The Role of Universal Service Obligation Fund (USOF) in India's

Telecom Revolution

The Universal Service Obligation Fund (USOF) was formed on the

premise that Telecom operators have an obligation to contribute

towards improving telecommunications infrastructure…

…to enable connectivity to people living in far-flung rural

regions. The idea is to bridge the gap between urban and

rural telephone subscriptions.

Telcos in India have been paying a 5% levy on various

licenses towards the USOF since 2002 – 03…

…with the objective of providing improved

telephone access in rural areas.

The evolution of the telecom industry can

be categorized into three phases:

A. Pre-liberalization Era

B. Post-liberalization Era

C. Post 2000 – Beginning of the 21st Century

The Universal Service Obligation Fund (USOF) was designed to sustain

and accelerate telecommunications access to people in rural and

remote areas at affordable prices.

USOF – Fund Allocation Year-on-Year

Factors that contributed to the rise in Tele-

Density in India include:

A. Reduction in call rates

B. Reduced data charges(enforced by market forces)

C.Availability of handsets at

lower prices

D. Economic Liberalisation

The rise in Tele-Density in India over the years..

Source: TRAI

Despite these factors, rural tele-Density remains rather low at 48%

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