labels: Telecom
TRAI suggests restructuring of USO Fund for rural telephony growth news
04 March 2009

The Telecom Regulatory Authority of India (TRAI) has suggested a restructuring of the Universal Service Obligation Fund (USOF). TRAI has released its draft recommendations on an 'Approach to Rural Telephony Suggested Measures for an Accelerated Growth' for public comments.

TRAI has invited all the stakeholders to participate in a collective thinking process so as to stimulate rural telecom penetration in India. The draft recommendations are placed at TRAI website All the stakeholders are requested to send their comments on these recommendations by 12 March 2009.

The rate of growth of telecom penetration in urban India has been high as compared to rural. Total subscribers as of January 2009 stood at 400.05 million, out of which only 26.6 per cent is the contribution from rural India, which constitutes 70 per cent of the total population of the country. As of December 08, the rural teledensity is 12.62 and urban teledensity is 81.40 per hundred of population, TRAI pointed out.

To sustain telecom services growth, TRAI has suggested a restructuring of USO Fund. Today, USOF is functioning as an extension of the Department of Telecom. The decision making process, criterion for tendering, allocation of projects, its monitoring and evaluation remains typically like government department. The present organisational framework and work norms has not served the goals of rural telephony.

This has also been observed by the CAG in its audit reports. Some of the stakeholders have suggested the need of redesigning the scope and management systems for managing USOF by putting in place a third party program assessment process. The assessment can be carried out not only at the end of the programme, but also at periodic intervals, so that any bottlenecks can be detected and removed out early. It is felt that a total overhauling of the USOF would improve the performance.

In a number of countries, the USOF is managed either directly under the regulator or, in some cases, with the assistance of an advisory or management board specially created to represent the interests of rural stakeholders, the telecommunications industry and the communications regulator. In some cases (e.g. Uganda, Mongolia, Nigeria), the government or regulator has opted to appoint a management or advisory board or committee, with representation from a cross section of the society that extends beyond government. It is necessary for the government to consider the issues that have arisen with the establishment of the fund e.g. operator's unwillingness to consider.

TRAI in its recommendation on `Infrastructure Sharing' in April 2007 had recommended that subsidy should be extended not only to the successful bidders of phase I scheme but also to other infrastructure providers/ telecom service providers erecting the towers in such identified areas if the same is shared among 2 to 3 service providers. This would have addressed many of the concerned and facilitated speedy roll out of mobile services in these areas. The number of towers so erected would have been much higher than the identified towers in Phase I scheme of USO Fund if these recommendations would have been accepted. The subsidy schemes supporting growth of mobile services in rural areas has to be pro-active, supportive, transparent, encouraging, competitive and facilitate roll out of telecom services at much faster pace.

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TRAI suggests restructuring of USO Fund for rural telephony growth