Universal Service Obligation Fund

Apart from the higher capital cost of providing telecom services in rural and remote areas, these areas also generate lower revenue due to lower population density, low income and lack of commercial activity. Thus normal market forces alone would not direct the telecom sector to adequately serve backward and rural areas. Keeping in mind the inadequacy of the market mechanism to serve rural and inaccessible areas on one hand and the importance of providing vital telecom connectivity on the other, most countries of the world have put in place policies to provide Universal Access and Universal Service to ICT.Universal Service Obligation Fund is the government fund that makes it possible and is reserved for the same purpose. However, its scope was first limited to telecom services, but now broadband connectivity and mobile services are also a part of it. Universal Service Obligation Fund is a non-lapsable Fund.

History of Universal Service Obligation Act

In 1999, there was a new Telecom policy. It stated that the Fund for the Universal Service Obligation would be collected through ‘Universal Access Levy (UAL) .’This will constitute some percent of operators with various licenses earned.

Universal Service Support Policy was brought in effect from 1st April in 2002. In 2003, the Indian Telegraph (Amendment) Act gave the Universal Service Obligation Fund (USOF) statutory status. In 2003, this act was passed by the two houses of Parliament.

Gaining statutory status means that body, i.e., the statutory body, is defined as a non-constitutional body with authority set up by the Parliament. Statutory bodies have the authority to pass laws and take decisions on behalf of the state or country. Statutory bodies have official permission for Legislation, i.e., the process of enacting the law.

The rules for the Fund, known as Indian Telegraph (Amendment) Rules, 2004, and how it will be administered were defined on 26th April 2004. Indian Telegraph Act 1885 was amended first in 2003, then again in 2006, and finally in 2008. It was stated that the Fund should be used exclusively to meet the Universal Service Obligation.

Fund Generation

Universal Service Obligation Fund (USOF) is a collection of funds generated by imposing a 5% Universal Service Levy. It is charged to every telecom fund operator on their Adjusted Gross Revenue (AGR). The Consolidated Fund of India will get this Fund first. The Indian Parliament will then approve it later. After this, the Fund is dispatched. USOF uses this Fund to fulfill its aim, providing Universal Service to all areas, including uncovered areas, like the rural areas.

USOF Objectives & Vision

The main aim of USOF is to provide affordable and reliable access to the telecommunications network to rural parts of India. This will help them achieve up to their full potential.

USOF also has political, social, economic, and constitutional objectives. They are stated below:

• To encourage the consumption of Internet and Communication Technologies (ICT) services.
• To expand the telecommunication network.
• To use the collected USO levy for equal distribution in all the target subsidies.
• To bring the unserved and uncovered areas of the country into the telecom network and bridge the access gap.

Partners of USOF

According to the Department of Telecommunications, USOF has 24 partners. They are stated below:

• Tata Teleservices Limited
• Bharti Airtel Limited, etc.
• Reliance Communications Limited
• Vodafone
• Bharat Sanchar Nigam Limited

Nature of the Fund

The Fund of USOF is a non-lapsable Fund.

A non-lapsable fund means that the unspent money from the ministry’s capital budget won’t lapse. It will be continued in the coming fiscal year. When a fund is lapsable, the unspent amount is returned to the Consolidated Fund of India.

Now usually after the collection of funds in USOF, the Levy amount is deposited to the Consolidated Fund of India.

The Fund is later deposited to USOF when approved by the Parliament.

Scope of the USOF

Let’s understand the scope of the Universal Service Obligation Fund:

• As we have seen before, the basic and foremost objective of USOF is to establish a system that provides access to fundamental telecom service to rural and uncovered areas at a very reasonable and economical price.
• Later, the scope was expanded. As of now, UFOS has the aim of providing subsidy access to several types of telecom services which include broadband connectivity and mobile services.
• Building and developing the infrastructure in remote areas would be useful to fulfill their aim.
• The infrastructure involves roads, railways, ports, energy, etc.

Conclusion

The Universal Service Obligation Fund was established with the primary objective of providing Universal Service to remote and rural areas at an affordable price. The act was passed in 1885 and was amended in 2003, 2006, and 2008. Universal Service Obligation Fund is a non-lapsable fund affiliated with the Department of Telecommunications.

It also aims to develop the rural areas in social and economic aspects. It promotes the growth of Internet and Communication Technologies Services among the rural areas. It leads to decreased rates of urban migration and the generation of employment opportunities in rural areas.