FINANCING RURAL CONNECTIVITY
   THROUGH USOF SUPPORT
                                                     Archana.G.Gulati...
RURAL CONNECTIVITY-WHY BOTHER?
 THE INDIAN DICHOTOMY
 Economy growing at 9% (Before Recession)
 Millennium Development ...
THE IMPORTANCE OF ICT CONNECTIVITY
   Mainstreaming of rural areas
   Reducing isolation
   Awareness
   Education, He...
THE NEED FOR USO IN TELECOM


                            IDEAL COVERAGE


P
o
v                   ACTUAL
e               ...
ACTUAL ACCESS GAP

 WHY LIBERALISATION AND COMPETITION ARE NOT
 ENOUGH FOR RURAL/REMOTE AREA PENETRATION

SCATTERED POPUL...
WHAT IS USOF’S ROLE?
INCENTIVISE TELECOM SERVICE PROVIDERS TO VENTURE
INTO RURAL/REMOTE AREAS
FACILITATE RURAL ROLL OUT
...
DEFINITION OF USO


   OBLIGATION TO PROVIDE ACCESS TO
    TELEGRAPH [TELECOMMUNICATIONS]
    SERVICES TO PEOPLE IN RURAL...
FUND POSITION & UTILISATION


 AS ON 31.3.09: POTENTIAL FUNDING
  BY WAY OF USL BALANCE: RS 11,243 CRORE
 DISBURSEMENTS ...
USOF MUST WEIGH:

                      Government Policy Direction,
                          Financial Propriety
       ...
ROLL OUTS AND OUTFLOWS


 3

2.5

  2

1.5

     1

 0.5

      0
          Year - year -
            1           year 0 Y...
SUBSIDY SCHEME DESIGN
 1. Overall Scheme conception including
 decision on service deliverables
 ( to other service provid...
SUBSIDY SCHEME DESIGN
5. Subsidy Modeling to ensure correct
level and structure of incentives for long
term sustainability...
A UNIQUE PROGRAMME
   ALL INDIA NETWORK OF DEPARTMENTAL
    OFFICEs FOR IMPLEMENTATION AND SUBSIDY
    DISBURSEMENT
   L...
ENSURING EFFECTIVENESS OF USOF SCHEMES

                         POLICY,
                        SCHEME
                  ...
ACHIEVEMENTS
   TELECOM COVERAGE OF HITHERTO UNCONNECTED
    RURAL AND REMOTE AREAS ACROSS THE VARIED
    TERRAIN OF COUN...
LESSONS LEARNT
 USOF ACTIVITIES CARRIED OUT SINCE 2002 HAVE SERVED TO
  PROVIDE VALUABLE INSIGHTS INTO PLANNING &
  IMPLEM...
CONNECTIVITY IS NOT AN END IN ITSELF




                                             Increased
                     Affor...
CONNECTIVITY MUST BE SUPPORTED
   BY CAPACITY AND CONTENT




                     Relevant               Capacity
 Univer...
USOF NOT A UNIVERSAL PANACEA

 USOF EFFORTS MUST BE
  SUPPLEMENTED BY
  SIMULTANEOUS PROGRAMMES
  TOWARDS OVERALL RURAL
 ...
NEW SCHEMES

   RURAL WIRE LINE BROADBAND SCHEME
   SCHEME FOR AUGMENTATION AND
    CREATION OF INTRA-DISTRICT OFC
    N...
RURAL WIRE LINE(WL) BROADBAND SCHEME


   WE ARE STILL AWAITING 3G/BWA AUCTIONS FOR RURAL
    WIELESS BB ROLL OUT
   IN ...
RURAL WIRE LINE BROADBAND SCHEME




CHALLENGES
             •Lack of demand: Low perceived
              utility of servi...
RURAL WIRE LINE BROADBAND SCHEME


ADDRESSING
 ESSENTIAL
    FOR      •Affordability of :
  SUCCESS     - Connectivity
   ...
RURAL WIRE LINE BROADBAND SCHEME



SCHEME
           •Subsidised Connectivity, CPEs,
 DESIGN
           •Special USOF Tar...
BB KIOSK –PILOTs

   Healthy demand for utility payments,
    entertainment, micro finance, e-marketing,
    railway book...
GENERAL INFRASTRUCTURE-OFC
Rural Areas (Assam) Under Served by Voice and Data Services

