Subsidy for rural mobiles: Bill passed

BL reports

The Lok Sabha today passed a Bill enabling cellular mobile service providers to get financial support from the Universal Services Obligation Fund for offering mobile services in rural and remote areas. At present, the USO fund is mandated to support only fixed line telephone in rural areas. However, with wireless technologies offering cheaper and more affective means of communications, the Government had introduced an amendment to the Indian Telegraph Act in Parliament to enable the fund to be used for supporting cellular services.

Replying to a debate on the Indian Telegraph (Amendment) Bill, the Communications and IT Minister, Mr Dayanidhi Maran, said that it was necessary to provide support to the mobile operators in order to replicate the urban success of telecom services in rural areas.

The subsidy would be given for a period of five years to cover nearly 2.5 lakh villages in remote areas. Some members expressed concern that the support to cellular operators may divert money from the USO fund, primarily created to finance fixed line projects by BSNL and MTNL.

Supporters of economic reforms have long cited the success of (private and relatively free) telecom sector in providing access even to poor. I dont know the details of this scheme, but i am not sure if subsidies are the best way to replicate urban success in rural areas.