Universal Service Obligation Fund of India | Functions of Universal Service Obligation

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 of India serves the same purpose

The New Telecom Policy - 1999 provided that the resources for meeting the Universal Service Obligation (USO) would be raised through a ‘Universal Access Levy (UAL)’, which would be a percentage of the revenue earned by the operators under various licenses. The Universal Service Support Policy came into effect from 2002. The Indian Telegraph (Amendment) Act, 2003 giving statutory status to the Universal Service Obligation Fund (USOF) was passed by both Houses of Parliament in December 2003. The Rules for administration of the Fund known as Indian Telegraph (Amendment) Rules, 2004. As per the Indian Telegraph Act 1885 (as amended in 2003, 2006 and 2008), the Fund is to be utilized exclusively for meeting the Universal Service Obligation.

Functions of USOF Administration
1. To formulate USOF projects under the various streams provided in the Indian Telegraph Rules, in consultation with telecom services providers and various stakeholders.
2. To design the bidding process and carry out tendering.
3. To enter into implementation agreements with Telecom Service Providers (TSPs).
4. To monitor the implementation of USOF projects and to disburse subsidy in accordance with terms and conditions of USOF agreements.
5. To design the format of various records and returns to be maintained by the TSPs.
6. To carry out post implementation review of USOF Schemes.
7. Budgeting and Audit of USOF Activities.
8. Interface with International Organizations such as ITU, APT and USO Funds of other nations.