Role of Universal Service Obligation Fund in Rural Telecom Services: Lessons from the Indian Experience

Abstract

This paper outlines India’s experience of increasing rural teledensity, including its recent policy initiative to increase penetration through creation of a Universal Service Obligation Fund (USOF) that supports a variety of innovative initiatives. USOF’s most ambitious programme to date had been the design and deployment of mobile services in rural areas.

This paper analyses the outcomes of various programmes, especially those of the mobile service provision component of USOF. This paper also provides a framework for assessment of USOF and relates it to the experience in other countries. USOF must be treated as one among many instruments for increasing rural teledensities and efforts should be made to facilitate policy outcomes on a variety of dimensions.