UNIVERSAL SERVICE OBLIGATION FUND

(USOF)
Department of Telecom, Ministry of Communication

Pankaj Kumar
Jt. Administrator
USOF, Govt. of India
 ICT STAT AT A GLANCE: AUGUST 2019
• Wireless subscribers: 1171 Million
• Wireline subscribers: 21 Million
• Total : 1192 m( urban-681m +Rural-511m)

• Tele-density : overall 90 % (Urban-161 ; rural :57)

• Broadband subscribers: 615 m(597 on mobile)

• Cable/DTH: 170 m TV homes( DTH-70m ; Cable- 100m)

• Public Wi-Fi: about 5 lakh Access Points

 DEFINATION OF UNIVERSAL SERVICE OBLIGATION
INDIAN TELEGRAPH ACT

UNIVERSAL SERVICE OBLIGATION: MEANS THE OBLIGATION TO

PROVIDE ACCESS TO *TELEGRAPH SERVICES TO PEOPLE IN THE RURAL
AND REMOTE AREAS AT AFFORDABLE AND REASONABLE PRICE

Till 2006, ‘Basic’ was prefixed to ‘telegraph Services’

 Policy Options for Universal Service
• Market based reforms
• Mandatory service obligations
• Cross subsidies
• Access deficit charges
• Private Public Partnerships (PPPs)
• Pay or play
• Universal funds
 USOF: Policy Objectives
• Provide widespread and non-discriminatory access to quality ICT services at
affordable prices to people in rural, remote, and unserved, areas.

• Provide an effective and powerful linkage to the hinterland thereby

mainstreaming the population of rural and remote parts of the country.

• Ensure that universal services are provided in an economically efficient manner.

• Ensure that by developing hitherto unconnected areas, the benefits of inclusive

growth are reaped by our nation, bringing in its wake rapid socio-economic
development and improved standards of living.
 USOF : Policy Underpinnings
• Availability: the level of service is the same for all users in their
place of work or residence, at all times and without geographical
discrimination

• Affordability: for all users, the price of the service should not be a
factor that limits service access

• Accessibility: all telephone subscribers should be treated in a non-

discriminatory manner with respect to the price, service and
quality of the service, in all places, without distinction of race, sex,
religion,caste etc.
 UNIVERSAL SERVICE OBLIGATION FUND : INDIA

➢ Universal Service Obligation Fund (USOF) was set up by an Act of Parliament

in December 2003 by amending the Indian Telegraph Act, 1885.

➢ Objective of USO Fund is to provide access to telecom services in a non-

discriminatory manner to people in the rural and remote areas at affordable
and reasonable prices, thereby bridging the rural-urban digital divide.

➢ USOF inflow comes from the collection of Universal Access Levy (UAL)
through the license fee charged on licensee of DoT @ 5% of the adjusted
gross revenue (AGR)

➢ For commercially non-viable rural and remote areas, USOF provides subsidy
support in the form of Net Cost or Viability Gap Funding (VGF) to incentivize
telecom service providers.
 BACKGROUND AND QUICK FACTS
• Universal Service Support Policy (USSP) came into effect w.e.f. 1.4.2002.

• Administrator, USOF was appointed on 01.06.2002

• Indian Telegraph Act 1885 was amended in 2003 to give statutory status to USOF
• Part IIA, Section 9A to 9D of the Act pertain to USOF
• The Rules for administration of the Fund known as Indian Telegraph (Amendment) Rules, 2004 were
notified on 26.03.2004
• Rule 523: Defines Administrator and the Fund
• Rule 524: Powers of Administrator
• Rule 525: Scope of support from USOF
• Rule 526: The selection of the Universal Service Provider shall be made by a bidding process from amongst
the eligible operators
• Rule 527: Release of Funds to Universal Service Providers
 POLICY PRESCRIPTION ON USOF
•NTP 1994 : One of the objective was provision of access to all people covering all villages as early as
possible, for certain basic telecom services at affordable and reasonable prices.

•NTP 1999: envisaged development of telecom facilities in remote, hilly & tribal areas and provision of
universal services to all uncovered villages.
•NTP 2012: ‘Right to broadband’ enshrined and envisaged provisioning of converged communication services
in commercially unviable rural & remote areas using USO Fund
•NDCP 2018:
➢ Provide Universal broadband connectivity at 50Mbps to every citizen
➢ BharatNet – Providing 1 Gbps to Gram Panchayats upgradeable to 10 Gbps
➢ GramNet – Connecting all key rural development institutions with 10 Mbps upgradeable to 100
Mbps
➢ JanWiFi – Establishing 2 Million Wi-Fi Hotspots in rural areas
➢ Ensuring connectivity for all uncovered areas in the North Eastern States, Himalayan region, LWE
areas, Aspirational Districts, Islands and Border Areas
➢ Marginalized communities, women and persons with disabilities
➢ Promoting innovative, effective and scalable alternate technologies for remote areas
➢ Enabling access provision by any entity capable of fulfilling the Universal Service Obligation
➢ Redesigning the USOF and broadening its objectives to enable universal broadband access including
for economically and socially weaker sections in urban pockets
➢ Strengthening institutional capacity of USOF to ensure effective rollout of services in uncovered,
remote and rural areas
 USOF IN DOT: ORGANISATIONAL STRUCTURE

