FINANCING RURAL CONNECTIVITY THROUGH USOF SUPPORT Archana.G.Gulati Jt Administrator (Finance) USOF JA(F) Universal Service Fund of India

RURAL INDIA 0.6 Million Villages lacking basic infrastructure (schools, colleges, hospitals, government services, non-agricultural employment opportunities) 833 Million rural Indians,70% of population Primarily dependant on agriculture/allied activities ( 14.2% of GDP)-characterized by low productivity Can we afford to neglect Rural India? RURAL CONNECTIVITY-WHY BOTHER? A.G.Gulati (JA(F) USOF)

THE IMPORTANCE OF ICT CONNECTIVITY MAINSTREAMING OF RURAL AREAS Reducing isolation Awareness Education, Health, Market Access, Information E-Government Services Knowledge, Productivity, Employment ECONOMIC DEVELOPMENT SOCIETAL TRANSFORMATION Broadband access especially is important when other infrastructure is inadequate ( roads, administrative machinery etc). Access to multi media content important as literacy level is less than 70%

A.G.Gulati (JA(F) USOF) THE NEED FOR USO IN TELECOM ACTUAL ACCESS GAP MARKET EFFICIENCY GAP TELECOM COVERAGE Isolation PovertyPoverty IDEAL COVERAGE

ACTUAL ACCESS GAP WHY LIBERALISATION AND COMPETITION ARE NOT ENOUGH FOR RURAL/REMOTE AREA PENETRATION SCATTERED POPULATION LOW INCOME LOW PECEIVED UTILITY (BB) HENCE USAGE LACK OF COMMERCIAL/INDUSTRIAL CUSTOMERS LACK OF ROADS, POWER ETC DIFFICULT TERRAIN, INSURGENCY HIGHER CAPEX AND OPEX, LOW ARPUs A.G.Gulati (JA(F) USOF) BOTH DEMAND AND SUPPLY SIDE CONSTRAINTS

WHAT IS USOFS ROLE? INCENTIVISE TELECOM SERVICE PROVIDERS TO VENTURE INTO RURAL/REMOTE AREAS FACILITATE RURAL ROLL OUT REDUCE COSTS AND HENCE END USER PRICES INCREASE AFFORDABILTY HOW? SUBSIDY SUPPORT TO REDUCE/CLOSE VIABILITY GAP PURSUANCE & LIASION WITH STATE AUTHORITIES ENCOURAGE & SUPPORT ADOPTION OF INNOVATIVE SOLUTIONS TO OVERCOME CONSTRAINTS E.G. POWER ENCOURAGE SHARING OF INFRASTRUCTURE AT DISCOUNTED RATES BUILD IN SPECIAL TARIFF PLANS FOR TARGET BENEFICIARIES A.G.Gulati (JA(F) USOF)

DEFINITION OF USO OBLIGATION TO PROVIDE ACCESS TO TELEGRAPH [TELECOMMUNICATIONS] SERVICES TO PEOPLE IN RURAL AND REMOTE AREAS AT AFFORDABLE AND REASONABLE PRICES.

A.G.Gulati(JA(F) USOF) USOF IN INDIA STATUTORY FUND (ITA (AMENDMENT)2003) CAME INTO EXISTENCE AS ON NON LAPSABLE FUND USL AS 5% OF ADJUSTED GROSS REVENUE OF TELECOM SERVICE PROVIDERS ITR (AMENDMENT) 2004 GOVERNS SCOPE AND IMPLEMENTATION ADMINISTRATOR APPOINTED ON ATTACHED OFFICE OF THE DOT ASSISSTED BY AN INTER- MINISTERIAL ADVISORY COMMITTEE: (REPRESENTATION FROM IIT CHENNAI, IIM A, MINISTRY OF FINANCE, MINISTRY OF LAW AND JUSTICE, PLANNING COMMISSION, TRAI AND DOT ) SUBSIDY DISBURSEMENT AND MONITORING BY 22 CCA OFFICES ACROSS INDIA More details available at

A.G.Gulati(JA(F) USOF) SCOPE OF USOF IN INDIA PUBLICACCESS, INDIVIDUAL HOUSEHOLD LINES AND TELECOM INFRASTRUCTURE IN IDENTIFIED RURAL/REMOTE AREAS. TILL NOVEMBER 2006, ITR 2004 LIMITED USF ACTIVITIES TO ONLY BASIC SERVICES: STREAM I: PROVISION OF PUBLIC TELEPHONE SERVICES (Village Public Telephones & Rural Community Phones) STREAM II :PROVISION OF HOUSEHOLD TELEPHONES IN NET HIGH COST RURAL/REMOTE AREAS.(Rural Household DELs)

