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The government is thinking to exempt BSNL’s rural fixed line operations from license fee after concerns over BSNL’s financial capability to offer services in rural areas after phasing out of Access Deficit Charge (ADC), a levy paid by private players to BSNL to carry out rural operations, with effect from April. . This license fee exemption will make the company gain Rs 400 crore annually.

BSNL two years ago was getting the ADC to Rs 5,000 crore annually from the private players to remunerate the PSU to take services in rural areas, where usually other players were not ready to go. Telecom regulator TRAI had decided to do away with the ADC subsidy in a phased manner as demanded by the private service providers. BSNL is fulfilling various social obligations of the government and has to operate in loss-making rural areas, as the PSU received Rs 4,650 crore from Universal Service Obligation (USO) fund during 2002 while it contributed Rs 8,031 crore towards it.

BSNL had earlier opposed TRAI’s decision to phase out the ADC saying the rural expansion would take a major hit as the private players were not going to these areas. Although the government has allowed mobile players to take advantage of USO fund to establish networks in rural areas but the move would affect BSNL as it has already invested huge money in setting up rural telephony.

Communication and IT Minister A Raja has directed the Telecom Commission to work out the details, for the decision with regard to revising the license fee and spectrum charges as percentage of Adjusted Gross Revenue (AGR). Earlier, DoT was considering to increase the spectrum charges to minimum eight per cent of AGR for the existing players but no decision has yet been taken.