15 January 2012

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Know about Universal Service Obligation fund USO Fund What is USO Fund Reason to create USO Fund

Know about Universal Service Obligation fund USO Fund What is USO Fund Reason to create USO Fund

Universal Service Obligation fund

Policy, Acts and Rules on USO Fund

1.1 The Universal Service Support Policy came into effect from 01.04.2002. The guidelines for universal service support policy were issued by DoT and were placed on the DoT website on 27th March 2002.
Subsequently, the Indian Telegraph (Amendment) Act, 2003 giving statutory status to the Universal Service Obligation Fund (USOF) was passed in December 2003.

The Fund is to be utilized exclusively for meeting the Universal Service Obligation by providing access to telegraph services to people in the rural and remote areas at affordable and reasonable prices.




The USO Fund was established with the fundamental objective of providing access to basic telegraph services. Subsequently, an Act has been passed on 29.12.2006 as the Indian Telegraph (Amendment) Act 2006 to amend the Indian Telegraph Act, 1885 to enable provision of all types of telegraph services.

1.2 The Rules for administration of the Fund known as Indian Telegraph (Amendment) Rules were originally notified on 26.03.2004.

The Rules were subsequently amended in order to enable support for mobile services and broadband connectivity in rural and remote areas of the country as Indian Telegraph (Amendment) Rules 2006 and the same were published on 17.11.2006.

The Rules have recently been amended to provide subsidy support to eligible operators for operational sustainability of Rural Wire line Household DELs installed prior to 01.04.2002, for a period of 3 years subject to a ceiling of Rs. 2000 Crore per annum for the country.
The Indian Telegraph (Amendment) Rules 2008 have been published on 18.07.2008.

1.3 The resources for implementation of USO are raised through a Universal Service Levy (USL) which has presently been fixed at 5% of the Adjusted Gross Revenue (AGR) of all Telecom Service Providers except the pure value added service providers like Internet, Voice Mail, E-Mail service providers etc.

In addition, the Central Govt. may also give grants and loans. The annual revenue share license fee shall be reduced to the extent of reduction in contribution towards Universal Service Obligation Fund (USOF) levy if the licensee in service area(s) meets the prescribed qualification.

The balance to the credit of the Fund will not lapse at the end of the financial year. Credits to the Fund shall be through Parliamentary approvals.

1.4 The implementation of USO related activities is carried out by the eligible operators as per the aforesaid Indian Telegraph (Amendment) Rules covering Basic Service Operators, Cellular Mobile Service Providers, Unified Access Services Licensees and Infrastructure Providers (IP-I). These Telecom Service providers are both public and private sector companies.


2.0 Activities supported by USO Fund

As per the Rules, the following services shall be supported by the Fund, namely:-

(i) Stream-I: Provision of Public Telecom and Information Services

(a) Operation and Maintenance of Village Public Telephone in the revenue villages identified as per Census 1991 and Installation of Village Public Telephone in the additional revenue villages as per Census 2001.- For installation of Village Public Telephone in the revenue villages, identified as per 1991 Census, only the Operating Expenses and Revenue shall be taken into account for determining the Net Cost. For the additional revenue villages identified as per 2001 Census, Capital Recovery in addition shall also be taken into account for determining the Net Cost.

Provided that in the case of the Village Public Telephone which are still to be installed in the villages identified as per Census 1991, Capital Recovery shall also be taken into account while determining the Net Cost.

(b) Provision of additional rural community phones in areas after achieving the target of one Village Public Telephone in every revenue village.- Where in a village the population is more than 2000 and no public call office is existing, a second public phone shall be installed and for the purposes of determining the Net Cost, Capital Recovery, Operating Expenses and Revenue shall be taken into account.

(c) Replacement of Multi Access Radio Relay Technology Village Public Telephone installed before 1st day of April 2002.- Capital Recovery, Operating Expenses and Revenue shall be taken into account for determining the Net Cost.

