4.Common_USO

• Universal Service


  Having a phone and affordable phone service in every home
• The precise parameters for Universal Service are usually set by national law or regulation, or may be contained in the license of the dominant operator
• As the world becomes more dependent on information and communication technology (ICT), broadband Internet access and usage is increasingly recognized as essential to economic growth and the provision of education, healthcare, and other basic services
• Universal Service Obligations (USO)


  The concept that telecommunication services play such a fundamental role in economic and social development that everyone should have access to a basic level of telecommunications facilities and services, if they are to participate fully in modern society
• Universal access


  The goal adopted by many countries to provide convenient and affordable access to communications, at least on a community basis, through a combination of private and public access facilities such as payphones and tele centres
• Universal Service Fund (USF)

  Funds created to ensure ubiquitous deployment of basic telephone equipment and services, and now being used to support ICT/broadband programs
• Universal Service Obligation Fund (USOF)


  Universal service funds, focused on basic voice services especially to the rural and uncovered areas in developing countries, and including access to PSTN, directory services, emergency services, and internet access to public schools and libraries at discounted prices in developed countries
• Some features of Universal service funds

  • Need to be enacted by countries law
  • Need countries parliamentary approvals to use funds
  • Every Telecom Operator has to levy some percent of the Adjusted Gross Revenue (AGR) towards USOF in the form of Universal Access Service levy (UASL)
  • Countries law will create an authority to monitor USAL flow and its utilization
• Benefits of Applying Universal Service Funds to Support ICT/Broadband Programs

  • Direct economic benefits: Stimulation of Rural Economic Growth, Rural BPOs/KPOs, Positive Externalities, GDP growth benefits
  • Indirect Benefits: Social Development, Increased Government Services, Mainstreaming Rural Areas, Access to information and resources, Improved social services, Wider market opportunities, Greater business productivity
• Universal access policies in most countries are based on the assumption that it is more expensive and hence unprofitable to provide telecom service in rural and remote locations
• In India, the focus of most policies to bridge the digital divide has been to provide / extend subsidy to telecom operators to reach out to rural areas
• Despite the subsidy and support for new rural household lines through USO, the number of wire-line connections in rural areas are decreasing, while the rural wireless subscriber base has reached 44 million without any subsidy support
• Competition


  Plays a much bigger role in bridging the digital divide than subsidies, as the active participation of many players in the market leads to faster saturation of urban centres and quicker focus on smaller cities and towns
• ITU Guidelines for applying USF in support of ICT/broadband programs


  • Shift policies to enable and support ICT-related programs, including broadband
  • Develop an overall plan that includes short-term and long-term indicators, goals, and measurements to track progress
  • Bring stakeholders together in a collaborative process that includes public and private partners with a range of interests and experience
• Factors that encourage rural penetration

  • High level of competition in the segment
  • Active participation of many players in the market leads to faster saturation of urban centres and quicker focus on smaller cities and towns
• The Indian cellular market is perhaps the most competitive market in the world with the presence of 6-7 operators in each service area
• Competition plays a much bigger role in bridging the digital divide

  Than subsidies
• ITU Guidelines for applying USF in support of ICT/broadband programs


  • Shift policies to enable and support ICT-related programs, including broadband
  • Develop an overall plan that includes short-term and long-term indicators, goals, and measurements to track progress
  • Bring stakeholders together in a collaborative process that includes public and private partners with a range of interests and experience
  • Focus on and integrate sustainability measures from the beginning
  • Consider sufficient spectrum allocation for broadband and last-mile connectivity
• Sustainable ICT/broadband programs


  ICT/broadband programs that are funded by universal service funds can and should be sustainable
• Specific best practices to improve sustainability


  • Develop program plans that cover no more than five to seven years
  • Design plans to fully recover the costs of delivering services over time
  • Ensure that government subsidies are targeted, short-term, and investment-oriented
  • Support service operations mainly through user revenues, with operations scaled to local needs and affordability
  • Ensure that government contributions directly relate it to public service goals
• Alternate USOF Models


  • Fund raised through Community Co-operatives
  • Asymmetric Interconnection
  • Universal Access through License Obligations
  • Administered by Ministry/Regulator but for Incumbent
  • Fund Administered by Ministry/Regulator for all/any Operator
  • Administered by Ministry/Regulator but disbursed thru separate entity
• Challenges and Best Practices

  • The Model– Experience shows that a successful model has to be: Non-bureaucratic and participatory with the private sector
  • Bureaucratic delays – In preparing necessary legislation, spectrum allocations, budget approvals, too much time taken especially when USO money treated like the usual Public Money etc.
  • Political Interference– Short-term political agendas, that are not in line with USO objectives, are unavoidable
  • "Hostility" of the Industry- No one likes to pay! Some just stay away after paying
  • Challenges from within – It is not easy to build a competent/professional team to implement USO
  • Dominance of the Incumbent – It helps in reaching far-and-wide but tends to eliminate other operators from the process
  • Disputes with Contractor– These are inevitable especially at payment times
• Affordable Telecom Services is essential for economic and social development of country
• USOF will help to provide such services to the Rural and remote area of the country
• USOF needs to be enacted by respective countries law considering the parameters of policy, legal, rules and regulation, organizational structure, mandate, collection and disbursement