As a measure to encourage private operators in expanding their coverage in rural areas, the DoT is working on a graded scheme which will allow operators to contribute only 2% of their annual revenues to the USOF subject to the condition that the operators complete their roll-out obligation.

Presently operators contribute only 5% of their annual revenues towards USO fund. A reduction of 3% will result in savings of around Rs.2000 crore for the industry.

The new graded scheme will require those operators who cover below 50% of the district to pay the original contribution of 5%. Those who cover 70% will get 1% rebate and those who cover 90% will get 2% rebate. Those completing 100% coverage will get 3% rebate.

Remember, DoT had recently issues show cause notice to seven operators with a penalty of about Rs.450 crore for not fulfilling roll-out obligations.

Government is now trying to encourage rural telephony by offer of such incentives. By reducing the licence fee, the Government is now trying to set incentives for connecting the rural areas since punitive measures are clearly not working. Tele-density (number of phones per hundred people) in urban areas is nearly 40 per cent compared with just around 3 per cent in rural areas.