Trai recommends separation of USOF from DoT

Observing that Universal Service Obligation Fund (USOF) subsidy has not spurred investment in the rural telecom space, sector regulator Telecom Regulatory Authority of India (Trai) today recommended separation of fund from the purview of Department of Telecom (DoT) to make effective use of the finances available.

"The USOF subsidy has also not spurred investments in rural areas to the desired level... USOF needs to be separated from DoT and a framework on the lines of the National Highway Authority of India should be considered," Trai said in a statement.

The USOF administrator should be empowered effectively in terms of administrative and financial powers, and ultimate decision making, it added.

The growth rate of telecom penetration in rural India has been skewed when compared to the urban population. Only 27.6 per cent of the 400.04 million subscriber base (as in January 2009) is from rural India.

As in December 2008, the rural teledensity is 12.59 against the urban teledensity of 81.38.

Trai said that the USO Fund Act should be so amended that the funds accruing to the USOF through levy is directly managed by the organisation and is not routed through the budgetary process of the Union government.