TRAI proposed creating this new type of operator in its recommendations for promoting rural telephony. DoT representatives said that the concept of rural operators cannot be implemented because there is not adequate spectrum available.

"The larger operators are demanding for more spectrum and most operators have planned major rural rollouts in the coming years. In this scenario, it would not be possible for the Government to earmark spectrum for the niche operators," said a DoT spokesperson.

The TRAI had suggested that rural operators be permitted to operate in districts where rural teledensity is below 1%. DoT officials claim that there is no room for this new type of operator as the Government expects mobile operators to improve telecom penetration levels in rural areas.

The TRAI suggested that rural operators be eligible for subsidies from the Universal Service Obligation (USO) fund and that they not have to pay spectrum charges. The benefits from the USO fund and other incentives will be provided to mobile operators.

While urban penetration is improving fast – Delhi and Mumbai have close to 40% teledensity – telecom connectivity in rural areas is extremely low, with just 2% teledensity. The Government is working on a roadmap for improving mobile and broadband usage in rural areas with support from the USO fund. The government’s target is 200 million telephones in rural areas by 2012.

Source: The Hindu Business Line - WDR/Intelecon Regulatory News