Administrator, USOF

BBNL

Joint Administrator *Joint Administrator (F) DDG (I)

(Tech.& Admin)

DDG (Special DDG (II)

Projects)
Dy. Admin(Tech.) Dy Admin(F)

Director Director

Director

*currently Addl. Admin(F)

 ITR 525: SERVICES SUPPORTED BY THE FUND

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

ii. Stream-II: Provision of household telephones in rural and remote

areas as determined by the Central Government from time to time.

iii. Stream-III: Creation of infrastructure for provision of Mobile Services in

rural and remote areas.

iv. Stream-IV: Provision of Broadband connectivity to villages in a phased

manner.

v. Stream-V: Creation of general infrastructure in rural and remote areas

for development of telecommunication facilities.

vi. Stream-VI: Induction of new technological developments in the

telecom sector in rural and remote areas.
 MAJOR SCHEMES OF USOF
1. BharatNet – To Provide Broadband Connectivity to all the 2.5 lakhs
(approx.) Gram Panchayats (estimated project cost Rs. 42,068 Cr)

2. Comprehensive Telecom Development plan (CTDP) for North East

Region (estimated project cost Rs. 8,121 Cr)

3. Comprehensive Telecom Development plan (CTDP) for Islands

(estimated project cost Rs. 2021 Cr)

4. Providing Mobile services in LWE areas (estimated project cost Rs.

7,330 Cr)

5. Providing Mobile services in Aspirational & Uncovered villages (under

process)

6. Special and Innovative Projects : E-Band solution, Air Jaldi, Free space
optics, WiFAR/ 4G LMLC based solutions, etc
 Mobile services in areas facing Law& Order
challenges because of extremist activities

Two phases:
Phase 1: complete
10 States Phase II: under finalization

106 Districts

1
❑ Uttar Pradesh
❑ Bihar
❑ Jharkhand
❑ Chhattisgarh
❑ Odisha
A&N Islands ❑ West Bengal
Lakshadweep ❑ Telangana
Islands ❑ Maharashtra
❑ Andhra Pradesh
❑ Madhya Pradesh
Comprehensive Telecom Development Plan for North Eastern States

1. Mobile services in uncovered villages and along national highways

2. Optical Fiber connectivity from District to Block Headquarters

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Comprehensive Telecom Development Plan for A&N Islands

1. Submarine OFC cable from mainland to Island

2. Mobile towers in uncovered villages
3. Intra Island OFC connectivity
4. BharatNet project

15
 Comprehensive Telecom Development Plan for Lakshadweep Islands

1. Submarine OFC cable from mainland to Island

2. Mobile services in uncovered villages
3. Satellite Bandwidth Augmentation
4. BharatNet project

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 Provision of Mobile Services in Uncovered Villages

❑ Total Villages in the country as per Census 2011: 6,42,517

❑ Total inhabited Villages in the country as per Census 2011: 6 lakh (approx.)
❑ Number of uncovered villages as per initial estimate: 27,721
❑ Uncovered villages are being covered by various schemes such as
▪ LWE- II: 3465 towers
▪ CTDP NER: 5514 towers
▪ CTDP A&N: 170 towers

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 ‘Digital India’ Programme
❑ Government of India has launched the ‘Digital India’ programme’ on 01 July
2015.
❑ The vision is to transform India into a digitally empowered society and
knowledge economy.
❑ ‘BharatNet’ (earlier NOFN) is the most important pillar of Digital India.
❑ Provision of mobile connectivity to uncovered villages is another vital area.
❑ Aims to establish network infrastructure for Broadband Highways accessible
on a non-discriminatory basis.
❑ Provisioning of affordable broadband services to citizens and institutions in
rural areas.
BharatNet: World’s largest Rural
Broadband Connectivity Program
 BharatNet

BharatNet is a project of National importance that aims to

build a Highly Scalable Network Infrastructure accessible
on a Non-Discriminatory basis to provide On Demand,
Affordable Broadband connectivity to rural masses &
institutions for realising the vision of
Digital India
 Objective of BharatNet

Build high speed

optical fibre network Enable Broadband
infrastructure across Access for 700 Mn
All 2.5 lakh Gram rural Indians
Panchayats

