The Indian Telegraph Act 1885 (as amended in 2003 and 2006) defines Universal Service Obligation as access to telegraph service to people in rural and remote
areas at affordable and reasonable prices.
Apart from the higher capital cost of providing telecom services in rural and remote areas, these areas also generate lower revenue due to lower population density, low income and lack of commercial activity. Market forces alone would not direct the telecom sector to adequately serve backward and rural areas.
Creation: The New Telecom Policy - 1999 (NTP’99) envisaged creation of a Universal Service Obligation Fund to foster inclusive growth of telecom facilities for all and thus to fund the telecom schemes for Rural and Remote areas.
Funding: It provided that the resources for meeting the Universal Service Obligation (USO) would be raised through a ‘Universal Access Levy (UAL)’, which would be a percentage of the revenue earned by the operators under various licenses.
Statutory body:The Indian Telegraph (Amendment) Act, 2003 giving statutory status to the Universal Service Obligation Fund (USOF) was passed by both Houses of Parliament in December 2003.
Guiding rules: The Rules for administration of the Fund known as Indian Telegraph (Amendment) Rules, 2004 were notified on 26.03.2004. As per the Indian Telegraph Act 1885 (as amended in 2003, 2006 and 2008), the Fund is to be utilized exclusively for meeting the Universal Service Obligation.