USO Fund Pakistan leads the way

Please go through this report on the commendable utilization of USO funds (a fund allotted to develop rural telephony) in Pakistan. What about India? A directly opposite , poorly maintained system by DOT is wrapped by CAG. That report also follows the Pakistan story.

Pak ahead of India in use of Universal Service Funds (from BusinessLine)

M. Somasekhar
Recently in Islamabad
While India and Brazil with over $4 billion and $5 billion, respectively, collected under the US Funds (Universal Services), grapple with how to use them to improve telecom services in rural areas, Pakistan with a much smaller fund seems to have made good progress.
Pakistan has been able to spread and roll out services from its roughly around annual $200 million fund under its focussed rural telecom and eServices programme, said Mr Parvez Ifthikar, Chief Executive Officer (CEO) of Universal Service Fund (USF), based in Islamabad.
The USF has targeted 12,000 un-served Mauzas (of the total 60,000) in the country this year. A Mauza is the smallest, administered unit in Pakistan. Having divided under 26 lots for promoting rural telecom, the bidding process has been completed for 10 lots and sold, he told an Expert Forum Meeting on Mobile 2.0, organised by LIRNEasia, a Sri Lanka-based telecom think-tank recently.
Interestingly, while in India, a telecom operator has to contribute 5 per cent of its annual revenue to the USO Funds, Pakistan charges much less at 1.5 per cent. In India, the funds go to the national budget and the Department of Telecommunications has to make projects to source them, in Pakistan a separate company has been created to utilise the funds.
Renewable energy mandatory
In a bold move, the Pakistan Telecom Authority, the telecom Regulator has made it mandatory that all bases stations being set up with support from the USF should be ‘Green Sites' or renewable energy powered, especially solar and wind as the case may be. The reason being that there is currently, a huge shortage of electricity in rural Pakistan.
In India, renewable energy players, especially the solar energy industry has been making a strong plea that solar power should be encouraged to power the telecom towers in rural areas and the USO (universal services obligation) Funds could be utilised for it.
The USF has also taken up a project to lay OFC cable network in 31 Tehsils. About 8,000 km of cable route was needed, Mr Parvez told Business Line.
USF structure
One of the reasons for the early take off of the utilisation of USF in Pakistan could be attributed to the creation of a separate entity registered as a company with 50 per cent private sector participation on the 10-member board. It has a Chief Executive Officer, in Mr Parvez Ifthikar, who was earlier country head of Siemens Telecom.


And this is the story of DOT dealing the funds
NEW DELHI: The government auditor CAG has pulled up the department of telecommunications (DoT) for not utilising funds of over Rs 18,000 crore collected for promoting rural telephony and giving false picture about the unused sums.

"A total universal levy of Rs 26,163.96 crore was collected during 2002-03 to 2008-09 by the DoT, but a disbursement of only Rs 7,971.44 crore was made from the fund during the period," the Comptroller and Auditor General (CAG) said in its report on the Union government's performance.

The closing balance of the USO fund as on March 31, 2009, the report said, should be Rs 18,192.52 crore and not 'nil' as shown in the DoT accounts.

The corpus of the universal service obligation (USO) fund, which was set up by the government in 2002 to promote rural telephony, is collected through a levy of 5 percent of adjusted gross revenue from telecom operators.

The fund is administered by the DoT. The levy received towards USO fund is first credited to the Consolidated Fund of India and subsequently the Centre credits such proceeds to the USO fund in the Public Account of India from time to time, for being utilised exclusively for meeting the USO.

The fund was created with the objective of utilising the proceeds exclusively for meeting the universal service obligation by providing access to telegraph services to people in the rural and remote areas at affordable prices.

The CAG recommended that the DoT formulate schemes for utilising the USO fund in the same year it is collected. "DoT may also ensure that viable schemes for implementation of USO for rural and remote areas are executed in timely fashion so that USO objectives are met and fund balances are utilised for the purpose it is created," the CAG said, regretting that currently the unspent balances are used for bridging budget deficit.