Universal Service Obligation Fund (USOF) Establishment:
The USOF was created to provide affordable telecom services in remote and rural areas through a universal access levy on operators’ revenue.
- Funding Mechanism: Funded by a 5% Universal Service Levy on telecom operators’ Adjusted Gross Revenue (AGR).
- Purpose: To expand telecom networks in unprofitable remote and rural regions.
- Statutory Status: Granted in December 2003 through amendments to the Indian Telegraph Act, now replaced by the Telecom
Act, 2023.
About DBN
Establishment: Instituted through the Telecommunications Act, 2023, replacing the USOF.
Objective: To promote telecommunication services and technologies in underserved areas
Features of DBN
Transfer of Funds
- Mechanism: Contributions from telecom companies are first credited to the Consolidated Fund of India (CFI).
- Process: The Centre periodically transfers funds from the CFI to the DBN.
Fund Utilization
Funds from the DBN will be used to:
- Promote Telecommunication Services: In underserved rural, remote, and urban areas.
- Support R&D: For telecom services, technologies, and products.
- Pilot Projects: Fund and support pilot projects, consultancy, and advisory services.
- Targeted Access: Provide access for underserved groups like women, persons with disabilities, and economically weaker
sections.
Appointment of Administrators
- Administrator Role: Appointed by the Centre to select “DBN implementers” through bidding or applications.
- Funding Decisions: Administrator will determine funding mechanisms, which may include full, partial, or co-funding, market risk
mitigation, and risk capital.
Open and Non-discriminatory Telecom Services
- Requirement: DBN implementers must provide telecom networks and services on an open and non-discriminatory basis.
- Criteria for Funded Schemes and Projects
- Innovation: Introduction of next-generation telecom technologies in underserved areas.
- Affordability: Improving the affordability of services.
- Research and Standards: Promoting innovation, research, and development of relevant standards.
- Support for Start-ups: Encouraging telecom start-ups and equipment manufacturing.
Underutilisation of USOF
- Criticism: USOF has been criticized for underutilization since its establishment in 2003.
- Utilization Stats: Between 2017 and 2022, out of Rs 41,740 crore collected, only Rs 30,213 crore (about 72%) was used.
- Specific Instances: In 2019-20, out of Rs 7,962 crore collected, only Rs 2,926 crore was utilized.
- Recent Trends: In FY23, expenditure was significantly lower than budgeted (Rs 3,010 crore vs. Rs 9,000 crore).
- Main Issue: Underspending on the BharatNet project for village fiber connectivity.
Conclusion: The Digital Bharat Nidhi (DBN) represents a renewed effort to improve telecom connectivity in rural India,
addressing past challenges with the underutilized USOF. By focusing on innovation, affordability, and targeted access, the
DBN aims to bridge the digital divide and promote sustainable telecom development across the country.