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Digital India Fund |
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UPSC Syllabus: Prelims: Economy Mains: GS-II, GS-III: Government Policies and Interventions, Growth and Development, Infrastructure |
Introduction:
- Digital India Fund, replacing the lesser-used USOF, aims to enhance rural telecom connectivity using funds collected from telecom operators.
- This initiative addresses gaps in service delivery by funding network expansion in under-served areas, thereby improving access and promoting technological advancement.
From the Universal Service Obligation Fund (USOF) to the Digital India Fund (DBN)
- USOF was set up in 2003 to expand telecom services in rural areas.
What is the Universal Service Obligation Fund (USOF)?
- The Universal Service Obligation Fund (USOF) was set up to provide universal telecom services across India, with a particular focus on rural and remote areas where the market alone cannot ensure adequate connectivity.
Objectives
- It aims to provide reliable telecom services to rural and underserved areas.
- To provide financial assistance to telecom operators to expand their networks in unserved areas.
Funding Mechanism
- The USOF is funded through a universal service levy (USL), which is a percentage of the adjusted gross revenue (AGR) of telecom operators.
- This levy is collected by the government and used to subsidize telecom infrastructure in targeted areas.
Adjusted Gross Revenue (AGR)
- Adjusted Gross Revenue (AGR) is used in the telecom industry to describe the gross revenue of telecom operators after certain deductions.
- It is a key factor in determining the fees to be paid by telecom companies to the government.
Components
- Total revenue earned by telecom operators from all services, including telecom and non-telecom activities.
- Certain revenues such as interconnection charges, roaming charges, and goods and services tax (GST) are deducted to arrive at AGR.
Significance
- AGR is important as it forms the basis for the calculation of various regulatory charges, including license fees and spectrum usage charges, that telecom operators have to pay.
Digital India Fund (DBN)
Introduction to DBN:
- Objective: The Digital India Fund is designed with a broader scope than the USOF, focusing on expanding telecom networks in areas where private companies do not find it profitable to provide services.
- Scope: To promote universal telecom services in rural, remote, and under-served urban areas.
Operation of Digital India Fund (DBN)
Funding Mechanism
- Contributions received from telecom companies will be credited to the Consolidated Fund of India (CFI).
- The Center will credit the collected funds to the DBN from time to time.
Use of Fund
- Focus on underprivileged rural, remote, and urban areas.
- Provide funds for research and development in telecom services, technologies, and products.
- Support for pilot projects, consultancy support, and advisory support.
- Support the introduction of new telecom services, technologies, and products.
Implementation Strategy
- The Department of Telecommunications will establish guidelines and a framework for the allocation and use of funds under the DBN.
- Collaboration with telecom operators and stakeholders is needed to ensure effective implementation.
Telecommunication Act, 2023
Objectives:
- The Telecommunication Act 2023 aims to modernize and strengthen the legal framework governing telecommunications in India, promote the development of digital infrastructure, and ensure the availability of high-quality telecommunication services.
Legislative Background:
- On June 26, several sections of the Telecommunication Act of 2023, came into effect.
- The Central Government issued a gazette notification on July 4, 2024, to bring into effect sections 6-8, 48, and 59(b) of the Telecommunication Act- 2023 from July 5, 2024.
Key Provisions of the Telecommunication Act 2023
Authorization and Licensing Requirements
- Prior authorization from the Central Government is mandatory to provide telecommunication services or operate a telecommunication network.
- Existing licenses remain valid for their permitted five years.
Spectrum Allocation and Use
- Spectrum is allocated through auction, except for national security, disaster management, and satellite services.
- The government has the right to reuse frequency ranges and allows spectrum sharing, trading, leasing, and surrender.
Satellite Internet Provisions
- Made provisions for allocating spectrum to satellite internet providers such as OneWeb and SpaceX’s Starlink.
Surveillance and Suspension Powers
- The government has the power to prevent, monitor, or block messages on grounds related to public safety or emergencies.
- Telecommunications services can be suspended and infrastructure temporarily taken over during public emergencies.
Regulation and standards
- The central government can set standards for telecom equipment and infrastructure.
- The Act also amends the TRAI Act 1997, allowing only experienced individuals to be appointed as chairperson and members.
- The chairperson must have at least 30 years of professional experience and have served as a member of the board of directors or CEO of a company.
- TRAI members must have at least 25 years of professional experience and have served as a member of the board of directors or CEO of a company.
- TRAI chairperson and members can now be appointed from the private sector.
Legal offences and penalties
- It specifies criminal and civil offenses, including unauthorized provision of telecom services and violation of terms and conditions.
- The designated authorities and committees will decide on the penalties, which can range from fines to imprisonment.
National security measures
- Provisions to prevent imports of telecom equipment from potentially hostile countries, integrated after the 2020 India-China border conflict.
