Universal Service Obligation Fund

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What is Universal Service Obligation Fund (USOF)

It is a fund created to increase rural teledensity so that a universal access to Information and Communication

Technologies (ICT) can be provided.

Why is USOF needed?

  1. Despite the tremendous growth of mobile services in most developing countries, these have largely                   remained limited to urban areas, thus increasing the rural-urban divide.

Why rural areas have not been served properly ?

  • This is because apart from the higher capital cost of providing telecom services in rural and remote areas, these areas also generate lower revenue due to lower population density, low income and lack of commercial activity. Thus normal market forces alone would not direct the telecom sector to adequately serve backward and rural areas.

2. Keeping in mind the inadequacy of the market mechanism to serve rural and inaccessible areas on one                   hand and the importance of providing vital telecom connectivity on the other, most countries of the world               have put in place policies to provide Universal Access to Information and Communication                                           Technologies(ICT). Universal Service Obligation Fund (USOF) is one of such initiatives.

How is USOF funded?

  • The New Telecom Policy – 1999 provided that the resources for meeting the Universal Service Obligation         Fund  would be raised through a ‘Universal Access Levy (UAL)’, which would be a percentage of the                   revenue earned by the operators under various licenses. At present ts is 5 %.
  • Also some quantum of funds come through grants by the central govt.

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