PROBLEM: Non affordability of end ...
FURTHER ANALYSIS
AIM: High capacity Backhaul
must be available at low cost to
a multiplicity of players




              ...
PILOT PROJECT SCHEME: NEW TECHNOLOGIES
   INDUCTION OF NEW TECHNOLOGY ON PILOT BASIS
   ELIGIBLE COMPANIES TO DEMONSTRAT...
PILOT PROJECT SCHEME-RENEWABLE ENERGY
   Scheme to subsidise up to 75% of cost of renewable
    energy installations in 2...
OTHER PILOT SCHEMES
            (UNDER CONSIDERATION)
III. SCHEME TO SUBSIDISE SOLAR MOBILE CHARGING
     STATIONS IN 5000...
FUTURE PLANS

BASED UPON :
   THE SUCCESS OF PRESENT SCHEMES
   LESSONS LEARNT
   NEW TECHNOLOGIES
   UNIQUE AND EMERG...
THE ROAD AHEAD…
   COVERING REMAINING UNCOVERED RURAL
    AREAS WITH MOBILE SERVICES
   RURAL INTRA-DISTRICT OFC SCHEME ...
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Archana Gulati U S O Fund

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Archana Gulati U S O Fund

  1. 1. FINANCING RURAL CONNECTIVITY THROUGH USOF SUPPORT Archana.G.Gulati Jt Administrator (Finance) USOF Email: jafusof@gmail.com JA(F) Universal Service Fund of India
  2. 2. RURAL CONNECTIVITY-WHY BOTHER?  THE INDIAN DICHOTOMY  Economy growing at 9% (Before Recession)  Millennium Development Goals –Nowhere in sight THE RURAL REALITY  0.6 Million Villages lacking infrastructure & connectivity  820 Million rural Indians,70% of population  Primarily dependant on Agriculture (19% of GDP)  Low Productivity: Agriculture growing at 3.4% p.a  Can we afford to neglect Rural India? A.G.Gulati (JA(F) USOF)
  3. 3. THE IMPORTANCE OF ICT CONNECTIVITY  Mainstreaming of rural areas  Reducing isolation  Awareness  Education, Health, Market Access, Information  E-Government Services  Knowledge, Productivity  ECONOMIC DEVELOPMENT  SOCIETAL TRANSFORMATION  Broadband access especially is important when other infrastructure is inadequate ( roads, administrative machinery etc).  Access to multi media content important as literacy level is only 65% A.G.Gulati (JA(F) USOF)
  4. 4. THE NEED FOR USO IN TELECOM IDEAL COVERAGE P o v ACTUAL e ACCESS r MARKET GAP t EFFICIENCY GAP y TELECOM COVERAGE Isolation A.G.Gulati (JA(F) USOF)
  5. 5. ACTUAL ACCESS GAP WHY LIBERALISATION AND COMPETITION ARE NOT ENOUGH FOR RURAL/REMOTE AREA PENETRATION SCATTERED POPULATION LOW INCOME LOW TELEPHONE USAGE LACK OF COMMERCIAL /INDUSTRIAL CUSTOMERS LACK OF ROADS, POWER ETC DIFFICULT TERRAIN, INSURGENCY HIGHER CAPEX AND OPEX, LOW ARPUs BOTH SUPPLY AND DEMAND SIDE CONSTRAINTS A.G.Gulati (JA(F) USOF)
  6. 6. WHAT IS USOF’S ROLE? INCENTIVISE TELECOM SERVICE PROVIDERS TO VENTURE INTO RURAL/REMOTE AREAS FACILITATE RURAL ROLL OUT REDUCE COSTS AND HENCE END USER PRICES  INCREASE AFFORDABILTY HOW? SUBSIDY SUPPORT TO REDUCE/CLOSE VIABILITY GAP PURSUANCE & LIASION WITH STATE AUTHORITIES ENCOURAGE & SUPPORT ADOPTION OF INNOVATIVE SOLUTIONS TO OVERCOME CONSTRAINTS E.G. POWER ENCOURAGE SHARING OF INFRASTRUCTURE AT DISCOUNTED RATES BUILD IN SPECIAL TARIFF PLANS FOR TARGET BENEFICIARIES A.G.Gulati (JA(F) USOF)
