IDEAS home Printed from https://ideas.repec.org/p/iim/iimawp/8326.html
   My bibliography  Save this paper

Role of Universal Service Obligation Fund in Rural Telecom Services: Lessons from the Indian Experience

Author

Listed:
  • Jain, Rekha
  • Raghuram, G.

Abstract

Despite the tremendous growth of mobile services in most developing countries, these have largely remained limited to urban areas. This has further aggravated the existing urban and rural divide. Policy makers and regulators perceive the need for an effective regulatory and policy environment to reduce the gap, as there are several market challenges in this endeavor, including low commercial viability. However, most such interventions have had little success. This paper outlines India.s experience of increasing rural teledensity, including its recent policy initiative to increase penetration through creation of a Universal Service Obligation Fund (USOF) that supported a variety of innovative initiatives. USOF.s most ambitious program to date had been the design and deployment of mobile services in rural areas. This paper analyses the outcomes of various programs, especially those of the mobile service provision component of USOF. Despite the innovative design of the USOF program, it had little impact on increasing rural teledensity. On the other hand, positive policy steps that reduced the costs for service provision (revenue shares, duties, ADC) and competition facilitated greater rural penetration. This raises the issue of role of government vis-à-vis private sector in increasing rural teledensities. The lack of accountability arising from the relationship between the government owned incumbent and the USOF administrator and proper evaluation of USOF, the non-ring fencing of the fund and poor quality project management contributed to the low impact. Non-involvement of private operators at an early stage, inability to suitably enforce any penalties for violation of contracts, and non-existent review and feedback mechanism have not allowed USOF to leverage the benefits of an early start. In Peru, strict penalties in non implementation of contracts led to more timely schedules (Cannock, 2001). Since USOF is a highly visible program, it is important to generate high impact outcomes. On the strategic front, USOF needs to be managed by an independent body that is made responsible for outcomes. Third party assessments and greater enforceability of contracts are necessary operational elements of thisdesign. Without this operational framework, the strategic elements of design will not provide the value that was envisaged. This paper also provides a framework for assessment of USOF and relates it to the experience in other countries. USOF must be treated as one among many instruments for increasing rural teledensities and efforts should be made to facilitate policy outcomes on a variety of dimensions.

Suggested Citation

  • Jain, Rekha & Raghuram, G., 2009. "Role of Universal Service Obligation Fund in Rural Telecom Services: Lessons from the Indian Experience," IIMA Working Papers WP2009-06-03, Indian Institute of Management Ahmedabad, Research and Publication Department.
  • Handle: RePEc:iim:iimawp:8326
    as

    Download full text from publisher

    File URL: https://web.iima.ac.in/assets/snippets/workingpaperpdf/2009-06-03Jain.pdf
    File Function: English Version
    Download Restriction: no

    References listed on IDEAS

    as
    1. Gasmi, Farid & Recuero Virto, Laura, 2005. "Telecommunications Technologies: Deployment in Developing Countries," MPRA Paper 2443, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iim:iimawp:8326. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/eciimin.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.