Telecom ministry will spend upto Rs 5,000 crore from the Universal Service Obligation fund

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(USOF) to give subsidy to the telecom operators for providing broadband services in rural areas of the country.

The size of the tender will be between Rs 2,000 and Rs 5,000 crore, a source close to development said.

USO Funds was set-up in 2002 in order to provide mobile services and broadband connectivity in rural and remote areas of the country. At the end of FY'11, the USOF had a total of Rs 16,803.84 crore in its corpus.

The resources for USOF are raised through a Universal Service Levy (USL) which at present has been fixed at 5 per cent of the Adjusted Gross Revenue (AGR) of all Telecom Service Providers except the pure value added service providers like Internet, voice mall, e-Mail service providers etc.

The Ministry has already floated the draft tender seeking the comments from various stakeholders and body.

"Department has received comments from almost every telecom operator and the associations and Ministry will proceed to float the tender as quickly as possible," the source added.

Under the 'Rural Wireline Broadband' scheme of USOF, a total of 2,61,413 broadband connections and 2,506 kiosks have been provided till January 31, 2011, in rural and remote areas.

Last month, telecom regulator Trai had objected making state-run BSNL as execution body for the National Broadband Plan (NBP). Trai had said this in its recommendations on NBP that have been submitted to the Telecom Ministry.

When asked the reasons for Trai objecting to state-run BSNL as the execution body for this project, the sources merely said :"Actually they have made some comments so we are taking them into account".