Department of Telecommunications (DoT) on July 4 released draft rules to operationalise the Digital Bharat Nidhi, in a fresh attempt by the central government at increasing telecom connectivity in rural areas. Digital Bharat Nidhi would replace the erstwhile Universal Service Obligation Fund (USOF), which is a pool of funds generated by a 5 per cent Universal Service Levy charged upon all the telecom fund operators on their Adjusted Gross Revenue (AGR). The idea is that this money would be used to fund the expansion of telecom networks in remote and rural areas, where private companies may otherwise resist offering their services due to them not being revenue-generating markets.

HOW WILL DIGITAL BHARAT NIDHI WORK?

  • As per the Telecom Act, contributions made by telecom companies towards the DBN will first be credited to the Consolidated Fund of India (CFI).
  • All revenues that the government receives, including loans raised and all money received in repayment of loans, are credited to the CFI.
  • The government also incurs its expenditures from this fund.
  • The Centre will deposit the collected funds to the DBN from time to time.
  • Funds collected under the DBN 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 of telecommunication services, technologies, and products;
    • Support pilot projects, consultancy assistance and advisory support for Improving connectivity; and
    • For the introduction of telecommunication services, technologies, and products.
  • As per the draft rules issued by the DoT on how the DBN will be operationalised, the Centre will appoint an “administrator” who will select “DBN implementers” through “bidding” or invitation of applications from eligible persons.
  • This so-called 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.
  • The DBN shall fund schemes and projects for providing targeted access to telecommunication services for underserved groups of society such as women, persons with disabilities and economically and socially weaker sections, as per the draft rules.

AIM OF DBN

  • The introduction of next-generation telecommunication technologies in underserved rural, remote and urban areas;
  • Improving affordability of telecommunication services in such areas;
  • Promote innovation, research and development, promotion and commercialisation of indigenous technology development and associated intellectual property, including creation of regulatory sandboxes;
  • Developing and establishing relevant standards to meet national Requirements and their standardisation in international standardisation bodies; and
  • Encouraging start-ups in the telecommunications sector including the manufacturing of telecom equipment, among other things.
UNDERUTILISATION OF USOF Since its establishment in 2003, a common criticism of the USOF has been its relative underutilisation.
  • According to information shared in Parliament by former Minister of State for Communications Devusinh Chauhan in December 2022, between 2017 and 2022, the government had collected Rs 41,740 crore as part of contributions made by telcos towards the USOF, of which it had utilised Rs 30,213 crore – about 72 per cent.
  • In 2019-20, the collection was Rs 7,962 crore, of which the utilised amount was just Rs 2,926 crore. In the period specified by the former minister, the government did not achieve complete utilisation even once.
REASON: the underspending of funds allocated for the BharatNet project for fibre connectivity to villages.