A.G.Gulati(JA(F) USOF) SCOPE OF USOF IN INDIA contd IN NOVEMBER 2006 RULES GOVERNING USOF WERE AMENDED TO ALLOW USF TO SUPPORT MOBILE SERVICES AND BROADBAND CONNECTIVITY. FOLLOWING NEW STREAMS INTRODUCED BY AMENDMENTS TO ITA AND ITR : STREAM III: CREATION OF INFRASTRUCTURE FOR PROVISION OF MOBILE SERVICES IN RURAL AND REMOTE AREAS. STREAM IV: PROVISION OF BROADBAND CONNECTIVITY TO VILLAGES IN A PHASED MANNER. STREAM V: CREATION OF GENERAL INFRASTRUCTURE IN RURAL AND REMOTE AREAS FOR DEVELOPMENT OF TELECOM FACILITIES STREAM VI: INDUCTION OF NEW TECHNOLOGICAL DEVELOPMENTS IN THE TELECOM SECTOR IN RURAL AND REMOTE AREAS

FUND POSITION & UTILISATION AS ON : POTENTIAL FUNDING BY WAY OF USL BALANCE: Rs 16, Cr DISBURSEMENTS AS ON : Rs Cr DISBURSESMENT AS ON DATE: Rs Cr USL LEVY FIRST CREDITED TO CONSOLIDATED FUND OF INDIA AVAILABLE TO USOF THROUGH BUDGETARY PROCESS UTILISATION SUBJECT TO GOVERNMENT OF INDIA RULES AND REGULATIONS ON FINANCIAL PROPRIETY ACCOUNTING: AS PER CGA REGULATIONS AUDIT: C&AG

USOF MUST WEIGH: Costs, Benefits RESULTS Government Policy Direction, Financial Propriety Impact on competition Effective Utilization of Government Funds BudgetRules LONG TERM SUSTAINABILITY OF SUBSIDISED INFRASTRUCTURE/SERVICES Revenue StreamsOpportunity Cost COSTING, BENCHMARKING & SUBSIDY MODELLING PAYMENT TERMS & CONDITIONS, VERIFICATION /INSPECTION REMEDIAL ACTION

SUBSIDY SCHEME DESIGN 1. Overall Scheme conception including decision on service deliverables ( to other service providers or to end customer) 2. Identifying infrastructure elements to be created/augmented/shared (if any). 3. Deciding on appropriate costing based on prevailing market rates/historical costs 4. Benchmarking to arrive at maximum subsidy rate/offered subsidy

SUBSIDY SCHEME DESIGN 5. Subsidy Modeling to ensure correct level and structure of incentives for long term sustainability 6. Decision on subsidy disbursement schedule and associated conditions. Building in safeguards to ensure proper implementation. 7. Decision on pricing of services to ensure affordability of telecom services for target beneficiaries 8. Formulation of tender, tendering, bid evaluation, agreement with service providers

A UNIQUE PROGRAMME ALL INDIA NETWORK OF DEPARTMENTAL OFFICEs FOR IMPLEMENTATION AND SUBSIDY DISBURSEMENT LEAKAGES AVOIDED GROUND LEVEL IMPLEMENTATION IS CLOSELY MONITORED REGULAR POST PAYMENT VERIFICATION EFFECTIVE USE OF SUBSIDY DOUBTFUL CLAIMS WITHHELD FOR FURTHER VERIFICATION DISALLOWED AMOUNT:MORE THAN Rs 900 Cr A.G.Gulati (JA(F) USOF)

Karnataka Tamil Nadu Orissa M.P EFFECTIVE IMPLEMENTATION Punjab U.P(W) M.P

ENSURING EFFECTIVENESS OF USOF SCHEMES POLICY, SCHEME DESIGN & LAUNCH IMPLEMENTATION DISBURSEMENT, INSPECTION, MONITORING FEEDBACK ANALYSE, CLARIFY, MODIFY A.G.Gulati (JA(F) USOF) USOF HQ TSPs CCAs

A.G.Gulati(JA(F) USOF) VPTs/RCPs ACROSS INDIA MAHARASHTRA ASSAM VPTs/RCPs ACROSS INDIA RAJASTHAN USOF ORISSA 5.8 LAKH VPTs, 40,694 RCPs ORISSA

