up with a solution to save its rural landline operations. It has suggested that subsidy for the upcoming rural wireless broadband project should be limited to only one player and not two operators as has been proposed by the team managing the USOF corpus. BSNL feels subsidising the rollout of two potential rural wireless broadband networks would be a huge waste of national resources.
"The cost of setting up parallel (rural broadband) infrastructure by two operators in rural areas will be wastage of national resources. It would be better that only one operator is allowed to roll out the network and other operators share the same by embracing the MVNO model," says BSNL in a note to the DoT, which was reviewed by ET.
In the event, the government buys BSNL's argument, some funds may be available with the USOF to continue supporting the state-owned telco's loss-making rural landline operations.
Incidentally, MVNOs are firms who do not own any cellular infrastructure but buy airtime from existing mobile phone companies and sell it under their own brand. The USOF administrator has pegged the peak subsidy requirement for two potential operators rolling out rural wireless broadband networks at Rs 16,000 crore which will be payable over five years.
It will shortly invite bids and one slot is likely to be reserved for BSNL. .......ET