World’s largest Rural Internet Project

 BharatNet : Network for filling the gap

Basic geographical Data for design

• Radius of each Block about 15 Km
• Average Panchayats per blocks 37

Existing OFC

P P P
P P P
P
P
P P
OLT P
P P P
P
P
P P P P
P
P P
P
P P
P P
 Basic service architecture

BBNL
NOC

OP1 ---- OPn

650 Districts
Existing
PoI at Block Of N/W
Networks
6600 BLOCK Existing 700,000 RKM OFC
BBNL BBNL PoP PoI of OFC
Domain 500,000 RKM New OFC
250,000 GPs
BBNL PoP PoI at GP Interconnect Agreement
Access between BBNL and User SPs
Domain
To be served
Access by User TSPs
Provider’s
PoPs
Retail Customers
 BharatNet Utilisation Model
2 3
Government Offices, 1 Integration with State wide area Community Based Access at all Gram
Schools, PHCs at GP Networks Panchayats
(Public Wi-Fi)

FTTH 7

4 Digital village
Existing Network BharatNet
Block Gram Panchayat

TSPs (4G / 5G), ISPs, Cable 5

6
operators, content providers E-learning. E-Health, e- Agriculture
marketing, etc
 BHARATNET: HISTORICAL TRAJECTORIES OF EVENTS

• Oct 2011: cabinet approval for NOFN to provide broadband connectivity on fibre to all
2.5 lakh GPs; indicative cost : 20,100 cr full CAPEX and 5/8 years net OPEX
• BBNL, set up in Feb 2012 as SPV for execution, monitoring, and as custodian of
BharatNet assets/infrastructure
• July 2014 : 1st phase execution started ; 1,00,000 GPs to be connected
• July 2017 : Cabinet approved modified strategy for BharatNet Implementation
• December, 2017 : 1st phase completed; more than 1.18 lakh GPs made BB service ready
• 2018 : Implementation of phase II started; Serious attempts to utilize the phase I connectivity
• 2019 :idea of migrating to PPP model ; CSC awarded O&M and utilization of phase I
Network Design
 IMPLEMENTATION STRATEGY

Block
▪ Tapping existing BSNL fibre- only last mile
Fiber under BharatNet
Phase-I ▪ Only U/G incremental fibre GP1
(1.25 Lakh ▪ 3 PSUs as IA: BSNL, PGCIL, RailTel
GPs) Old BSNL Fibre

GP2 New Fibre Laid

under BharatNet

▪ End to End Fibre from Block to GP

Block
▪ Multiple connectivity mode –Underground,
overhead, radio, satellite
GP1
Phase-II ▪ Multiple Implementation Agencies
(1.25 lakh GPs) (State, PSUs, Pvt. sector)
GP2 New Fibre Laid
under BharatNet
 BHARATNET: IMPLEMENTATION STATUS

• Phase I completed in December 2017, phase II under implementation

• More than 380,000 km incremental OFC laid

• About 127,000 GPs provided with Broadband connectivity

• Utilization: Wi-Fi Hotspots in about 45000 GPs

FTTH connections: about 33000
Lease of dark fibre : 2300 km
Bandwidth by TSP/ISP: about 4000 GPs

• Further utilization plan: 2 Wi-Fi in each of the 125,000 GPs of phase I

 BHARATNET: WAY FORWARD

• O&M and utilization of 1st Phase assigned to CSC e-Gov services India Ltd, a SPV under
MeitY. CSC to install 2 Wi-Fi Hotspots in each of the remaining GPs of 1st phase.

• Migrating to PPP model, wherein PSPs shall handed over entire Network on long term lease
for up-gradation, maintenance, utilization, and marketing on VGF basis

• PSPs to provide BB Connectivity to minimum 5 development institutions such as schools,

health centers, police stations etc

• PSPs shall be selected by open bidding. Each telecom circle as one package for tendering.

• DCC gave in principle approval of PPP model. Note for . Cabinet approval under process.
 Challenges in USOF Administration

• underlying legal and regulatory framework

• Socio-political conditions- the Context
• Difficulty to adapt to changing requirements and focus
• Correlation between USF levies and demand
• Structural Issues : Institutional capabilities, Inter-agency coordination
• Managerial, operational and capacity issues
• Transparency, visibility and accountability in USF reporting
• Oversight and governance
• Project allocation process
 CHALLENGES IN INDIAN CONTEXT
• Structural
▪ Projects can be awarded only to Licensed TSPs on bidding basis
▪ TSPs are neither interested nor capable of executing projects in uncovered/undeserved
areas
• Technological
▪ Selecting appropriate technology – technology choice- is limited by many factors
• Organizational
▪ low organizational capabilities- manpower, capacity, institutional mechanisms
▪ Inter-agency Coordination
• Poor Financial health of BSNL
• Vastness of the country, difficult terrain in Himalayan, Boarder, Interior areas
• Lack of supporting infrastructure (power, road etc.)
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