  7. 7. DEFINITION OF USO  OBLIGATION TO PROVIDE ACCESS TO TELEGRAPH [TELECOMMUNICATIONS] SERVICES TO PEOPLE IN RURAL AND REMOTE AREAS AT AFFORDABLE AND REASONABLE PRICES. A.G.Gulati(JA(F) USOF)
  8. 8. FUND POSITION & UTILISATION  AS ON 31.3.09: POTENTIAL FUNDING BY WAY OF USL BALANCE: RS 11,243 CRORE  DISBURSEMENTS AS ON 31.3.09: RS 7971.44 CRORE  DISBURSESMENT AS ON DATE: MORE THAN Rs 9400 CRORE  USL LEVY FIRST CREDITED TO CONSOLIDATED FUND OF INDIA  AVAILABLE TO USOF THROUGH BUDGETARY PROCESS  UTILISATION SUBJECT TO GOVERNMENT OF INDIA RULES AND REGULATIONS ON FINANCIAL PROPRIETY  ACCOUNTING: AS PER CGA REGULATIONS  AUDIT: C&AG
  9. 9. USOF MUST WEIGH: Government Policy Direction, Financial Propriety Impact on competition Costs, Benefits RESULTS
  10. 10. ROLL OUTS AND OUTFLOWS 3 2.5 2 1.5 1 0.5 0 Year - year - 1 year 0 Year 0.5 Year 1 Year 0.5 Year2 Year 1.5 Year 3 Year 2.5 Year 4 Year 3.5 Year 5 4.5 New Scheme I New Scheme 2
  11. 11. SUBSIDY SCHEME DESIGN 1. Overall Scheme conception including decision on service deliverables ( to other service providers or to end customer) 2. Identifying infrastructure elements to be created/augmented/shared (if any). 3. Deciding on appropriate costing based on prevailing market rates/historical costs 4. Benchmarking to arrive at maximum subsidy rate/offered subsidy
  12. 12. SUBSIDY SCHEME DESIGN 5. Subsidy Modeling to ensure correct level and structure of incentives for long term sustainability 6. Decision on subsidy disbursement schedule and associated conditions. Building in safeguards to ensure proper implementation. 7. Decision on pricing of services to ensure affordability of telecom services for target beneficiaries 8. Formulation of tender, tendering, bid evaluation, agreement with service providers
  13. 13. A UNIQUE PROGRAMME  ALL INDIA NETWORK OF DEPARTMENTAL OFFICEs FOR IMPLEMENTATION AND SUBSIDY DISBURSEMENT  LEAKAGES AVOIDED  GROUND LEVEL IMPLEMENTATION IS CLOSELY MONITORED  REGULAR POST PAYMENT VERIFICATION  EFFECTIVE USE OF SUBSIDY  DOUBTFUL CLAIMS WITHHELD FOR FURTHER VERIFICATION  DISALLOWED AMOUNT :RS 606 CRORES
  14. 14. ENSURING EFFECTIVENESS OF USOF SCHEMES POLICY, SCHEME DESIGN & LAUNCH ANALYSE, CLARIFY, IMPLEMENTATION MODIFY DISBURSEMENT, FEEDBACK INSPECTION, MONITORING
  15. 15. ACHIEVEMENTS  TELECOM COVERAGE OF HITHERTO UNCONNECTED RURAL AND REMOTE AREAS ACROSS THE VARIED TERRAIN OF COUNTRY  VPTs IN ALMOST EVERY VILLAGE OVERCOMING ODDS SUCH AS DIFFICULT TERRAIN,LACK OF ROADS, POWER ETC  SECOND PUBLIC TELEPHONES (RCPs) IN BIGGER VILLAGES  6.5 MILLION NEW INDIVIDUAL HOUSEHOLD LINES (RDELs) IN COST POSITIVE SDCAs  OUT OF 7439 SHARED MOBILE INFRASTRUCTURE TOWERS, 6209 COMMISSIONED  PRIVATE OPERATORS HAVE FIRMLY ESTABLISHED THEMSELVES IN RURAL AREAS (Note: Data as on 31.7.09) A.G.Gulati(JA(F) USOF)
  16. 16. LESSONS LEARNT USOF ACTIVITIES CARRIED OUT SINCE 2002 HAVE SERVED TO PROVIDE VALUABLE INSIGHTS INTO PLANNING & IMPLEMENTATION ISSUES PUBLIC ACCESS SCHEME:  ORGANISATION ALONG COMMERCIAL LINES  MONITORING ~AWARENESS + FEEDBACK MECHANISM RURAL DEL:  PRACTICALITY OF MONITORING REQUIREMENT  TELECOM COVERAGE WITH MINIMUM QoS IS A BETTER APPROACH MOBILE INFRASTRUCTURE  RURAL AREAS HAVE TREMENDOUS POTENTIAL, YET…  CHALLENGING GROUND REALITIES-POWER IS A MAJOR ISSUE  LAND ACQUISITION, BACKHAUL, COORDINATION AMONG TSPs  AFFORDABILITY? A.G.Gulati(JA(F) USOF)