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Evolution of the Telecom Sector in India at a Glance 1851: Telegraph services were introduced in India
1881: First telephone service
1947: Post-independence evolution
1985: Department of Telecommunications (DoT) formed
1994: National Telecommunication Policy (NTP) 1994
1995: Launch of mobile services
1997: Establishment of Telecom Regulatory Authority of India (TRAI)
1999: New National Telecom Policy (NTP) 1999
2003: Formation of Universal Service Obligation Fund (USOF)
2015: Launch of Digital India initiative
2018: National Digital Communications Policy (NDCP) 2018
2020: PM-WANI Scheme
2023: Telecommunication Act 2023
Recent developments:
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Government Initiatives in the Telecom Sector
1. Digital India
- Launch Date: July 1, 2015
Key Features
- High-speed broadband to all Gram Panchayats.
- Promote digital literacy and e-governance.
- Establish Common Service centers.
Achievements:
- Over 5 lakh km of optical fiber were laid.
- Increase in digital literacy through programmes like PMGDISHA (Pradhan Mantri Gramin Digital Saksharta Abhiyan).
- Example: Direct Benefit Transfer (DBC) scheme leveraging digital platform for subsidies.
2. BharatNet
- Launch Date: October 25, 2011
Key Features
- Optical fibre network: Connecting 2.5 lakh Gram Panchayats.
- Public-private partnership: Collaboration with the private sector for implementation.
- High-speed internet: Enabling rural connectivity.
Achievements:
- More than 1.5 lakh Gram Panchayats will be connected by 2021.
- Promote rural e-governance and digital inclusion.
- Wi-Fi hotspots and internet access in rural schools and healthcare centers.
3. National Digital Communications Policy (NDCP) 2018
- Launch Date: September 26, 2018
Key Features
- Broadband for All: Aims to provide universal broadband coverage.
- Spectrum Management: Efficient allocation and use of spectrum.
- Investment Incentive: Attracting $100 billion in investment in the sector.
Achievements
- Spectrum auction and connectivity enhancing reforms.
- 5G technology trials started.
- Enhanced mobile network coverage and quality across India.
4. Telecom Regulatory Reforms
- Launch Date: Ongoing (various reforms since 2015)
Key Features
- Transparent and efficient spectrum allocation.
- Simplified licensing and regulatory framework.
- Improved consumer grievance redressal mechanism.
Achievements
- Successful auctions raise significant revenues for the government.
- Competition and improved services for consumers.
- Example: Introduction of mobile number portability and reduction in call drop rates.
5. PM-WANI (Pradhan Mantri Wi-Fi Access Network Interface)
- Launch Date: December 9, 2020
Key Features
- Enable Public Data Offices (PDOs) to provide Wi-Fi services.
- No license fee: Encouraging small businesses to participate.
- Interoperable network: Seamless connectivity between different providers.
Achievements
- Promoted internet access in public places.
- Empower small businesses to provide internet services.
- Example: Increased internet usage in urban and rural public areas.
Challenges and Issues Facing the Telecom Sector in India
Financial Stress
- High debt levels: Many telecom companies are burdened with high debt.
- Payment of Adjusted Gross Revenue (AGR) dues.
- Example: Vodafone Idea is facing financial crisis due to high AGR dues.
Regulatory Challenges
- Frequent changes and uncertainty in regulatory policies.
- High cost of spectrum and stringent licensing conditions.
- Example: High spectrum prices cause financial stress on telecom companies.
Infrastructure Development
- Expanding telecom infrastructure in rural and remote areas.
- Delays and high costs in obtaining Right-of-Way permissions.
- Example: Initiatives to increase broadband connectivity in rural areas slowed down due to ROW issues.
Technological Upgradation
- There is a need for continuous investment in upgrading technology and networks.
- Challenges in internal operational processes of a nationwide rollout of 5G technology.
- Example: Delay in 5G trials and rollout due to financial and regulatory hurdles.
Market competition
- Intense competition leads to price wars and low-profit margins.
- Mergers and acquisitions reduce the number of companies in the market.
- Example: Entry of Reliance Jio led to significant disruption and consolidation in the market.
Way Forward
- Ensure timely and full utilisation of funds allocated under the Digital India Fund, to avoid underutilization issues faced by USOF.
- Prioritize projects aimed at improving telecom infrastructure in rural and remote areas to bridge the digital divide.
- Support research and development in telecom to encourage development and deployment of next-generation technologies.
- Facilitate greater participation of private telecom operators through incentives and risk-sharing mechanisms to enhance service delivery in under-served areas.
- Ensure supportive regulatory policies that facilitate the smooth implementation of DBN projects without bureaucratic hurdles.
- Align DBN initiatives with Sustainable Development Goals, particularly those related to industry, innovation, and infrastructure (SDG 9).
- Remain flexible and adaptive to incorporate emerging technologies such as 5G, IoT, and AI into DBN initiatives for future-proof solutions.