'India sitting on over $4 billion unused Universal Services fund'

NEW DELHI: Global mobile industry bodyGSMA today said India is sitting on unutilised fund of over $ 4 billion collected from telecom operators and the system needs to be re-valuated as it has been ineffective. 

"In India, the 
Universal Service Obligation Fund (USOF) continues to impose approximately a five per cent levy on operator revenues, despite the fact that is contains over USD 4 billion of accumulated funds. 

"India is not alone as regards the collection of substantial amounts of money from the mobile industry, for example in Cote D'Ivoire and Paraguay, the USF represents in excess of 0.6 per cent of the countries' 
GDP," a report prepared by Ladcomm for GSM Association said. 

Globally, there are USD 11 billion universal services funds lying unused with authorities in various countries, it said. 

"Our research shows that, despite the fact that there is an ever-increasing amount of money sitting unused in these funds, governments continue to collect still more from the mobile operators, India levies 5 per cent tax on mobile operators for collecting USF perhaps which is highest in the world," GSMA Head of Public Policy Gabriel Solomon said here. 

"At the moment thats not evident. One of the key reason is 5 per cent of each rupee earned is going to 
USOF and its not going top be returned back to the industry. This is a missed opportunity. It is something that is taken from the industry that could otherwise be used to make an investment case," Solomon said. 

As per the 
Indian Telegraph Act 1885 (as amended in 2003 and 2006), Universal Service Obligation is defined as access to telegraph service to people in rural and remote areas at affordable and reasonable prices. 

The report, however, appreciates India's USOF for having high level of transparency from a financial reporting perspective along with Colombia. 

It says USOF in Colombia and India provide "Detailed annual reports (in a four year planning cycle) showing budget allocation, funds committed and funds used" and "Details on fund's financial performance on the website listing levies collected, amount contributed and balance not yet disbursed". 

The report alleges that Indian USF has inadequate or misguided articulation of objectives and strategy. 

"Guidelines encouraged urban rather than rural network rollout," the report alleged for India's USF along with such fund in other two countries. 

No comment on this was received from 
Department of Telecommunications on the comment by GSMA till the time the report was written.