  17. 17. CONNECTIVITY IS NOT AN END IN ITSELF Increased Affordable access Universal Service connectivity causes an programmes improves increase in economic, social, cause affordable subscription or access educational, and connectivity health outcomes
  18. 18. CONNECTIVITY MUST BE SUPPORTED BY CAPACITY AND CONTENT Relevant Capacity Universal Service Content is Building of programmes can required to make state, and private bring about connectivity players to use connectivity & meaningful content and affordable (mobile and BB facilitate its use access content) by rural public
  19. 19. USOF NOT A UNIVERSAL PANACEA  USOF EFFORTS MUST BE SUPPLEMENTED BY SIMULTANEOUS PROGRAMMES TOWARDS OVERALL RURAL INFRASTRUCTURE DEVELOPMENT  IT, EDUCATION, POWER & RE, Rx HEALTH, GENDER BASED SUPPORT ETC  MUCH GREATER LEVEL OF COORDINATION AND MUTUAL LEVERAGING ARE CALLED FOR
  20. 20. NEW SCHEMES  RURAL WIRE LINE BROADBAND SCHEME  SCHEME FOR AUGMENTATION AND CREATION OF INTRA-DISTRICT OFC NETWORKS-ASSAM SERVICE AREA  PILOT PROJECTS FOR RENEWABLE ENERGY IN MOBILE INFRASTRUCTURE SITES  PILOT PROJECTS FOR SOLAR MOBILE CHARGERS  PILOTS FOR NEW TECHNOLOGY PERTINENT TO RURAL AREA TELECOMMUNICATIONS A.G.Gulati(JA(F) USOF)
  21. 21. RURAL WIRE LINE(WL) BROADBAND SCHEME  WE ARE STILL AWAITING 3G/BWA AUCTIONS FOR RURAL WIELESS BB ROLL OUT  IN THE MEANWHILE TO ENCOURAGE RURAL (WIRE LINE) BB ROLL OUT  AGREEMENT WITH BSNL THAT OWNS 99.5% of ALL RURAL WIRE LINES (28,000 RURAL WL EXCHANGES WITH OFC BACKHAUL)  SUBSIDY SUPPORT TOWARDS BROADBAND ENABLEMENT OF THESE EXCHANGES  CAPACITY CREATION FOR 18 LAKH BB CONNECTIONS  PROVISION OF 28,000 BB KIOSKS  SAME SUBSIDY OFFER MADE AVAILABLE TO ELIGIBLE PRIVATE PLAYERS A.G.Gulati(JA(F) USOF)
  22. 22. RURAL WIRE LINE BROADBAND SCHEME CHALLENGES •Lack of demand: Low perceived utility of services •Content-relevance and language •Affordability of services •Cost of CPEs and Computers
  23. 23. RURAL WIRE LINE BROADBAND SCHEME ADDRESSING ESSENTIAL FOR •Affordability of : SUCCESS - Connectivity - CPEs - Computers •Public Access •Content •At least 512 kbps
  24. 24. RURAL WIRE LINE BROADBAND SCHEME SCHEME •Subsidised Connectivity, CPEs, DESIGN •Special USOF Tariff Pans -bundling Computer/Computing Device •Public access kiosks: -Franchisee Model, -Local Village Level Entrepreneur - Content Aggregator -Subsidised Rates of Browsing -Printing, Scanning, Video Conferencing -Power Backup
  25. 25. BB KIOSK –PILOTs  Healthy demand for utility payments, entertainment, micro finance, e-marketing, railway booking, e-education, Agro and Weather related Information,  Location-Public Access  Timing  Ambience  Tariffs  Language JA(F) USOF
