Universal Service Obligation Fund (USOF) , THY NAME IS ‘PROJECT KILLER’ - The India Saga



Universal Service Obligation Fund (USOF) , THY NAME IS ‘PROJECT KILLER’

Rural India remains deprived from the benefits of mobile/broadband connectivity. Universal Service Obligation Fund or USOF formed more than a decade…

Universal Service Obligation Fund (USOF) , THY NAME IS ‘PROJECT KILLER’

Rural India remains deprived from the benefits of mobile/broadband connectivity. Universal Service Obligation Fund or USOF formed more than a decade ago was tasked to bring rural/remote under mobile/Internet connectivity. But delaying projects, getting them stuck in the quagmire of approvals/evaluations has become a hallmark of USOF.

Currently, USOF is sitting on at least three key telecom infrastructure projects which Prime Minister Narendra Modi wants to showcase as his governmentÂs success when he goes to the electorate in 2019Â

NEW DELHI : Let us begin with a glimpse of how Department of Telecom (DoT) and its organizations are wasting public money and hurting IndiaÂs growth and progress, particularly the Universal Service Obligation Fund (USOF)formed over 13 years ago to boost connectivity to rural and remote corners of the country.

Recently, under the Phase-I of ambitious BharatNet project of connecting 2.5-lakh gram panchayats with optical fibre cable (OFC) network it was decided to connect some panchayats with broadband. But government officials were left shocked when they were unable to locate the optical fibre which was laid sometime back.

This is when the USOF-funded BharatNet project is being directly monitored by the Prime MinisterÂs Office (PMO) and is being implemented by the Bharat Sanchar Nigam Ltd (BSNL).

Fearing severe backlash from the PMO, USOF Administrator Sanjay Singh shot off a letter to BSNL CMD Anupam Srivastava, expressing concern over the lapses and seeking his intervention in ensuring end-to-end connectivity to all panchayats.

ÂThe progress of end to end connectivity has not been up to the mark, even at locations where end to end connectivity is certified by the implementing CPSUs is being found to be not available, the letter said.

DoT sources say USOF will now have to provide additional Rs.2000 crore to re-lay around 50,000 km of OFC which is either untraceable or is of poor quality.

The BharatNet project has been a classic case of how funds meant for providing better connectivity in rural, remote areas are being misused. Earlier known as National Optic Fibre Network (NOFN), which was rechristened as BharatNet by the Narendra Modi government, the project has seen many delays and missed several deadlines. As a result, project cost has escalated from initial Rs.20,000 crore to Rs.70,000 crore, a 70% hike. And this figure will only go up keeping in mind the shoddy progress of the project.

From DoT to USOF to BSNL to Bharat Broadband Network Limited (BBNL Â the special purpose vehicle formed to lay OFCs across India), all agencies have played their part in ensuring that 2.5-lakh gram panchayats does not get better, reliable Internet.

Ironically, from DoT to USOF to BBNL, same telecom officers are holding posts in these organizations. So, these officers create project, allocates funds, evaluates project, sans any accountability.

BharatNet, was cleared by the Union Cabinet in 2011 to connect 2.5 lakh Gram Panchayats through OFC by providing 100 Mbps bandwidth for each panchayat with financial support of USOF. The plan was modified under the current government in 2016 to have broadband connectivity to 1 lakh panchayats in first phase by March 2017, which is far from being achieved.

Of the 1,00,076 panchayats under Phase 1, broadband connectivity has been provided in only 22,333 panchayats so far, a success rate of poor 25%. Government sources say, forget December 2018 deadline, PMO should feel lucky if the project is completed even by the end of 2019.

Another important infrastructure project which the PMO wants to get completed without further delay is the mobile connectivity to eight Northeastern states which have remained deprived of poor mobile connectivity due to apathy of private operators who took licenses to serve these states but never put up telecom infrastructure there.

The project was conceived in 2014 and divided into two parts  phase I to be implemented by BSNL and phase II by private operator.

Tender process of phase I, to provide mobile connectivity to 4,118 villages through 2,817 telecom towers, was completed almost four months back but DoT is yet to clear it. Telecom Commission meeting to clear this project has already been postponed once due to unknown reasons.

But government sources say the real reason behind the delay was that the DoT and USOF are in a fix over phase II where the only bidder  Bharti Airtel  has quoted cost 56% higher as compared to phase I.

