USOF successor to focus on indigenising tech, hiring global bandwidth

Govt plans to include fund in upcoming telecom Bill despite telcos' opposition, officials said

The Telecommunication Development Fund, the proposed new avatar of the Universal Service Obligation Fund (USOF), will shift focus to indigenising telecom technology, hiring international bandwidth, and laying submarine cable lines, among other things, officials said.

The fund would remain the central government’s primary source of capital for building telecom infrastructure. As a result, it could find a place in the telecom Bill despite opposition from telecom companies, officials at the Department of Telecommunications (DoT) said.

The USOF funds projects that boost mobile, broadband connectivity in rural and remote areas.

Thus far, the USOF focused on extending connectivity to uncovered villages, especially in areas where left wing extremism was reported. It also looked after the comprehensive telecom development plan in the Northeastern states and the government’s flagship BharatNet project, which aims to provide broadband connectivity to 250,000 gram panchayats. That is set to change.

“The government has been working steadily on the legacy targets and in many cases has seen major success. The Prime Minister’s Office has suggested the focus now has to shift to the next stage. This would see the government investing in capital intensive projects that boost telecom infrastructure,” a senior official said.

Bandwidth augmentation in remote areas remains the top priority and projects focused on this would receive investments, he added.

The government has hired international bandwidth for internet connectivity in the Northeastern states. Given the pace of the project, which saw the second 10 Gbps link being commissioned earlier this year, officials said similar ones were in the offing.

A project to ensure faster internet connection to remote areas on and near the border with China is also being considered, they added.

Indigenisation

However, the largest chunk of the USOF’s funds would be diverted towards indigenising crucial telecom technology.

Live since October 1, the Telecom Technology Development Fund (TTDF) aims to fund research and development in rural-specific communication technology applications. Additionally, it aims to promote technology ownership and indigenous manufacturing, reduce imports, boost export opportunities, and create higher volumes of Indian-held intellectual property rights.

To enable this, the government has mandated that 5 per cent of the annual collections of the USOF be allocated to the TTDF starting from 2021-22. Last week, Telecom Minister Ashwini Vaishnaw said the TTDF would be slowly enlarged to Rs 3,000-4,000 crore from the current Rs 500 crore per year.

Officials confirmed that this would be funded by a larger share of USOF being diverted to the TTDF. “The idea is to support industry to build high impact deep tech projects at affordable costs,” another official said.

Unutilised funds

Funds for the USOF come from the collection of Universal Access Levy (UAL) from telecom service providers, who have to pay 5 per cent of their adjusted gross revenues annually to the fund.

As of October 31, a cumulative Rs 1.35 trillion was collected by the government, official data shows.

Telecom companies have repeatedly argued that the government holds onto the UAL simply as a source of discretionary funds. The fund has a surplus of Rs 64,774 crore that has not been used so far, official data shows.

Industry organisations such as the Internet and Mobile Association of India (IAMAI), which represents internet and tech giants such as Amazon, Twitter, Microsoft, and several Indian tech start-ups have also backed telecom firms’ argument.