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USO SUBSIDY DISBURSEMENT STATEMENT

Government of India
Ministry of Communications & Information Technology
Department of Telecommunications

Office of the Controller Communication Accounts
Uttrakhand-Dehradun

USOF

1. Policy, Acts and Rules on USO Fund

1.1 The Universal Service Support Policy came into effect from 01.04.2002. The guidelines for universal service support policy were issued by DoT and were placed on the DoT website www.dot.gov.in on 27th March 2002. Subsequently, the Indian Telegraph (Amendment) Act, 2003 giving statutory status to the Universal Service Obligation Fund (USOF) was passed in December 2003. The Fund is to be utilized exclusively for meeting the Universal Service Obligation by providing access to telegraph services to people in the rural and remote areas at affordable and reasonable prices. The USO Fund was established withthe fundamental objective of providing access to ‘basic’ telegraph services. Subsequently, an Act has been passed on 29.12.2006 as the Indian Telegraph (Amendment) Act 2006 to amend the Indian Telegraph Act, 1885 to enable provision of all types of telegraph services.

1.2 The Rules for administration of the Fund known as Indian Telegraph (Amendment) Rules were originally notified on 26.03.2004. The Rules were subsequently amended in order to enable support for mobile services and broadband connectivity in rural and remote areas of the country as Indian Telegraph (Amendment) Rules 2006 and the same were published on 17.11.2006. The Rules have recently been amended to provide subsidy support to eligible operators for operational sustainability of Rural Wireline Household DELs installed prior to 01.04.2002, for a period of 3 years subject to a ceiling of Rs. 2000 Crore per annum for the country. The Indian Telegraph (Amendment) Rules 2008 have been published on 18.07.2008.

1.3 The resources for implementation of USO are raised through a Universal Service Levy (USL) which has presently been fixed at 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. In addition, the Central Govt. may also give grants and loans. The annual revenue share license fee shall be reduced to the extent of reduction in contribution towards Universal Service Obligation Fund (USOF) levy if the licensee in service area(s) meets the prescribed qualification. The balance to the credit of the Fund will not lapse at the end of the financial year. Credits to the Fund shall be through Parliamentary approvals.

1.4The implementation of USO related activities is carried out by the “eligible operators” as per the aforesaid Indian Telegraph (Amendment) Rules covering Basic Service Operators, Cellular Mobile Service Providers, Unified Access Services Licensees and Infrastructure Providers (IP-I). These Telecom Service providers are both public and private sector companies.

2.0 Activities supported by USO Fund

As per the Rules, the following services shall be supported by the Fund, namely:-

(i) Stream-I: Provision of Public Telecom and Information Services

(a) Operation and Maintenance of Village Public Telephone in the revenue villages identified as per Census 1991 and Installation of Village Public Telephone in the additional revenue villages as per Census 2001.- For installation of Village Public Telephone in the revenue villages, identified as per 1991 Census, only the Operating Expenses and Revenue shall be taken into account for determining the Net Cost. For the additional revenue villages identified as per 2001 Census, Capital Recovery in addition shallalso be taken into account for determining the Net Cost.

Provided that in the case of the Village Public Telephone which are still to be installed in the villages identified as per Census 1991, Capital Recovery shall also be taken into account while determining the Net Cost.

(b) Provision of additional rural community phones in areas after achieving the target of one Village Public Telephone in every revenuevillage.- Where in a village the population is more than 2000 and no public call office is existing, a second public phone shall be installed and for the purposes of determining the Net Cost, Capital Recovery, Operating Expenses and Revenue shall be taken into account.

(c) Replacement of Multi Access Radio Relay Technology Village Public Telephone installed before 1st day of April 2002.- Capital Recovery, Operating Expenses and Revenue shall be taken into account for determining the Net Cost.

Note - Unless otherwise specified by the Central Government, the Secondary Switching Area shall be taken as a unit for the purpose of arriving at the Net Cost for activities specified in items (a) to (e) of stream I.

(ii) Stream-II – Provision of household telephones in rural and remote areas as may be determined by the Central Government from time to time:

(a) For household Direct Exchange Lines installed prior to 1st day of April, 2002, the difference in rental actually charged from rural subscribers and rent prescribed by Telecom Regulatory Authority of India for such subscribers shall be reimbursed until such time the Access Deficit Charges prescribed by Telecom Regulatory Authority of India from time to time take into account such difference.

