Universal Service Obligation Fund (USOF)

20.01.2024

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Why in the news?

Telecom service providers have urged the Ministry of Finance to suspend the universal service obligation fund (USOF) levy until the existing corpus is exhausted.

About Universal Service Obligation Fund (USOF):

• It was set up by an Act of Parliament in December 2003 by amending the Indian Telegraph Act, 1885.
• The objective of the USOF is to provide access to telecom services in a non-discriminatory manner to people in rural and remote areas at affordable and reasonable prices, thereby bridging the rural-urban digital divide.
• For commercially non-viable rural and remote areas, USOF provides subsidy support in the form of Net Cost or Viability Gap Funding (VGF) to incentivize telecom service providers for the expansion of telecommunications and broadband services in those areas.

Funding Mechanism:

• The USOF is funded through a levy on the revenue earned by telecom operators.
• The government imposes a Universal Service Levy (USL) on the gross revenue of the telecom companies, which is a percentage of their Adjusted Gross Revenue (AGR).
• This levy is collected and deposited into the USOF.

Administration:

• It is headed by the Administrator, USO Fund who is appointed by the Central Government, for the administration of the fund.
• It is an attached office of the Department of Telecommunications (DoT), Ministry of Communications.

What is the Telecom Technology Development Fund (TTDF)?

• USOF officially launched the TTDF Scheme on October 1st, 2022.
• The TTDF Scheme is aimed at domestic companies and institutions involved in technology design, development, and commercialization of telecommunication products and solutions to enable affordable broadband and mobile services in rural and remote areas.
• This initiative helps to connect schools with varied volunteers from the Indian Diaspora, namely, young professionals, retired teachers, retired Government officials, retired professionals, NGOs, Private Sector and Public Sector Companies, Corporate Institutions, and many others.
• Under the scheme, USOF is also targeting to develop standards to meet countrywide requirements and create an ecosystem for research, design, prototyping, use cases, pilots, and proof-of-concept testing, among others.
• The scheme entails grants to Indian entities to encourage and induct indigenous technologies tailor-made to meet domestic needs.

                                                  Source: Business standard