The government is considering minimizing or suspending the telecom industry’s annual contribution of around Rs. 10-12 billion comprising 1.5 percent of its annual gross revenue (AGR) towards the Universal Service Fund (USF) and 0.5 percent in the R&D Fund (Ignite) aimed at partially mitigating the “digital emergency” triggered by an exponential increase in the cost of doing business under the prevailing economic situation, it is learned.
Telecom operators have urged the government to suspend the industry’s annual contribution at least for two years. They have tabled the recommendations to the federal government through the Ministry of Information Technology and Telecommunication to immediately take some measures to improve fiscal space for the industry.
Of immediate utility in this context are industry-specific measures, within the power of the policymakers that provide the requisite space without affecting the overall budgetary positions of the wider economy. As part of the package of such measures, they have requested the government to suspend, for two years, the industry’s annual contribution of around Rs. 10 billion which comprises 1.5 percent of its AGR towards the USF, and 0.5 percent in R&D fund (Ignite).
The development was also confirmed by Federal Minister for Information Technology and Telecommunication during a briefing with a select group of journalists here on Thursday. However, the minister said that the ministry agreed in principle to either suspended the contribution for a specific time or minimize it by one percent, provided that the federal government announces other incentives.
“If I suspend or minimize USF and Ignite contribution on our own, fingers would be raised and therefore we linked it with other government incentives”, he added.
The USF was created in 2007 under the Telecom Act amendment of 2006 to extend cellular, broadband internet, fiber optics, and other telecommunication services to un-served or underserved areas. All telecom companies have been contributing 1.5 percent of their revenues to the USF.