While phase I was finalised at Rs.2,386 crores against the estimated cost of Rs.1,975 crore (a hike of 20%), for phase-II, comprising 4,177 sites in eight states, the total cost has jumped to Rs.4,396 crore against the estimated cost of Rs.2,817 crore (a hike of 56%). Negotiations are on to convince Bharti Airtel to bring down the prices, hence the delay.

As a result, the project has already lost more than a year since the formal tender process began. MPs from the Northeast are livid over the undue delays and have raised the matter in Parliament, written to Prime Minister Narendra Modi and Telecom Minister Manoj Sinha.


The only successful implementation of a major project which the USOF can claim is the phase I of providing mobile connectivity in the Left Wing Extremism (LWE)-affected states. Though the project was completed in record time by two Indian companies once work order was issued by BSNL, the tender process itself took more than two years to get completed due to lackadaisical attitude of DoT, USOF and BSNL.

Under phase I, 2,199 mobile towers were installed with an expenditure of over Rs.3,500 crore in 10 LWE-affected states. The successful implementation of the project led to boost in security preparedness of forces deployed in rural and remote areas. It also led to bringing rural, tribal people into mainstream and quick implementation of government welfare schemes.

Buoyed by the response, the PMO, the Home Ministry and concerned state governments started pushing for phase II comprising 2,726 towers since last year.

But USOF devised yet another way to delay the project in the name of evaluating the installed mobile network in phase I and completing ignoring success reports by union and state government agencies including security forces.

USOF went a step forward when it sidelined its government agencies like the Telecom Enforcement, Resource and Monitoring (TERM) cells, the Centre of Development and Telematics, the Telecommunications Consultants India Ltd and the Telecom Centres of Excellence, and instead choose IIT-Mumbai for the project and sanctioned a whopping Rs.61 lakhs for the study.

For over six months now the fate of phase II is hanging in balance even as LWE-affected state governments have been writing to PMO, MHA and DoT to immediately begin work. Agencies that have implemented phase I have conveyed to DoT and USOF to not only give upgraded technology in phase II but also improve phase I without any extra costs, but the DoT and USOF have kept mum.


USOFÂs mission is Âenabling rural Indians to achieve their fullest potential and participate productively in the development of the nation by virtue of being effectively connected through a reliable and ubiquitous telecommunications network, access to which is within their reach and within their means.Â

But the question which needs to be asked here is  What USOF has achieved in last 14 years?

Telecom revolution began at the turn of the 21st century. But as years passed government realized that rural-urban divide in terms of mobile/broadband connectivity was widening as private operators were more focused on revenue-generating urban areas and ignoring rural areas. So, government decided to levy a charge on operators to collect fund to boost rural telecom penetration. So to achieve this, it created USOF in 2004.

In last 14 years not much has been achieved in rural connectivity as mobile and broadband penetration has remained below par. While urban teledensity has crossed 150, rural teledensity remains at 50. Similarly, while urban Internet subscribers per 100 population stands at 58, rural Internet subscribers per 100 population is just 12.

USOF has so far collected over Rs.85,000 crore, but has spent only Rs.37,000 crore. It is sitting on a kitty of over Rs.48,000 crore, while people living in remote and rural areas are crying for better connectivity.

Administrators after administrators have come and gone, but USOF has failed to live up to expectations of the people. Ironically, USOF has done nothing to cover uncovered villages for past five years except for revising the list of these villages and asking Chief Secretaries of these states to send names of villages. It even ignored recommendations National Census which has clearly mentioned entire list of unconnected villages in its survey. This despite the PMO pushing for improving connectivity to these villages to give push to its various ambitious plans like Digital India.

Every quarter DoT and USOF prepare a nice presentation and forwards it to PMO and various Ministries painting rosy pictures of its plans but doing nothing on the ground. This has been continuing since 2012. And the credit for this shoddy progress goes to current USOF Administrator Sanjay Singh and USOFÂs Joint Administrator (Technical) I.S. Shastry who have been delaying these projects. Significantly, both of them recently got promoted for their Âservices to the DoT!

Currently, both of these senior most USOF officials  Administrator Sanjay Singh and Joint Administrator (Technical) I.S. Shastry Â are sitting pretty on at least two major telecom projects  LWE phase II and Northeast telecom project  despite the fact that weeks after week and month after month PMO and Home Ministry have been reminding them of this undue delay and asking them to expedite these projects.

Various telecom industry associations and former bureaucrats have been repeatedly complaining to the PMO and Telecom Minister about their role in delaying (read killing) important projects and also hurting interests of BSNL by favouring private operators, but nothing has changed.