RCOM fined for halting rural telephony services

5 Aug 2011

India’s Minister of State for Communications and IT Milind Deora has announced that the government has fined Reliance Communications (RCOM) and its subsidiary Reliance Telecom for closing down rural telephone services between 2010-11 in violation of the country’s Universal Service Obligation Fund (USOF) agreement. According to the Financial Express, the telco has been fined a total of INR54.8 billion (USD122 million), of which the larger penalty (INR44.2 billion) applied to RCOM, after both companies switched off services in circles including Andhra Pradesh, Bihar, Maharashtra, Punjab and West Bengal. The minister also stressed that the state had not cut the fine imposed on RCOM, instead noting that in view of the switch off and subsequent switch on of the service, the penalty had been imposed only for the period of interruption. RCOM for its part reportedly cited a lack of commercial viability as the reason for temporarily shutting down its services in the areas in question.

The report also notes that the Department of Telecommunications (DoT) has also formed a committee to examine all aspects of the matter, and suggest appropriate further action that may be necessary. Further, telecom minister Kapil Sibal has also recently set up a panel to ascertain the reasons for delays in providing mobile services in rural areas under the USOF scheme.