  26. 26. GENERAL INFRASTRUCTURE-OFC Rural Areas (Assam) Under Served by Voice and Data Services PROBLEM: Non affordability of end user services due to high cost of reliable backhaul and therefore higher prices of voice and data services vis-à-vis incomes Solution : Building Subsidize backhaul not Capex commercially viable due Problem Infrastructural Constraint: Lack of to lack of Solved?? backhaul at sub-district level : demand vis-à-vis investment required A.G.Gulati(JA(F) USOF)
  27. 27. FURTHER ANALYSIS AIM: High capacity Backhaul must be available at low cost to a multiplicity of players SOLUTION: Compulsory Sharing at Discounted Rates : makes backhaul cheaply available. -Encourages service providers to lease bandwidth -Proliferation of service providers -Cheaper Voice and data services RESULT: VOICE & DATA SERVICE PROVISION TO RURAL AREAS (ASSAM) AT AFFORDABLE RATES
  28. 28. PILOT PROJECT SCHEME: NEW TECHNOLOGIES  INDUCTION OF NEW TECHNOLOGY ON PILOT BASIS  ELIGIBLE COMPANIES TO DEMONSTRATE NEW TECHNOLOGY THROUGH PILOT IN AREAS OF -RURAL BROADBAND, FIXED/WIRELESS TELEPHONY, TRANSMISSION MEDIA, HYBRID POWER, CPEs ETC  TRIPARTITE EFFORT BETWEEN TECHNOLOGY PROVIDER, TSP & USOF  MUST FUNCTION FOR AT LEAST THREE MONTHS FOR PROPER IMPACT ASSESSMENT  PROJECT RESULTS TO BE CERTIFIED BY TEC/CDOT/IIT  SEMINAR TO SHARE AND DISSEMINATE RESULTS  UPPER LIMIT OF USOF ASSISTANCE IS Rs 0.5M  5 PROJECTS TO BE SELECTED A.G.Gulati(JA(F) USOF)
  29. 29. PILOT PROJECT SCHEME-RENEWABLE ENERGY  Scheme to subsidise up to 75% of cost of renewable energy installations in 20 USOF shared mobile infrastructure sites spread across 20 states. (limited to Rs 0.5m)  Being carried out with joint technical and financial support of MNRE & USOF  Solar/solar-wind hybrid depending on state’s climatic conditions  Draw lessons based on financial and technical data from these projects  Establish financial viability, technical feasibility in actual rural settings  Build learning into design of future USOF schemes for mobile infrastructure A.G.Gulati(JA(F) USOF)
  30. 30. OTHER PILOT SCHEMES (UNDER CONSIDERATION) III. SCHEME TO SUBSIDISE SOLAR MOBILE CHARGING STATIONS IN 5000 VILLAGES  LOCAL ENTREPRENEURSHIP MODEL  CHEAP CHARGING FACILITY FOR RURAL AREAS IV. SCHEME FOR SUBSIDISED RURAL BB ENABLED PUBLIC SERVICE TERMINALS  IN CONJUNCTION WITH RURAL WL BB SCHEME  GENDER BASED-SELF HELP GROUPS TO RUN THE RPSTs  LIVLIHOOD  VAS FOR RURAL POPULATION  FINANCIAL INCLUSION A.G.Gulati(JA(F) USOF)
  31. 31. FUTURE PLANS BASED UPON :  THE SUCCESS OF PRESENT SCHEMES  LESSONS LEARNT  NEW TECHNOLOGIES  UNIQUE AND EMERGING NEEDS OF RURAL & REMOTE AREAS  MARKET CONDITIONS PREVAILING A.G.Gulati(JA(F) USOF)
  32. 32. THE ROAD AHEAD…  COVERING REMAINING UNCOVERED RURAL AREAS WITH MOBILE SERVICES  RURAL INTRA-DISTRICT OFC SCHEME -COVERING REMAINING SERVICE AREAS  LAYING OF FIBRE TO THE BIGGER VILLAGES?  SUPPORT FOR POWERING OF TELECOM INSTALLATIONS THROUGH RENEWABLE ENERGY?  SUBSIDISING SATELLITE BANDWIDTH CHARGES FOR REMOTE AREAS?  INCENTIVISING THE SHARING OF EXISTING RURAL FIBRE NETWORKS?  SPECIAL SUPPORT FOR TARGET AREAS/ GROUPS?

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