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Broadband Universal Service Fund is about to be established: will focus on investment in rural areas

Updated:2015/6/19 09:34

According to the sources, the State Council has agreed to set up the Broadband Universal Service Fund, and relevant departments are working on a set of management measures.

As the source said, the government's focus is the implementation of the policies on the broadband China strategy and improve the speed while cut down the tariff, but not the carry out of a large scale financial stimulus.

"If the government wants to make investment, it has to be in the rural areas" the source said, “but no matter what happens, the current social environment no longer considered it the telecom industry's own business for the broadband construction."

Since 2013, the MIIT issued special actions for the “broadband China” project every year, and all the three major operators claimed the tasks. However, to be honest, in addition to the efforts of the three major operators, supports from the policies are always smaller than the slogans.

The director of China Telecom Technology Commission Wei Leping once pointed out directly, it was difficult to achieve the national goals solely on the efforts of the three major operators, collaborative co-operations from multiple aspects were needed, especially the government's policy supports. The mentioned source also totally agree with his opinion, “Policies are the most important supports, for the urban areas, the broadband entry fees, the monopoly and other issues must be resolved."

It is relatively better for the urban areas, due to the higher ARPU and lower construction cost of single users, the operators may be economically encouraged to carry out the network construction; but in the rural areas, the broadband access cost is very high for single users, or even takes more than ten years to recover the investment costs. As a listed company, the operators are reluctant and don’t have enough money for large-scale broadband network construction in rural areas, which requires the government's investment.

The source believes that even for rich countries like the USA (about $4.5 billion budget per year), a lot of the capital are invested in rural areas. For India, which is also a developing country, it has already established a Broadband Universal Service Fund. Moreover, the gaps between urban and rural areas and the gaps between East regions and West regions are very big in China, if we can't construct the broadband network widely in rural areas in time, a new digital divide may be formed.

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