Digital India Initiatives

Universal Service Obligation Fund (USOF)


From UPSC perspective, the following things are important :

Prelims level: USOF

Mains level: Expansion of internet connectivity

The Union Cabinet has approved a project for providing 4G mobile services in thousands of villages across the country under the USOF.

What do you mean by Universal Service?

  • In the modern world, universal service refers to having a phone and affordable phone service in every home.
  • It means, providing telecommunication service with access to a defined minimum service of specified quality to all users everywhere at an affordable price.
  • In 1837, the concept was rolled on by Rowland Hill, a British educator and tax reformer, which included uniform rates across the UK and prepayment by sender via postage stamps.

What is USOF?

  • The Universal Service Obligation Fund (USOF) was formed by an Act of Parliament, was established in April 2002 under the Indian Telegraph (Amendment) Act 2003.
  • It aims to provide financial support for the provision of telecom services in commercially unviable rural and remote areas of the country.
  • It is an attached office of the Department of Telecom, and is headed by the administrator, who is appointed by the central government.

Scope of the USOF

  • Initially, the USOF was established with the fundamental objective of providing access to ‘basic’ telecom services to people in rural and remote areas at affordable and reasonable prices.
  • Subsequently, the scope was widened.
  • Now it aims to provide subsidy support for enabling access to all types of telecom services, including mobile services, broadband connectivity and the creation of infrastructure in rural and remote areas.

Funding of the USOF

  • The resources for the implementation of USO are raised by way of collecting a Universal Service Levy (USL), which is 5 percent of the Adjusted Gross Revenue (AGR) of Telecom Service Providers.

Nature of the fund

  • USOF is a non-lapsable Fund.
  • The Levy amount is credited to the Consolidated Fund of India.
  • The fund is made available to USOF after due appropriation by the Parliament.


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