DoT delays second phase of rural mobile project

New Delhi: Lack of interest among private operators has delayed the second phase of the rural mobile project by over six months. The Department of Telecom had invited expression of interest from the infrastructure companies in August but had to extend the deadline five times due to poor response. The new deadline is set for January 5, 2009.

The project, funded by the Universal Service Obligation, envisages setting up 11,000 mobile towers across 2.4 lakh villages. Once completed, almost the entire Indian population will have access to mobile phone.

DoT had kick-started the second phase exactly a year ago by identifying locations for towers across various circles. Operators were asked to apply by the end of August. However, only a few companies came forward, forcing DoT to extend the deadline repeatedly.

One reason for the poor response is that most of the infrastructure companies are still rolling out towers that were scheduled for the first phase of the rural mobile project. The USO fund administrator had identified 8,000 spots for mobile towers. Bidding was so intense for the first phase that the outgo from the USO fund was scaled down by more than 50 per cent.

However, the price of steel, which constitutes more than 80 per cent of the tower cost, increased subsequently. As a result, only about 2,000 towers have been set up till date in the first phase. The telecom companies have also blamed threats from naxalites, poor weather and tough terrain for the slow progress. DoT had hauled up the service providers during a meeting to check the implementation status.

Meanwhile, the telecom regulator has suggested doing away with the rural mobile scheme in its current form. In a recommendation issued on December 16, it suggested doing away with the bidding process and extending financial support from the USO fund to all operators who set up infrastructure in rural areas.

The rural mobile project assumes significance as the Government has set a target of 500 million subscribers by 2010. While most private operators have covered the urban population, growth is now expected from the rural areas. However, operators will face challenges of lower average revenue as a result of lower incomes in rural areas.