VPTs/RCPs ACROSS INDIA NAGALAND USOF RAJASTHAN

PUNJAB RURAL DELS TAMIL NADU ORISSA AJASTHA N U.P(W) USOF

TAMIL NADU RURAL DELS NAGALAND PUNJAB U.P(E ) RAJASTHN LAKH RDELs USOF

MOBILE INFRASTRUCTURE WEST BENGAL USOF TAMIL NADU 7295(7353) MOBILE TOWERs New Mobile Users-Chhattisgarh

USOF WIRE LINE BROAD BAND WEST BENGAL JHARKHAND 3.2 (8.9) lakh Broadband Connections

A.G.Gulati(JA(F) USOF) PILOT SCHEME FOR SOLAR MOBILE CHARGING FACILITIES (SMCFs) IN VILLAGES LOCAL ENTREPRENEURSHIP MODEL CHEAP CHARGING FACILITY FOR RURAL AREAS

RPST SCHEME Provides rural SHGs with broadband enabled terminals capable of secure financial transactions -on pilot basis in Rajasthan & H.P. VAS for Rural Public/ Livelihood for Rural Women RPST Enabled Services: Women Purchase of Tickets for Roadways, Railways and Airways Financial Services Insurance Services Rural Banking Mobile Recharge JA(F) USOF

CONNECTIVITY IS NOT AN END IN ITSELF Universal Service programmes cause affordable access Affordable access causes an increase in subscription or connectivity Increased connectivity could lead to desired economic, social, educational, and health outcomes A.G.Gulati (JA(F) USOF)

CONNECTIVITY MUST BE SUPPORTED BY CAPACITY AND CONTENT Universal Service programmes can bring about connectivity & affordable access Relevant Content is required to make connectivity meaningful (mobile and BB content) Capacity Building of state, and private players to use content and facilitate its use by rural public A.G.Gulati (JA(F) USOF)

USOFS SPECIAL INITIATIVES

SANCHAR SHAKTI Pilot Project Scheme for Mobile VAS & Livelihood related ICT Skills for Rural Womens SHGs Launched on

SANCHAR SHAKTI Scheme initiated with the objective of improving rural SHGs access to skills, knowledge, financial services and markets through mobile connectivity and Value Added Services Involves provision of customized content: information on markets, financial literacy, vocational training, health, social issues, government schemes to improve livelihoods, awareness and self confidence through SMS, IVRS and toll free query systems Multi-stakeholder approach whereby TSPs, VAS content providers, NGOs, USOF and NABARD work in coordination towards connectivity, content and capacity building of SHGs MoUs signed for 9 Mobile VAS pilot projects dealing with SHGs working with agriculture, livestock rearing, bee-keeping, textiles handicrafts, cottage industry etc States covered are Maharashtra, Tamil Nadu, Puducherry, Kerala, U.P, Uttaranchal, Andhra Pradesh, Rajasthan A.G.Gulati (JA(F) USOF)

PILOT PROJECT SCHEME FOR ACCESS TO ICTS FOR PERSONS WITH DISABILITIES (PwDs) IN RURAL INDIA For PwDs in educational/rehabilitation/vocational training institutions in rural areas Equipped with appropriate Assistive Technologies/Content ICT Centres For PwDs in rural areas With/without access to bundled content Special Handsets and Content To telecommunications facilities equipping with ATs in villages/in and around rural institutions for PwDs Public Access A.G.Gulati (JA(F) USOF)

A.G.Gulati(JA(F) USOF) FUTURE PLANS BASED UPON : THE SUCCESS OF PRESENT SCHEMES LESSONS LEARNT NEW TECHNOLOGIES UNIQUE AND EMERGING NEEDS OF RURAL & REMOTE AREAS MARKET CONDITIONS PREVAILING

THE ROAD AHEAD… COVERING REMAINING UNCOVERED RURAL AREAS WITH MOBILE SERVICES NOFN TO CONNECT 2.5 LAKH VILAGE PANCHAYATs WITH OFC & PROVIDE NON DISCRIMINATORY ACCESS TO ALL TSPs WIRELESS BROADBAND SUPPORT FOR POWERING OF TELECOM INSTALLATIONS THROUGH RENEWABLE ENERGY

RDELs in Tamil Nadu RDEL in U.P(East) VPT in Haryana VPT in Karnataka RDEL in Punjab THANK YOU!