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