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FUNDING MECHANISM

FUNDING MECHANISM. FOR ICT. CHANNELS FOR ICT DEVELOPMENT. TWO CHANNELS ARE BEING FOLLOWED WITHIN THE MINISTRY OF COMMUNICATIONS AND INFORMATION TECHNOLOGY: THE FIRST ONE IS PURSUED IN THE DEPARTMENT OF TELECOMMUNICATIONS THROUGH THE UNIVERSAL OBLIGATION SERVICE FUND (USOF)

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FUNDING MECHANISM

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  1. FUNDING MECHANISM FOR ICT

  2. CHANNELS FOR ICT DEVELOPMENT TWO CHANNELS ARE BEING FOLLOWED WITHIN THE MINISTRY OF COMMUNICATIONS AND INFORMATION TECHNOLOGY: • THE FIRST ONE IS PURSUED IN THE DEPARTMENT OF TELECOMMUNICATIONS THROUGH THE UNIVERSAL OBLIGATION SERVICE FUND (USOF) • THE OTHER CHANNEL IS THROUGH THE DEPARTMENT OF INFORMATION TECHNOLOGY USINNG PUBLIC FUNDS ALLOCATED THROUGH NATIONAL BUDGET

  3. FUNDING SOURCES FOR ICT DEVELOPMENT IN DOT • THROUGH UNIVERSAL SERVICE OBLIGATION FUND (USOF) AND RULES MADE THEREOF UNDER AMENDED INDIAN TELEGRAPH ACT. • UNIVERSAL SERVICE LEVY IS COLLECTED AS A PART OF THE LICENSE FEE PAYABLE BY ALL LICENSED TELECOM SERVICE OPERATORS

  4. FUNDING SOURCES FOR ICT DEVELOPMENT IN DOT(Contd) A LEVY EQUIVALENT TO 5% OF ADJUSTED ANNUAL GROSS REVENUE OF LICENSED OPERATORS (EXCEPT PURE VALUE ADDED SERVICE PROVIDERS LIKE INTERNET SERVICE PROVIDERS) FLOWS AS USL CONTRIBUTION TO USO FUND FROM THE LICENSE FEE PAID BY THEM. THERE IS NO ADDITIONAL BURDEN.

  5. FUNDING SOURCES FOR ICT DEVELOPMENT IN DOT (CONTD.) • ENTIRE LICENCE FEE COLLECTION INCLUDING UNIVERSAL ACESS LEVY IS CREDITED TO NATIONAL EXCHEQUER/CONSOLIDATED FUND OF INDIA • SPECIFIC ALLOCATIONS ARE MADE AVAILABLE TO USOFAFTER DUE APPROPRIATION BY THE PARLIAMENTEACH YEAR AS PART OF THE NATIONAL ANNUAL BUDGET BASED ON PROGRAMME FUNDING REQUIREMENTS PROPOSED BY USOF ADMINISTRATOR THROUGH DOT

  6. UNIVERSAL SERVICE FRAMEWORK • REGULATOR HAS STATUTORY TASK OF “ENSURING EFFECTIVE COMPLIANCE WITH UNIVERSAL SERVICE OBLIGATION” UNDER TRAI(AMENDMENT)ACT,2000. • CENTRAL GOVERNMENT HAS MADE THE RULES TO ADMINISTER & DISBURSE THE USO FUND. • USO RULES FRAMED UNDER INDIAN TELEGRAPH ACT 1885 LAY DOWN OPEN COMPETITIVE BIDDING PROCEDURE.

  7. USO FUNDING APPROACH • A TECHNOLOGY NEUTRAL APPROACH ISADOPTED FOR DIFFERENT SCHEMES, IN WHICH LICENSED SERVICE PROVIDERS & INFRASTRUCTURE PROVIDERS PARTICIPATE. • SCHEME TO FUND AN ACTIVITY IS MADE IN CONSULTATION WITH ALL STAKE HOLDERS. • SCHEME IS PUT ON WEB SITE FOR INPUTS / SUGGESTIONS FROM STAKE HOLDERS.

  8. ACHIEVEMENTS OF USO FUNDING • ABOUT 0.6MILLION(97.61% OF INHABITED) VILLAGES STAND PROVIDED WITH VILLAGE PUBLIC TELEPHONES. • 1.85 LAC NON-FUNCTIONAL MARR VPTS REPLACED. • 40,000 RURAL COMMUNITY PHONES PROVIDED. • ABOUT 80 LAC NEW RURAL TELEPHONES PROVIDED. • A TOTAL OF 14 MILLION RURAL DELs SUPPORTED • 7200 RURAL TOWERS WITH 15,000 BTSS PROVIDED. • 3 LAC FIXED BROADBAND CONNECTIONS PROVIDED. • DISTRICT-BLOCK OFC NETWORK BEING AUGMENTED. • BROADBAND COVERAGE OF 1,10,695 GRAM PANCHAYATS • 5000 MOBILE CHARGING STATIONS BEING PROVIDED.

