The GSM Association has come out with a report on universal service funds (USFs) to which telecom operators contribute a percentage of their adjusted gross revenue for the growth of rural telephony. The report concludes that most funds are not succeeding in delivering their specified goals of widening telecom services. Gabriel Solomon, head of public policy, GSMA, tells Priyanka Sahay that even telecom department is looking forward to a detailed study based on global practices. Excerpts from the interview:
Why should the Indian government review levy of 5% of USO fund on telecom operators?
The basis of this report is a review of 64 USFs (64 countries). Most funds are not succeeding in delivering their stated goals of widening access to telecom services. More than one of the 64 funds surveyed have yet to disburse any of the contributions they have collected and more than $11 billion remains undisbursed that could otherwise be used to extend rural coverage or lower the cost of mobile ownership.
What is India’s status here?
Operators in India have been paying 5% of their revenue as Universal Service Fund (USF) levy, one of the highest in the world. The growth of mobile telecom sector and the large amount of undisbursed funds are not compatible with a high USF levy. It’s hindering industry investment that could otherwise create significant socio-economic benefits. In India, the USOF contains over $4 billion of accumulated funds. India is not alone, for example in Cote D’Ivoire and Paraguay, the USF is in excess of 0.6% of the countries’ GDP.
What does the report communicate to the government?
Despite the fact that there is an ever-increasing amount of money unused in these funds, governments still continue to collect more from mobile operators. The situation needs urgent government attention as the money collected till date far exceeds the amount that is needed to ensure universal access. In India, operators pay 5%, while in rest of the countries, they pay lower or do not pay at all. The 5% levy is extremely high.
What are the alternative solutions?
Instead of paying 5%, we would like to set up specific targets and we hope it would work.
Alternative solutions, for example, private/public partnerships, such as those established in Finland, have been able to deliver better and more effective outcome. In competitive markets, if there is money within the industry, then each player will think of something creative to do. Other countries including Columbia had a 5% levy, but in 2002 they too reduced it to 2.2%. The research reinforces that market-based solutions have shown themselves to be the most effective way in bridging the digital divide.
How has been the Department of Telecommunications (DoT) reacting to this issue?
We have an ongoing relation with them and my colleagues in Delhi have been talking to them. We have met the USOF administrator in DoT and he has shown keen interest. He says it will be great to know what other countries do with this fund and if there is something to learn, we are open to getting rid of it.
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