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India: Government considers having ISPs contribute to fund Print E-mail
Thursday, 26 June 2008

Value-added service providers, including Internet service providers (ISPs), may be required to contribute to the Universal Service Obligation Fund (USOF) in order to subsidise broadband in rural areas.

Today, service providers are required to pay 5% of their adjusted gross revenue to the USOF. ISPs and other value-added service providers are exempted from this levy.

The USOF could be used to subsidise Bharat Sanchar Nigam Ltd's (BSNL’s) rural broadband services. Broadband uptake in India has been slow. Total broadband connections as of April 30, 2008, were 4.01 million. The government’s target was nine million broadband connections by 2007 and 20 million by 2010.

The Department of Telecommunications (DoT) is developing a new strategy to increase broadband penetration, particularly in rural areas. Using the USOF is part of the DoT’s strategy. The plans would be phased in and involves the use of common service centres (CSCs) being set up by the department of information technology (DIT) in schools, primary health centres and gram panchayats.

The government is also planning to subsidise its broadband initiative using existing USO funds. The DoT has about US$ 3.5 billion of unutilised resources in the USOF.

Source: The Economic Times - WDR/Intelecon Regulatory News.