Note - Unless otherwise specified by the Central Government, the Secondary Switching Area shall be taken as a unit for the purpose of arriving at the Net Cost for activities specified in items (a) to (e) of stream I.

(ii) Stream-II Provision of household telephones in rural and remote areas as may be determined by the Central Government from time to time:

(a) For household Direct Exchange Lines installed prior to 1st day of April, 2002, the difference in rental actually charged from rural subscribers and rent prescribed by Telecom Regulatory Authority of India for such subscribers shall be reimbursed until such time the Access Deficit Charges prescribed by Telecom Regulatory Authority of India from time to time take into account such difference.

(aa) For Household Direct Exchange Lines installed prior to 1st day of April 2002, an amount of maximum Two Thousand Crore rupees per annum for a period of three years shall be reimbursed to the eligible operators, from the date the Indian Telegraph (Amendment) Rules, 2008 come into force, for operational sustainability of rural wire lines in lieu of Access Deficit Charges being phased out.

(b) For household Direct Exchange Lines installed after 1st day of April, 2002, Capital Recovery, Operational Expenses and Revenue shall be taken into account to determine the Net Cost.

Note - Unless otherwise specified by the Central Government, the Short Distance Charging Area shall be taken as a unit for the purpose of arriving at the Net Cost for activities specified in item (b) of Stream II.

(iii) Stream-III: Creation of infrastructure for provision of Mobile Services in rural and remote areas:

(a) The assets constituting the infrastructure for provision of mobile services shall be determined by the Central Government from time-to-time.

(b) A percentage of the Capital Recovery for the infrastructure for provision of mobile services shall be taken into account to determine the Net Cost.

(iv) Stream-IV: Provision of Broadband connectivity to villages in a phased manner

A percentage of the Capital Recovery for the infrastructure for broadband connectivity shall be taken into account to determine the Net Cost.

(v) Stream-V : Creation of general infrastructure in rural and remote areas for development of telecommunication facilities

(a) The items of general infrastructure to be taken up for development shall be determined by the Central Government from time to time.

(b) A percentage of the Capital Recovery for the development of general infrastructure shall be taken into account to determine the Net Cost.

Note - Unless otherwise specified by the Central Government, the revenue district/ group of revenue districts shall be taken as a unit for the purpose of arriving at the Net Cost for the activities specified in Streams III, IV & V.

(vi) Stream-VI: Induction of new technological developments in the telecom sector in rural and remote areas

Pilot projects to establish new technological developments in the telecom sector, which can be deployed in the rural and remote area, may be supported with the approval of the Central Government.

The Universal Service Obligation Fund (USOF) of India’s most ambitious scheme to date
had been the provision of mobile services in 84 clusters covering 500 out of a total of nearly
625 districts through private participation.

Under this scheme, mobile infrastructure and services were to be provided separately through two bidding processes.

But as usual what happens in majority project here also same happened , projects failed to take off.

USOF came in to effect from April 1, 2002.

It was created as a non lapsable fund. Transfers from the USOF required parliamentary approvals.

The USOF was to be administered by the Administrator, USOF, and DoT.

All operators were required to contribute five per cent of the Adjusted Gross Revenue (AGR) towards USL.

USOF was designed to be implemented initially as two streams Stream I and II focusing on
fixed and fixed wireless covering both public and private services.

Amendments were made to the Indian Telegraph (Amendment) Act in 2006 and the USOF rules that paved the way for inclusion of provision of mobile services (Stream III) (TRAI, 2005).

Later, streams IV, V and VI were added to cover provision of broadband connectivity to villages in a phased manner, creation of general infrastructure in rural and remote areas for development of telecommunication facilities and induction of new technological developments in the telecom sector in rural and remote areas respectively.

But the progress and development using this fund is very less.

Reality views by sm –

Sunday, January 15, 2012

Tags – USO Fund India