(aa) For Household Direct Exchange Lines installed prior to 1st day of April 2002, an amount of maximum Two Thousand Crore rupees per annum for a period of three years shall be reimbursed to the eligible operators, from the date the Indian Telegraph (Amendment) Rules, 2008 come into force, for operational sustainability of rural wire lines in lieu of Access Deficit Charges being phased out.

(b) For household Direct Exchange Lines installed after 1st day of April, 2002, Capital Recovery, Operational Expenses and Revenue shall be taken into account to determine the Net Cost.

Note - Unless otherwise specified by the Central Government, the Short Distance Charging Area shall be taken as a unit for the purpose of arriving at the Net Cost for activities specified in item (b) of Stream II.

(iii) Stream-III: Creation of infrastructure for provision of Mobile Services in rural and remote areas:

(a) The assets constituting the infrastructure for provision of mobile services shall be determined by the Central Government from time-to-time.

(b) A percentage of the Capital Recovery for the infrastructure for provision of mobile services shall be taken into account to determine the Net Cost.

(iv) Stream-IV: Provision of Broadband connectivity to villages in a phased manner

A percentage of the Capital Recovery for the infrastructure for broadband connectivity shall be taken into account to determine the Net Cost.

(v) Stream-V : Creation of general infrastructure in rural and remote areas for development of telecommunication facilities

(a) The items of general infrastructure to be taken up for development shall be determined by the Central Government from time to time.

(b) A percentage of the Capital Recovery for the development of general infrastructure shall be taken into account to determine the Net Cost.

Note - Unless otherwise specified by the Central Government, the revenue district/ group of revenue districts shall be taken as a unit for the purpose of arriving at the Net Cost for the activities specified in Streams III, IV & V.

(vi) Stream-VI: Induction of new technological developments in the telecom sector in rural and remote areas

Pilot projects to establish new technological developments in the telecom sector, which can be deployed in the rural and remote area, may be supported with the approval of the Central Government.

Implementation Status Of The Schemes A. Ongoing Schemes B. Public Access 1.1.1 Village Public Telephones Agreements were signed with M/s BSNL and six Private Basic Service Operators (PBSOs) in March 2003 for operation and maintenance of existing Village Public Telephones (VPTs) in the country in the identified revenue villages as per Census 1991. In addition, subsidy support is also admissible for the VPTs installed in additional revenue villages as per census 2001. About 94% of the eligible Census 2001 inhabited revenue villages are already covered with Village Public Telephones (VPTs). This includes the VPTs provided under Bharat Nirman. Summary of VPTs provided by BSNL and PBSOs as on 30.06.09

  Name Of Service Area BSNL Total as per Agreements signed in March, 2003 Private BSOs Total as per Agreements signed in March, 2003 Provided by BSNL Provided by PBSOs as per website information
Uttaranchal 11621   13223  
           

The details of VPTs being maintained by Universal Service Providers (USPs), namely, M/s BSNL (www.bsnl.co.in), in 1.1.2 New VPTs in the Uncovered villages Agreements were signed with M/s BSNL in November 2004 to provide subsidy support for provision of VPTs in 66822 no. of uncovered villages as per Census 1991 in the country excluding those villages having population less than 100, those lying in deep forests and those affected with insurgency. Subsidy support in the form of Capital and Operational expenses will be provided for provision of these VPTs for a period of five years from the date of installation of the VPTs. The provision of VPTs in these villages has been included as one of activities under Bharat Nirman Programme. Out of these, 14183 remotely located villages were to be provided VPTs through Digital Satellite Phone Terminals (DSPTs) as per the agreement signed. Some of the VPTs, which were initially proposed to be provided on DSPTs, are also being provided through the Wireless coverage now available in these villages on account of network expansion. The VPTs were to be provided in phases covering 20%, 40% and 40% respectively over a period of three years. Since there was a delay in getting transponders from Department of Satellite and supply of DSPT equipment by the vendor, the remaining VPTs are likely to be provided in a phased manner by November 2009. 1.1.3 1.1.3 New VPTs to be provided in the remaining villages as per Census 2001 As per Census 2001, there are about another 62,443 uncovered villages, which are yet to be provided with VPT facility. Such uncovered villages shall also be provided with VPT facility with subsidy support from USOF. Agreements in this regard have been signed with BSNL on 27.02.2009 . Provision of VPTs under new agreement as on 30-06-09

