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
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.[…]