1) The document discusses various schemes and initiatives by the Universal Service Obligation Fund (USOF) of India to promote rural connectivity through telecom infrastructure development and subsidies. 2) It outlines challenges in rural areas like scattered populations and lack of roads/power that make connectivity commercially unviable for private operators, and the role of USOF in incentivizing rollout through viability gap funding. 3) New schemes discussed include subsidizing rural wireline broadband rollout, building intra-district optic fiber networks in Assam, pilot projects for renewable energy in mobile towers and solar chargers, and testing new technologies.

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. 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. 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. 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. 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. 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. 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. 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. USOF MUST WEIGH:
Government Policy Direction,
Financial Propriety
Impact on competition
Costs, Benefits
RESULTS

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. 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. 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. 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. ENSURING EFFECTIVENESS OF USOF SCHEMES
POLICY,
SCHEME
DESIGN &
LAUNCH
ANALYSE,
CLARIFY, IMPLEMENTATION
MODIFY
DISBURSEMENT,
FEEDBACK INSPECTION,
MONITORING

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. 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. 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. 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. 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. 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. 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. 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. RURAL WIRE LINE BROADBAND SCHEME
ADDRESSING
ESSENTIAL
FOR •Affordability of :
SUCCESS - Connectivity
- CPEs
- Computers
•Public Access
•Content
•At least 512 kbps

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. 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. 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. 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. 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. 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. 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. 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. 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?