  9. ACHIEVEMENTS (Contd) • By supporting above activities through USOF, it has been possible not only to increase the national rural tele-density but also to reduce the tele-density inequalities between various Service Areas as well as the digital divide. • On per capita basis, more USOF support has been given to Service Areas with low rural tele-density & more unviability of operations.

  10. PLANNED USOF INITIATIVES • GREEN ICT INNOVATIONS TO CREATE NEW OPPORTUNITIES & TO REDUCE CARBON FOOTPRINT FOR MOBILE SERVICES IN UNCOVERED VILLGES. • USOF SUBSIDY SUPPORT FOR SETTING UP OF THE INCREMENTAL INFRASTRUCTURE TO PROVIDE TERRESTRIAL WIRELESS BROADBAND COVERAGE TO ABOUT 5,00,000 VILLAGES BY LEVERAGING THE EXISTING INFRASTRUCTURE IN RRAs. • NATIONAL OPTIC FIBRE NETWORK FOR BROADBAND CONNECTIVITY OF 2,50,000 GRAM PANCHAYATS.

  11. USO FUND MANAGEMENT

  12. USO FUND & STATUS • A CUMULATIVE TOTAL OF ABOUT Rs.204 BILLION STANDS ALLOCATED FOR PROVIDING UNIVERSAL SERVICES AGAINST A COLLECTION OF NEARLY RS. 372 BILLION. • AS ON 31.3.11, SUBSIDY OF RS.134.71 BILLION DISBURSED AND THE POTENTIAL BALANCE AVAILABLE IS RS 168.03 BILLION

  13. BASIS OF SUBSIDY SUPPORT • BENCHMARKING: EITHER A NET COST APPROACH-OR A PERCENTAGE OF CAPITAL RECOVERY MODEL • CAPITAL RECOVERY EQUALS SUM OF DEPRECIATION, RETURN ON EQUITY AND INTEREST ON DEBT. • BENCHMARK FORMS THE UPPER LIMIT OF SUBSIDY • BIDDING DETERMINES THE ACTUAL SUBSIDY PAYOUT PER UNIT OF BIDDING (NORMALLY SERVICE AREA). • SUBSIDY PAYMENTS COMMENCE ONLY AFTER COMMISSIONING AND ARE PHASED OVER AGREEMENT DURATION (5-7 YEARS).

  14. SCOPE OF USO FUND USO FUND ACTIVITIES CLASSIFIED UNDER DIFFERENT STREAMS: • STREAM I : PROVISION OF PUBLIC TELEPHONE SERVICES • STREAM II : PROVISION OF RURAL HOUSEHOLD TELEPHONES IN NET HIGH COST RURAL & REMOTE AREAS. • STREAM III : CREATION OF INFRASTRUCTURE FOR PROVISION OF MOBILE SERVICES IN RURAL/REMOTE AREAS. • STREAM IV : PROVISION OF BROADBAND CONNECTIVITY TO VILLAGES IN A PHASED MANNER. • STREAM V : CREATION OF GENERAL INFRASTRUCTURE IN RURAL /REMOTE AREAS FOR DEVELOPMENT OF TELECOM FACILITIES • STREAM VI: INDUCTION OF NEW TECHNOLOGY DEVELOPMENTS IN THE TELECOM SECTOR RURAL & REMOTE AREAS

  15. USO STREAM-WISE ACHIEVEMENT • Stream I: ABOUT 5,79,382 (97.6%) VILLAGES PROVIDED WITHVILLAGE PUBLIC TELEPHONES • Stream II: 7.9 MILLION NEW RURAL PHONES PROVIDED IN NET HIGH COST RURAL AND REMOTE AREAS (RRAS). HOWEVER ABOUT 14 MILLION FIXED RURAL PHONES HAVE BEEN SUPPORTED BY THE USOF.

  16. USO STREAM-WISE ACHIEVEMENT • Stream III: A PERCENTAGE OF THE CAPITAL RECOVERY FOR SHARED INFRASTRUCTURE TO PROVIDE MOBILE SERVICES (TOWERS+BTSs) HAS BEEN TAKEN INTO ACCOUNT TO DETERMINE THE SUBSIDY. OVER 7 THOUSAND MOBILE TOWERS & 15100 BTSs HAVE BEEN SUPPORTED BY USOF. INFRASTRUCTURE PROVIDERS ARE SETTING UP PASSIVE TOWER SITES(PART A) & INSTALLATION OF BTSs(PART B) IS BY THREE USPS ON EACH TOWER SITE.

