The department of telecommunications plans to offer incentives, which may include some kind of subsidy, to service providers for increasing mobile coverage in rural areas.
"We are still working on it; it may take some time," a senior DoT official told Business Standard.
The broad idea was endorsed by the DoT's internal panel in its report on the Telecom Regulatory Authority of India's recommendations last year on spectrum management and other licensing issues.
Trai had said service providers which had covered half the habitations in their licensed area with a population of 500-2,000 should get a reduction of 0.5 per cent in the annual licence fee.
Those which had covered all such habitations should get two per cent off.
However, DoT's panel has not accepted this.
Instead, it said there should be other ways of helping operators increase their coverage in rural areas.
All telecom service providers contribute a fixed five per cent of their adjusted gross revenues as a levy towards a Universal Service Obligation Fund, used for providing affordable services in rural and far-flung areas.
The government also allocates money for the USOF, set up in 2002.
According to estimates, about Rs 6,000 crore (Rs 60 billion) is added annually to the USOF, the corpus currently a little over Rs 20,000 crore (Rs 200 billion).
The utilisation of funds has always been less than Rs 2,000 crore (Rs 20 billion) annually and usually only in providing access deficit charges to government-run Bharat Sanchar Nigam Ltd.
"Because of non-utilisation of the full USO fund, we are looking at other ways which will propel mobile players to increase the coverage in rural areas," the official added.
Trai says about 74 per cent of all villages have been covered by more than one operator.
And, that only nine per cent of villages are not covered at all.