The UPA government pro­poses to set up India Tele­com Innovation Fund (ITIF) to incubate technolo­gies and support 20 ‘start up’ telecom entrepreneurs who could help benefit growth of wire­less telephony in rural India.

This is part of the telecom department’s move to make telecom industry expansion inclusive and take its benefits to ‘aam admi’. Telecom penetration in rural India is as low as 15 per cent as against 88 per cent in metros and smaller cities.

ITIF will be set up with seed money from Universal Services Obligation Fund (USOF) that has about Rs 15,000 crore unused fund. However, size of the fund is yet to be decided.

Top technical institutions like IITs, National Institute of Technology (NIT), C-Dot and other research centres will shoulder the respons­ibility of developing techn­ologies and entrepren­eurs with focus on rural India. Private telecom players may also be roped into devel­opment of the start up firms.

The Telecom Commiss­ion, that met last week, deferred a decision on this proposal of the telecom department. Deployment of USO Fund resources into setting up a SEBI-regist­ered venture capital fund will need clearance from both, the PMO and union cabinet. But, the nodal department has simultane­ous­ly begun discussion with industry players about the judicious way of using the huge funds in USOF.

The government is look­ing at innovative techn­o­l­ogy for the start up compa­n­ies that can benefit rural popu­lation that has no acce­ss to banking, post office, electri­city and basic ameni­ties.

Technology start ups with focus on providing rural population the edge to operate their bank accou­nts through mobile sets, send money to distant par­ents through wireless net­works or buy seeds and fert­il­i­s­ers apart from creating an easy platform to sell their produce at best prices eliminating the agents will be encouraged.

Further, these start-ups may be supported through dedicated venture capital fund to provide easy linkages with urban markets and stores. USO Fund adminis­trator Ajay Bhattacharya was not available for comments.

Meanwhile, PM’s advisor on innovations, infrastru­cture and technology Sam Pitroda has mooted the idea of using USO Fund resources to set up the National Public Innovation Network to take technology to doorstep of commoners.

A third idea being considered by an internal committee of telecom ministry is to set up a dedicated fund with corpus of Rs 5,000 crore to promote companies that manufac­ture telecom equipment indigenously and carry out research and development. This proposal is being pushed by services providers as several key equipments import from cost-effective Chinese companies have been banned owing to security considerations.

Fourth proposal being vetted by telecom department is to use the USOF resources for broadband penetration in rural India so that they can wireless services seamlessly.

But, the sector regulator, Telecom Regulatory Authority of India (Trai) had a different scheme to effectively utilise the USOF resources. Former member of Trai (Trai) RN Prabhakar told Financial Chronicle that funds from USOF and National Employment Guarantee Programme be used for taking wireless telecom platforms and optical fibre networks to rural masses.

“Trai had proposed that those villages with more than 500 people should be provided with optical fibre for network. Digging cost would be funded from NREGA and laying fibre network from USO Fund. The government had consi­d­ered setting up separate bodies to maintain the opti­cal fibre network and some service providers were to be roped in, to take care of the services,” Prabhakar said.

Timelines set by Trai to network the entire rural India is two to three years and the initial cost for this project may be used from Rs 15,000 crore lying with USOF. Later, funding can come from fresh accruals into USOF. About Rs 12,000 crore to Rs 13,000 crore could also be mobilised from the NREGA.

But the biggest limiting factors in this plan were linking the agency to lay optical fibre network and charges to be levied for network usage for rural people. The union cabinet was to take a decision on both, Prabhakar said.

The idea was to float an independent agency to work on this ambitious project that can undertake broadband or wi-fi network in the rural areas. They can set up a network around the villages, Prabhakar said.

Mahesh Uppal, director of Com First India told Financial Chronicle that, “USO fund must be delivered for creation of all infrastructure that would not come up on its own.”