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Invited Talks at Conferences/Workshops/Seminars

Invited Talks at Conferences/Workshops/Seminars

Effectiveness of Public Funding for Rural Telecom and Broadband: Lessons from the Universal Service Obligation Fund, India

Conference :  19th ITS Biennial Conference 2012 Bangkok, Thailand, November 18-21, 2012

Presenter :  Prof Rekha Jain, IIMA

Abstract :-   

Despite the growing telecom penetration in India, largely driven by mobiles, the increasing gap between urban and rural teledensity (RTD) is a cause of concern. As of March 31, 2012, the teledensity was 78.7% with nearly 951 million subscribers. While the urban teledensity (UTD) was 169.6%, the rural teledensity (RTD) was 39.2% showing a difference of 130.4%. Ten years back, this gap was 11.0%. We believe that the differential in broadband access would be even starker (We could not get the segregated data on the urban and rural broadband penetration).To overcome the market challenges of telecom services in rural areas, the Indian government, like several other governments (e.g. in Uganda, Chile and Malaysia) [Baek, et. al. 2006] created the Universal Service Obligation Fund (USOF) to be funded by contributions from the revenues of all operators.

Recent results released by USOF indicated that it had contributed very little to the overall growth in RTD even after nearly ten years of the funds availability and deployment, innovative design of schemes and support for private sector involvement for ensuring efficiency in deployment. Most of the growth had come about because of penetration by private operators [Jain and Raghuram, 2010], while the USOF had an unspent amount of US $ 4.37bn by the end of financial year 2011-12.

The paper has two parts, both of which bring out the implications for USOF and its programs for increasing RTD. The first part critically analyzes the overall design of the USOF program and the performance of its various schemes with respect to the stated goals. Next, we examine the organizational structure, resources and processes adopted by USOF with a view to highlight how these influence USOF goals. Since USOF has so far focused predominantly on voice network roll-out, we also examine organizational changes, if any, required in the context of broadband.

Since states in India have significant variation in their economic and developmental parameters, the paper develops models for RTD based on socio-economic characteristics of states to identify factors contributing to faster roll out. Such an analysis would help in sequencing of roll out in rural areas.