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Going Around in Circles?

Getting Regulation Right Blog Aspect
Dr Archana Gulati
Published May 01, 2014
Updated Sep 03, 2023
The whole idea of universal service funds was that at least  theoretically they are considered to be a more transparent, targeted and efficient means of achieving universal service as compared to cross-subsidies, access deficit charges and roll out obligations. 
The Economics Times today reports that USOF, India is considering a reduction in universal service levy for operators that meet roll out targets. This is a flawed approach. 
Firstly roll out obligations in Indian licenses do not  and cannot ensure that specific rural areas (uncovered/.under-served) will be covered. They generally require coverage of a certain percentage of rural area in the licensed  service area or telecom circle and history has shown that the areas covered are those closest to cities/towns. Secondly, mere technical roll out cannot ensure universal individual/household access which requires inter alia affordability or accessibility of connections. A well designed USF scheme can achieve both these objectives.
 An overall reduction in Universal Service Levy based on assessed requirement of funds is a different matter but retaining/relying on roll out obligations as a means of achieving universal service when a universal service fund exists is not advisable. It is likely to increase the government’s regulatory and administrative burden while defeating the purpose of the Fund.