LIRNEasia » Indian USO Fund

India inches toward reducing universal service fee

Rohan Samarajiva — Mon, 23 Mar 2009 05:57:16 +0000

Since 2005, LIRNEasia has been critical of the very high amount (5%) charged from Indian telecom consumers through the operators and then left unspent in government accounts (approx. USD 4 billion at last count). Our criticisms were presented in multiple forms including a book chapter. We made them known to the leadership of the Department of Telecommunications in face-to-face conversations.

Most recently, I discussed the harm caused by taxing poor people to purportedly serve poor people and then keeping the money unspent at a UNCTAD meeting on trade and regulation. In a recent newspaper article, Payal Malik was quoted as recommending the closure of the universal service fund, which is another way of saying the levy should be brought down to 0.

It appears that our work is having an impact. The first step, a cut in the rate, is in the works. It has been held back by a pernicious rider that would unduly benefit BSNL, but we are optimistic that the reduction will be effected.

In October last year, the Department of Telecom (DoT) had announced a cut in the fee contributed towards Universal Service Obligation Fund, a subsidy given to telcos to offer services in rural areas, to three per cent from five per cent now and had been kept in abeyance till further order.

Full article is here.

India’s Universal Service officials seek information about teleuse at the Bottom of the Pyramid

Rohan Samarajiva — Sun, 25 Mar 2007 14:17:25 +0000

On March 22nd, LIRNEasia was invited to present the Teleuse@BOP findings to the staff of the Indian USO Fund and interested members of the Telecom Commission. It was a great honor to share our findings with this knowledgeable audience, knowing that they make the decisions regarding disbursement of the world’s second largest universal service fund.

While the slides that were used are by no means the sum total of the findings from the survey, they are the broadest slice of data presented so far. The discussion ranged from interpretation of the survey findings to whether or not broadband access should be subsidized, a question triggered by the rather shocking findings about the use and knowledge of the Internet at the BOP in India.

The presentation slides can be downloaded here.

Mobile operators eligible for Indian USO Fund

Divakar Goswami — Sat, 25 Nov 2006 17:25:15 +0000

The Study of India’s Universal Service Instruments by LIRNEasia researchers Payal Malik & Harsha De Silva, critiqued the Indian government’s policy that made only fixed line operators eligible for USO funds:
As of today, the government is giving USO fund support to only the fixed line operators offering services in the rural areas. The over defining terms in the law is a bad idea in a rapidly evolving technology environment, though this correction has been suggested it is quite possible that the previous auctions have left huge amounts of rents that have been appropriated by the incumbent. In an industry that manifests the potential for rapid technological change and innovation, such as telecom, an economic analysis of a problem should not focus too narrowly or exclusively on the best use of society’s resources from the standpoint of today’s technology and resource availability i.e. static economic efficiency but should be viewed from a dynamic perspective. The government should, at the most, set basic minimum standards of service that any claimant of the fund should meet. Moreover, the proposed amendment should be flexible enough to allow upcoming technologies such as WiMax to make use of USO funds. (Page 14)

The Indian Government has now permitted mobile operators draw on the USO funds to roll-out service in 250,000 villages according to the Business Line report from November 24, 2006.
New rollout: Mobile phone services to 2.5 lakh remote villages soon
Thomas K. Thomas

Top 5 beneficiaries
Uttar Pradesh 38,763
Madhya Pradesh 26,483
Bihar 23,586
Maharashtra 19,816
Orissa 17,612

New Delhi , Nov. 24

The lone man staying in a village called Henry Island in the Andamans will soon be able to communicate with the rest of the world using a mobile phone. So will the people living in a single household village of Chingraliang in Arunachal Pradesh.

The mobile services project being undertaken by the Government under the Universal Services Obligation is expected to cover 2.5 lakh remote villages across the country, size varying from a single household village to those having a few hundred people. What is common though is that people living in any of these villages, spread across 27 States, have never known about mobile services.

Uttar Pradesh with 38,763 villages under the project is the biggest beneficiary followed by Madhya Pradesh and Bihar.

The Department of Telecom has shortlisted 21 companies to set up the passive infrastructure for rolling out 10,000 towers across these villages with financial support from the Universal Services Obligation fund.[...]