News Excerpt:
On July 4, the Department of Telecommunications (DoT) unveiled draft rules to operationalize the Digital Bharat Nidhi (DBN), a new initiative by the central government aimed at improving telecom connectivity in rural areas.
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- According to the draft rules, the government will appoint an "administrator" to oversee the selection of "DBN implementers" through a bidding process or by inviting applications from eligible individuals.
- The administrator will determine the modalities of providing funding to DBN implementers on a case-by-case basis, including but not limited to full funding, partial funding, co-funding, market risk mitigation, and risk capital.
- Any DBN implementer receiving funding from the DBN for establishing, operating, maintaining, or expanding a telecommunication network shall share and make available such telecommunication network, and telecommunication services being delivered using such telecommunication networks on an open and non-discriminatory basis.
Replacing the Universal Service Obligation Fund (USOF)
- The Digital Bharat Nidhi will replace the previous Universal Service Obligation Fund (USOF), which was funded by a 5 percent Universal Service Levy charged to all telecom operators on their Adjusted Gross Revenue (AGR).
- The USOF was used to finance the expansion of telecom networks in remote and rural areas, where private companies are less inclined to offer services due to the lack of profitability.
- Following the recent notification of parts of the Telecom Act, the government has proposed additional rules for transforming the USOF into the Digital Bharat Nidhi (DBN), which will have a broader scope.
How the Digital Bharat Nidhi Will Operate
- Under the Telecom Act, contributions from telecom companies to the Digital Bharat Nidhi will first be credited to the Consolidated Fund of India (CFI), which is the main account where all government revenues and loans are deposited.
- The government will periodically transfer funds from the CFI to the DBN.
- The DBN funds will be used to support universal service through:
- Promoting access to and delivery of telecommunication services in underserved rural, remote, and urban areas.
- Fund research and development in telecommunication services, technologies, and products.
- Support pilot projects, provide consultancy assistance, and offer advisory support to improve connectivity.
- Introducing new telecommunication services, technologies, and products.
Targeted Projects and Initiatives
- The DBN will support schemes and projects aimed at providing telecommunication services to underserved groups such as women, persons with disabilities, and economically and socially disadvantaged sections of society.
- These projects will focus on introducing next-generation telecommunication technologies in underserved areas.
- It will enhance the affordability of telecommunication services.
Underutilization of USOF
- Since its inception in 2003, the USOF has faced criticism for underutilization.
- Between 2017 and 2022, the government collected Rs 41,740 crore from telecom contributions to the USOF but utilized only Rs 30,213 crore (about 72 percent).
- The government did not fully utilize the USOF in any year during this period.
- In FY23, the expenditure estimates from the USOF were revised down to Rs 3,010 crore, significantly 200% lower than the budget estimate of Rs 9,000 crore.
- This underutilization is largely attributed to underspending on the BharatNet project for village fiber connectivity.
