bu.gif (89 bytes) Progress Report

USO Agreements

Government of India adopted a National Telecom Policy in 1994 for the purpose of India's competitiveness in global market with the supplement aim to attract foreign direct investment as well as domestic investment.

The main objectives of this policy were to achieve Universal Service covering all most all villages in India and providing batter quality of the Telecom Services on reasonable price. The Govt. of India opened up the sector private investment in July 1992 and there after, following sub-sectors for value added services were opened:-

  • Electronic Mails
  • Voice Mail
  • DATA Services
  • Audio Text Services
  • Video Text Services
  • Video Conferencing
  • Radio Paging
  • Cellular Mobile Telephone

For first six services in India the registered companies are permitted to operate under license on non-exclusive basis.

To provide an effective regulatory framework and adequate safeguard to ensure fair competitions and protection of consumers interests, Govt. was formed The Telecom Regulatory Authority of India ( TRAI ) in Jan.1997

In 1999 Government made same modifications in old ( NTP 1994 ) policy and introduced new policy called New Telecom Policy 1999. Cellular Mobil Service Provider ( CMSP ) granted separate license for each service area for 20 years. For this purpose whole service area have been categories in four Metro Circles and Telecom Circles. The formation of the framework as follows:-

  • Access Providers
  • Fixed Service Providers
  • Cable Service Providers
  • Internet Telephony
  • Radio Paging Service Providers
  • Public Mobile Radio Trucking Service Providers
  • National Long Distance Operators
  • Other Service Providers
  • Global Mobile Personal Communications Services
  • SATCOM Policy
  • VSAT Service Providers
  • Spectrum Management

Under the Universal Service Support Policy which came in to effect from 1.4.2002.Through an amendment in The Indian Telegraph ( Amendment ) Act 2003 giving statutory status to the Universal Service Obligations Fund passed by the parliament in Dece 2003. The fund is to be utilized exclusively for meeting the Universal Service Obligation.

The Universal Service Obligations Fund is headed by the Administrator USF. His office functions as an attached office to the Department of Telecommunication, Ministry of Communication & IT.

The Universal Service Lavy is presently 5% of the Adjusted Gross Revenue (AGR) of all telecom service providers except the pure value added service providers like Internet ,Voice Mail, E-Mail service providers etc. As per rules the following activities are to be supported by the USOF. Namely:-

  • Operation & maintenance of VPTss.
  • Provision of additional Rural Community Phones.(RCPs)
  • Replacement of Malti Access Radio Relay (MARR) based VPT's
  • Up- gradation of Public Telephones to Public Telephone Information Centers (PTIC)


The New Telecom Policy 1999 envisaged provision of access to basic telecom services to all at affordable and reasonable prices. The resources for meeting the Universal Service Obligation (USO) shall be generated through a Universal Service Levy (USL) at a prescribed percentage of the revenue earned by the operators holding different type of licenses. Further, the New Telecom Policy 1999 envisaged implementation of Universal Service Obligation for rural and remote areas through all Basic service providers who will be reimbursed from the funds collected by way of USL. Other service providers shall also be allowed to participate in USO provisioning subject to technical feasibility and shall be similarly reimbursed out of the funds of USL.

The Universal Service Support has been started from the financial year 2002-03 based on the following guidelines.

The funds created by the USL shall be spent in rural and remote areas on both the public access telephones or community telephones meant for public use and individual household telephones in net high cost rural/remote areas.

The support from Universal Service Fund will be provided to meet Net Cost (i.e. cost minus revenue) of providing the Universal service.

In the event of an increase in the requirement of Universal Service Obligation, the percentage of contribution towards USL can be raised to meet such additional requirement but the added levy will be drawn out of the prevalent percentage of license fee for keeping the ceiling intact and as such, will not cause any additional burden either on the service providers or the consumers.

The implementation of the USO is divided into the following two streams.