  17. USOF SHARED TOWERS

  18. USO STREAM-WISE ACHIEVEMENT Stream IV :3 LAC BROADBAND CONNECTIONS & 4,500 KIOSKS FUNDED SO FAR AGAINST AN AGREEMENT WITH BSNL TO PROVIDE ABOUT 900,000 WIRELINE BROADBAND (ATLEAST 512 KBPS) CONNECTIONS FROM 28,672 EXISTING RURAL & REMOTE TELEPHONE EXCHANGES TO INDIVIDUALS & GOVERNMENT INSTITUTES. THE SUBSIDY DISBURSEMENT IS FOR • BROADBAND CONNECTIONS, • CUSTOMER PREMISES EQUIPMENT (CPE) • COMPUTER/COMPUTING DEVICES • SETTING UP OF KIOSKS FOR PUBLIC ACCESS

  19. USO STREAM-WISE ACHIEVEMENT • Stream V: A PERCENTAGE OF CAPITAL RECOVERY FOR THE DEVELOPMENT OF GENERAL INFRASTRUCTURE TAKEN INTO ACCOUNT TO DETERMINE SUBSIDY. THE FIRST PROJECT, TO CREATE,AUGMENT & MANAGE OPTICAL FIBER CABLE (“OFC”) FOR THE TRANSMISSION NETWORK IN ASSAM STATE IS BEING SUCCESSFULLY IMPLEMENTED. 70% OF THE BULK BAND-WIDTH CREATED IS BEING SHARED WITH OTHER OPERATORS AT A DISCOUNT OF ATLEAST 74% OF TRAI PRESCRIBED CEILING TARIFFS.

  20. USO STREAM-WISE ACHIEVEMENT • Stream VI: INTRODUCTION OF NEW TECHNOLOGICAL DEVELOPMENTS IN THE TELECOMMUNICATIONS SECTOR IN RRAs THOUGH SOME PILOT PROJECTS ON NEW TECHNOLOGY SOLUTIONS HAVE BEEN SUCCESSFULLY DEMONSTRATED YET NO DISBURSEMENTS HAVE BEEN MADE.

  21. -RURAL PUBLIC SERVICE TERMINAL SCHEME • In conjunction with Rural Wire Line BB scheme on pilot basis in H.P and Rajasthan (2770 exchanges) • Gender Based-Self Help Groups (SHGs) to run the RPSTs • MoU with BSNL on 11.1.10 • Financial inclusion and Value Added Services for rural population -Purchase of Tickets for Roadways, Railways and Airways -Insurance Services -Rural Banking -Financial Services -Mobile Content -Loans and livelihood products -Mobile Prepaid Recharges -Utility Bill Payment • Subsidy outlay of about Rs 47 Million

  22. FUND MANAGEMENT • USOF IS MANAGED THROUGH THE OFFICE OF USO FUND ADMINISTRATOR WHICH IS AN ATTACHED OFFICE TO THE DOT IN MINISTRY OF C & IT • IT IS HEADED BY USOF ADMINITRATOR • UNDER THE ADMINISTRATOR , THE USOF ADMINISTRATION INCLUDES APPROXIMATELY 20 PERSONNEL, ASSISTED BY TWO JOINT ADMINISTRATORS (TECHNICAL AND FINANCIAL) AND A DEPUTY DIRECTOR GENERAL (BROADBAND). ALL USOF PERSONNEL ARE DOT / GOI EMPLOYEES

  23. EVALUATION • THE USOF OF INDIA IS ONE OF THE LARGEST AND MOST SUCCESSFUL USFS IN THE WORLD AND HAS BEEN FULLY OPERATIONAL FOR EIGHT YEARS • THE USOF HAS SUPPORTED THE MAINTENANCE, INSTALLATION AND OPERATION OF ABOUT 0.6 MILLION PUBLIC TELEPHONES, 14 MILLION FIXED RURAL TELEPHONE LINES, 7 THOUSAND MOBILE TOWERS, 15100 BTSs AMONG OTHER PROGRAMS

  24. EVALUATION (CONTD.) • THE SIZE OF THE USOF HAS AVERAGED US $288 MILLION PER YEAR • THE USOF HAS SUCCESSFULLY DISBURSED 100% OF THE FUNDS ALLOCATED TO IT

  25. FUNDING OF PROJECTS IN DIT • PROJECTS SUCH AS THE e-GOVERNANCE PROJECT, SETTING UP OF SOFTWARE TECHNOLOGY PARK, ETC. ARE DIRECTLY FUNDED, EXECUTED AND MONITORED BY THE DEPARTMENT OF INFORMATION TECHNOLOGY • SOME PROJECTS HAVE BEEN TAKEN UP AS PPP INITIATIVES WITH MIXED FUNDING

  26. SUGGESTED APPROACH • USOF Administration should keep pace with changing technological scenario by suitably modifying the rules. • There is a need to synergize Government initiatives particularly in providing broadband services. SWANs (State-Wide Area Networks), CSCs(Common Service Centres) & broadband initiatives of USO Fund should be synergized to evolve an effective self sustaining model for providing not only broadband access but also a bouquet of services to address basic needs of rural populace. Convergence of services on broadband networks would enable ICT benefit reach rural masses.

  27. THANKS

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