COAI pushes for cut in USO levy, asks govt to slash overall levies

Industry body COAI has said that the Universal Service Obligation Fund (USOF) contribution should be kept in abeyance till the full amount of the said corpus is disbursed. In a recent letter to the telecom department, the Cellular Operators' Association of India (COAI) said that alternately USO contribution should be immediately brought down to 3 percent with the ultimate objective of doing away with the levy in the next 2-3 years in line with the recommendations of the telecom regulator.

"Further, we earnestly request the Department of Telecom (DoT) to kindly reduce remaining license fee from three percent to one percent of adjusted gross revenue...This will bring the total license fee to four percent from the present eight percent," the COAI said in the letter to DoT dated July 19. At present, the USOF levy is five percent and the license fee is pegged at 3 percent - taking the overall incidence of levy to eight percent.

The COAI pointed out that of the Rs 99,674 crore collected for the USOF between FY2003 and FY2019, as much as Rs 50,554 crore remained unutilized as on June 2019. The USOF is an independent body within the telecom department that subsidizes telecom infrastructure rollouts in rural India.

"In this regard, we are of the view that the existing contribution available in USO fund, that of Rs 50,554 crore is more than the requirement to connect 43,000 unconnected villages," the COAI said in the letter. The industry body said it is of the view that USOF should not exceed three percent of the Adjusted Gross Revenue (revenue earned from the sale of telecom services alone).

The COAI said that the regulatory levies were "additional costs to the consumers". The reduction in these levies will act as incentives for operators to roll out more network in rural areas.

"Thus considering that reduction in levies will act as an incentive for telecom service providers to roll out more network in rural areas, we are of the view that the USOF should be reduced immediately," COAI said.