Universal Service Obligation Fund (USOF)

RELEVANCE – UPSC GS PRELIMS & GS MAINS – III

PRACTICE QUESTIONS

First go through the text (given after the questions) and then attempt the questions.

QUES 1 . Consider the following statements with respect to Universal Service Obligation Fund (USOF) 

1 . It is a fund which was created to provide universal access to telecom services .

2 . It is mostly used for providing telecom services to urban areas at affordable and reasonable prices.

Which among the above statements is/are correct?

a . 1 only

b . 2 only

c . Both 1 and 2

d . Neither 1 nor 2

Answer –a

QUES 2 . Which of the following statements is incorrect?

a . The New Telecom Policy (NTP) 1999 provided that the resources for meeting the Universal Service Obligation (USO) were to be generated through a Universal Access Levy (UAL).

b . The Universal Service Support Policy came into effect in 2002.

c . The Indian Telegraph (Amendment) Act, 2003 gave statutory status to the Universal Service Obligation Fund (USOF).

d . None of the above

Answer – d 

ABOUT USOF

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It is a fund which was created to provide universal access to telecom services . It is mostly used for providing telecom services to rural and remote areas at affordable and reasonable prices.

Need for USOF

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. 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 hand, USOF was created.

Historical Background or Timeline

1 . The New Telecom Policy (NTP) 1999 of Department of Telecom, GoI had Universal Service as one of its main objectives. The NTP 1999 provided that the resources for meeting the Universal Service Obligation (USO) were to be generated through a Universal Access Levy (UAL), at a prescribed percentage of the revenue earned by the telecom licensees to be decided in consultation with the Telecom Regulatory Authority of India (TRAI).

2 . The Universal Service Support Policy came into effect from 01.04.2002. The guidelines for universal service support policy were issued by DoT on 27th March 2002.

3 . The Indian Telegraph (Amendment) Act, 2003 giving statutory status to the Universal Service Obligation Fund (USOF) was passed by both Houses of Parliament in December 2003.

4 . The Rules for administration of the Fund known as Indian Telegraph (Amendment) Rules, 2004 were notified on 26.03.2004.

As per the Indian Telegraph Act 1885 (as amended in 2003, 2006), the Fund is to be utilized exclusively for meeting the Universal Service Obligation.

Aim of the fund

Enabling rural Indians to achieve their fullest potential and participate productively in the development of the nation by virtue of being effectively connected through a reliable and ubiquitous telecommunications network, access to which is within their reach and within their means.

Objectives of the fund

1 . Network extension & stimulate uptake of the ICT services.
2 . Mainstreaming the underserved & un-served areas/groups .
3 . To enable citizens exercise their political rights in an informed way .
4 . Equitable distribution of the fruits of the telecom/digital revolution and fair allocation of national resource (pooled USO levy) via targeted subsidies.