Name of the Service Area Uncovered inhabited census-2001 villages as per new USOF Agreement Cumulative achievement up to 30.06 09
Uttaranchal 1964 527
       

1.1.4 Replacement of MARR based VPTs 1,86,872 no. of VPTs which were earlier working on Multi Access Radio Relay (MARR) technology and installed before 01.04.2002 are to be replaced by reliable technology equipment as most of these were non functional. Both capital and operational expenses are to be supported for this activity. The number of MARR VPTs to be replaced has subsequently been revised as 185121.All theMARR VPTs are likely to be replaced in a phased manner by June 2009. The targets and achievements for replacement of MARR VPTs are given inbelow Table Service Area-wise replacement of MARR VPTs by BSNL as on 30.06.09 (Reconciled figures)

Service area Total MARRs to be replaced Total No. of MARR VPTs to be replaced (after revision in September 08) Cumulative total MARR VPTs Replaced as on 30.06.09 Balance
Uttaranchal 3149 2876 2852 24

1.1.5 Provision of Rural Community Phones 46,253 villages with population exceeding 2,000 and without a Public phone facility are being provided with a Rural Community Phone (RCP). Agreements were signed with M/s BSNL and M/s RIL in September 2004 to provide 24,822 and 21,431 RCPs respectively in these villages over a period of three years i.e. by 30.09.2007. These installations are eligible for both Capital and Operational expenses. The number of RCPs to be provided has subsequently been revised as 40705 [BSNL: 21958, RIL: 18747]. All the RCPs are likely to be replaced in a phased manner by May 2009. The targets and achievements for RCPs are given in below Table

To be provided(Reconciled Figures) Achievement
BSNL RIL Total BSNL RIL Total
4 3080 3084 4 3075 3079

1.2 Individual Access 1.2.1 RDELS (01.04.05 to 31.03.07) Agreements were signed with M/s BSNL, M/s RIL, M/s TTL and M/s TTL (MH) in March 2005 for installation of Rural Household Direct Exchange Lines (RDELs) to be installed during the period 01.04.2005 to 31.03.2007. These RDELs were to be installed in 1685 Short Distance Charging Areas (SDCAs) [BSNL: 1267, RIL: 203, TTSL: 172, TTML: 43] where cost of providing telephone connections is more than the revenue earned. Support in the form of front loaded subsidy is being given for all the lines (RDELs) installed from 01.04.2005 to 31.03.2007. The equated annual subsidy where payable, shall be given up to a maximum period of validity of the Agreement (Five years) and validity period ends in March, 2010. Subsequently the cutoff date for installation of the RDELs was extended to 31.3.2010. The details of the SDCAs where RDELs are to be provided are given in below Table-A

Service Area Service Provider Total number of eligible SDCAs Number of (SSAs)/SDCAs
BSNL (171) RIL (61) TTL (37) TTL (MH) (5)
Uttaranchal BSNL 29 29 0 0 0

The achievements of RDELs are given in below Table- B

Service Area Total number of eligible SDCAs Cumulative number of RDELs provided since 01.04.2005
BSNL RIL TTL Total
Uttaranchal 29 31718 0 0 31718

1.2.2 RDELs (01.04.02 to 31.03.05) Support is also being extended for 18.65 lakhs rural lines installed between 01.04.2002 and 31.03.2005 at the same rates as applicable for the RDELs at (i) above. Agreements to this effect were signed with M/s BSNL and M/s RIL in May 2005 & August 2005. The equated annual subsidy is to be given for a maximum period of five years from the date of installation of these RDELs. One time front loaded subsidy is payable only for net addition of rural household DELs. 1.2.3 RDELs (Prior to 01.04.02) Support has been extended to nearly 90.5 lakh rural household Direct Exchange Lines (RDELs) installed prior to 01.04.2002 towards the rental differential between the TRAI prescribed rental and the rental charged by the Service Provider. The support was for the limited period of 01.04.2002 to 31.01.2004. The Access Deficit Regime has come into operation from 01.02.2004. 1.2.4 Rural Wireline Household DELs installed prior to 01.04.2002 Based on the recommendations of TRAI, Indian Telegraph Rules (ITR) have already been amended to provide subsidy support to the eligible operators for operational sustainability of Rural Wireline Household DELs installed prior to 01.04.2002 in lieu of ADC being phased out, This support shall be provided for a period 3 years subject to a ceiling of Rs. 2000 Crore per annum for the country. 1.3 Infrastructure Support For Mobile Services A scheme has recently been launched by USO Fund to provide subsidy support for setting up and managing 7871 (revised to 7440) number of infrastructure sites (towers) in 500 districts spread over 27 states for provision of mobile services in the specified rural and remote areas, where there is no existing fixed wireless or mobile coverage. The infrastructure so created shall be shared by three service providers for provision of mobile services. The agreements effective from 01.06.2007 have been signed with the successful bidders in May 2007. Mobile services from these towers are likely to be launched in a phased manner by end of year 2008. The State-wise/IP-wise number of towers to be set up under this scheme and the towers commissioned are given in below Table Commissioning status of Towers (Districtwise) as on 30.07.2009 in rural & remote areas for provision of Mobile Servicesin Uttrakhand Circle

