Telecom Operators Urge GOP to Reduce USF and R&D funds by 50%

Telecom operators are reportedly pressing the government for suspending the industry annual contribution of around Rs8 billion i.e. @ 1.5 percent of its annual gross revenue (AGR) towards Universal Service Fund (USF), and 0.5 percent in R&D fund (Ignite), it is learnt.

Sources revealed that given huge amounts of unallocated amounts in both USF/R&D funds, telecom operators seek a moratorium for two years or 50 percent reduction in annual USF and R&D fund contributions.

Telecom Operators Urge GOP to Reduce USF and R&D funds by 50%

Telecom operators contribute around Rs6 billion in USF and Rs2 billion in R&D annually.

Under law, GoP could reduce or adjust these contributions.

The funds have been historically underutilised and the size has grown to more than Rs100 billion, as per the documents.

The objective behind the proposal is to reduce the cost of doing business and improve industry profitability.

However, sources revealed that if government suspended the industry contribution, it might hurt the telecom sector expansion.

According to documents, the USF has spent around Rs66.044 billion to extend cellular, broadband internet, fibre optics and other telecommunication services to un-served or underserved areas but some areas in Balochistan as well as South Waziristan and Kurram districts of Khyber-Pakhtunkhwa still lack access to basic telephony and mobile broadband services.

The USF was created in 2007 to stretch cellular, broadband internet, fibre optics and other telecommunication services to un-served or underserved areas.

All telecom companies have been contributing 1.5 percent of their revenues to the USF.

Officials revealed that USF had around Rs30 billion in balance and spent Rs66.044 billion since its inception for expansion of telecommunication services to the under-served and un-served areas of the country.

They maintained that despite massive growth, there were many areas that remained underserved.

The challenges, they asserted, that the USF faced, were rugged terrains, sparse population, harsh weather, lack of electricity, no backhaul, and poor logistics as well as security clearance.

Some of these areas include, South Waziristan, North Waziristan, Orakzai, Kurram, Jhal Magsi, Dera Bugti, Nasirabad, and Jaffarabad that are not being catered.

According to the sources, the areas which do not support business plans of telecom operators, the government subsidises projects there to reach the under-served and un-served.

According to documents, of the total Rs66.044 billion subsidy, Ufone took major chunk of subsidy i.e. Rs17.451 billion (26.42 percent), PTCL, Rs16.134 billion (24.4 percent), Telenor, Rs17.484 billion (26.47 percent), Zong, Rs5.525 billion (8.37 percent), Wateen, Rs4.847 (7.34 percent), World Call, Rs1.273 billion (1.9 percent), and Jazz, Rs1.663 billion (2.5 percent).

Telecommunication coverage was around 44 percent before USF-2006-07, which reached around 72.8 percent since the creation of USF, while covering 7771 un-served mauzas.

Official said broadband for sustainable development programme under the USF was designed to provide telecom services to the un-served mauzas across the country.

After issuance of 3G/4G licences by the federal government, this programme has been redesigned to include the broadband equivalent data (internet) services as a compulsory component.

For new projects, powering of telecommunication site through solar energy was also made a part of each project.

According to documents, 1159 BTS have been installed and 7116 mauzas have been covered.

Optic fibre programme is another initiative under USF that aims to promote development of telecommunication services in un-served and under-served rural areas to make available and affordable the voice telephony and basic data services.

This requires also the establishment of a stable and reliable optic fibre network in all corners of the country.

See Also: How To Convert Your Network To Ufone, Zong, Telenor or Jazz?

This project aims to extend the optic fibre connectivity to the un-served tehsil headquarters for meeting the growing requirements of voice, data and video in these areas.

Chek out? Telecom sector contributes Rs173.22bn to the national exchequer