UNIVERSAL SERVICE OBLIGATION USO

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UNIVERSAL SERVICE OBLIGATION (USO)

• DR. DEVENDRA P.S. SETH
• MEMBER, TRAI
• E-Mail dpsseth_at_gmail.com

Presented at SARTC meet on 22nd Feb 2006 at New
Delhi
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Market Efficiency Gap and True Access Gap
True access gap
Market efficiency gap
Socio-economic reach
Current network reach
Commercially feasibility reach
Geographical reach
Source World Bank
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• Therefore, USO policy has to be shaped around
• Minimizing market efficiency gap
• Covering True Gap

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Minimising Market Efficiency Gap

• Sector reforms
• Intense competition
• Liberalisation
• Privatisation
• Interconnection
• Fair, transparent and effective policy framework
• Service and technology neutrality
• Tariffs

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Covering True Access Gap

• Promoting Infrastructure sharing to minimise the
  costs and thereby reducing the True Access gap.
• Adapting an approach which increases revenues for
  the operator i.e. creating conditions for freedom
  to provide service and technology neutrality.
• Making available financial support to a business
  case by covering the gap.

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Universal Access Regulatory Best Practice
Guidelines - ITU

• Regulatory reform first step in achieving
  Universal access.
• Designing universal access polices, regulations
  and practices in order to create incentives for
  the private sector to extend universal access to
  communications services.
• Establishing a fair and transparent
  telecommunication regulatory framework that
  promotes universal access to ICTs.
• Adapting technologically neutral licensing
  practices enabling service providers to use the
  most cost-effective technology to provide
  services for end users.

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Universal Access Regulatory Best Practice
Guidelines - ITU

• Adopting a framework of interconnection rates
  linked to costs.
• Reducing regulatory burdens to lower the costs of
  providing services to end users.
• Developing an effective regulatory body
  responsible for implementing policies directed
  towards assuring the best quality reliable
  services at the most affordable prices that meet
  the needs of consumers, existing and future.
• Promoting competition in the provision of a full
  range of ICT services to increase access,
  affordability, availability and use of ICTs.

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Role of Regulator

• Sector reform
• USO Policy
• Define Universal Access/Service
• Set measurable targets
• Periodic review of scope and targets
• USF to provide limited and targeted smart
  subsidies

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Growth of Telecom services in India

• From early nineties the policy for expanding
  telecommunication services in rural areas of
  India was based on the concept of accessibility.
• The initial objective was to provide a village
  public telephone within 5 kms of each habitation.
• Thereafter, it was decided to cover each
  Panchayat Village with a Village Public
  Telephone.
• Finally, it was decided that each census village
  shall have a Village Public Telephone.

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Funding of Rural VPTs

• Till 1999, funds were provided for VPTs to the
  incumbent Govt. owned operator through self
  generation or budgetary channel.
• A USO policy was first defined in the New Telecom
  Policy 1999 ( NTP99)
• However, funding continued from the previous
  sources i.e. self generated funds of the public
  sector unit and the budgetary channels
• In 2002, through an Act of Parliament a USO Fund
  was established.
• This fund was made into a non lapsable fund by
  2004.

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USO Policy in NTP99

• For the first time a detailed enunciation of the
  USO Policy was given in the New Telecom policy
  1999 ( NTP99)
• The key features were
• Provide voice and low speed data service to the
  balance 2.9 lakh uncovered villages in the
  country by the year 2002.
• Achieve internet access to all district
  headquarters by year 2000.
• Achieve telephone on demand in urban areas by
  2002.
• Laid provisions for funding universal service
  through the creation of a Universal Service Fund.

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NTP 99 further stipulates that

• Encourage development of telecom in rural areas
  making it more affordable by suitable tariff
  structure and making rural communication
  mandatory for all fixed service providers.
• Increase rural teledensity from the current
  level of 0.4 to 4 by the year 2010 and provide
  reliable transmission media in all rural areas.
• Achieve telecom coverage of all villages in the
  country and provide reliable media to all
  exchanges by the year 2002.
• Provide high speed data and multimedia capability
  using technologies including ISDN to all towns
  with a population greater than 2 lakh by year
  2002.

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Growth of Telecom Services in Rural India

• TRAI provided its recommendations to the
  Government on October 3, 2005
• USO policy should shift from subsidy based on
  individual connections 9 DELS, VPT, etc) to
  network infrastructure expansion approach.
• Incentive Regulation Financial incentives to
  service providers in the form of coverage of
  partial cost of shared infrastructure.
• License fee and spectrum charge reduction based
  on rural roll-out.

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Growth of Telecom services in Rural India

• Unified Licensing regime
• Niche operators in areas where rural tele-density
  is below 1.
• No Spectrum charges for use of CorDECT and
  similar other technologies in rural areas.

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Thank You