State /Service Area Number of Districts Revised Number of Towers to be set up after dropping/ addition Number of Towers Commissioned as on 30.06.2009
Uttaranchal 13 185 171

1.4 Rural Broadband Schemes 1.4.1 Agreement has been signed with BSNL on 20.01.09 to provide 8,61,459 wire-line Broadband connections to individual users and Government Institutions from 27,789 DSLAMs, installed at existing rural and remote exchanges over a period of 5-years, i.e., by 2014.

The copy of Agreement signed with BSNL on 20.01.2009 for provision of Wire line Broadband Connectivity in Rural & Remote Areas &

List of Exchanges with subsidy covered under it.

List of 28,000 (approx.) Rural Exchanges for Wireline Broadband Connectivity under this Agreement

Other Schemes Which Are Under Pipeline In Dot 1-

Infrastructure Support For Mobile Services (Phase-II) It is proposed to cover other uncovered areas in the country through mobile services for which additional towers are being identified. About 11000 towers are proposed to be installed under the second phase of the scheme, which is likely to be launched shortly.The Details of Towers is given in Table VI - D

2 .Wireless Broadband Connectivity for Rural Areas A proposal is also under consideration of the Government to provide subsidy support for Broadband connectivity in rural and remote areas of the country in a phased manner by utilizing the existing passive and core infrastructure available with the Service Providers. It is proposed to provide broadband connectivity to Gram Panchayats, Higher secondary schools and primary health centers in order to provide e-governance and data services to the rural areas.

Appendix -A Summary Of Rural Exchanges

S.No. Circle No of Rural Exchange
1. A & N 47
2. AP 2676
3. Assam 429
4. Bihar 1000
5. Chattisgarh 449
6. Chennai 118
7. Gujarat 1965
8. Haryana 802
9. H.P 811
10. J & K 209
11. Jharkhand 291
12. Karnataka 2206
13. Kerala 873
14. Kolkatta 0
15. M P 1982
16. Maharashtra 3991
17. N E I 149
18. N E II 221
19. Orissa 942
20. Punjab 1215
21. Rajasthan 1959
22. Tamilnadu 933
23. UP (East) 2273
24. UP (West) 520
25. Uttaranchal 341
26. W.B 1387
  Total 27789

3. Wire line Broadband Connectivity for RuralAreas Wireline Broadband shall also be supported by USOF wherever feasible.

4 .Creation of General Infrastructure like OFC in Rural Areas With a view to provide sufficient back-haul capacity to integrate the voice and data traffic from the access network in the rural areas to their core network, USOF has taken initiative to strengthen the OFC network in the rural and remote areas. This scheme considers OFC Network augmentation between the blocks' HQ and Districts' HQ to begin with. The above Schemes are envisaged to be rolled out during the current Five Year Plan (2007-2012). The interested service providers may kindly see the EoI for USOF Scheme for Augmentation, Creation and Management of Intra-District SDHQ-DHQ OFC Network for Transport of Rural/Remote Area Traffic on Bandwith Sharing Basis in the Service Area Assam (Detailed Documentation) and approach this office withprescribeddetails by 10th August, 2009, at the following address:

5 .Pilot Projects For induction of new technological developments in the telecom sector on a Pilot Project basis in rural and remote areas, USOF has invited applications from the eligible companies to undertake Pilot Projects for demonstrating their products/ services in the field of Rural Telephony. About Five Pilot Projects are likely to be provided subsidy support at an upper sealing of 50 Lakhs per project during the FY 2008-09.

Publish Date: 13-12-2010