The Center plans to expand the scope of the USO Fund under a new entity


The Center may establish a new body to administer the universal service obligation fund, outside the Ministry of Telecommunications, with an expanded scope to include economically unviable areas in urban areas, promotion of manufacturing of equipment, financing pilot projects to stimulate innovation.

According to sources, this change will be part of the new Indian Telecommunications Bill, which introduces new telecommunications laws in place of the Indian Telegraph Act which has regulated the sector since 1885. The fund will now be called the Telecommunications Fund. development of telecommunications.

Funds raised over 19 years

The USO fund is a cache of almost ₹60,000 crore, collected from annual revenues of telecommunications service providers with the aim of providing telecommunications and digital services to rural and underserved areas. Fundraising for this initiative started in 2003 and over the past 19 years the fund has raised a total accretive amount of ₹1.28 lakh crore.

BharatNet Main Schema

The government has launched many rural connectivity projects using this fund, with the main USOF program being BharatNet which aims to provide broadband connectivity to nearly 2.5 lakh gram panchayats. So far, the fund has disbursed nearly ₹42,000 base for the BharatNet project, with limited success. An additional ₹20,000 crore for the second phase of the project was also greenlit, however, its corresponding tender saw limited success in 2021.

Network underutilization

Overall, this project is struggling to take off. Activity area previously reported that in 2020-21, the network recorded a profit of ₹1.46 crore, indicating the dismal underutilization of the network. At present, BharatNet is in the process of being merged with the telecommunications PSU, BSNL, in hopes of better implementation.

According to the comments of the senior official, the scope of the new Telecommunications Development Fund is extended beyond rural connectivity to also include urban connectivity programs. Other areas where the fund will be disbursed include R&D for new technologies and projects, support for the telecommunications manufacturing ecosystem, support for pilot projects and the introduction of new services and products.

The exact disbursement mechanism, mandate and operational changes to the fund remain unknown. However, the development of the fund comes at a time when the government is demonstrating its interest in fostering a robust ecosystem for Indigenous telecommunications players.

This includes BSNL deploying Indian companies (TCS-Saankhya consortium) to deploy 5G networks. Government-owned technology center C-DoT has also joined a consortium of Indian companies called The Voice, which is bidding for various government pilots to develop use cases for agencies such as the ONGC or 4G defense. and 5G. Recently, the government has also amended the PLI scheme of existing telecommunications equipment by including a design element giving preference only to locally designed projects.

“The new fund could be used by BSNL to roll out its 4G/5G network by creating a mechanism to direct the flow of funds directly to TCS without a tender or tender process. (under the Telegraph Act, USOF funds can only be disbursed through a competitive bidding process),” one expert suggested. Another expert added that the new fund will also have to undergo transformations in its operations, management and objectives in order to guarantee its success.

Published on

September 21, 2022


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