Digital Bharat Nidhi: Department of Telecommunications Unveils New Rules

The Department of Telecommunications (DoT) announced the implementation of the first set of rules under the Telecommunication Act, 2023, on Saturday, establishing the framework for the Digital Bharat Nidhi (DBN). This new fund replaces the Universal Service Obligation Fund (USOF) and aims to enhance the delivery of telecom services in underserved areas across India.

Background and Transition from USOF to DBN

The Digital Bharat Nidhi was established under the Telecommunication Act, 2023, which received parliamentary approval and the President’s assent in December. The USOF, which was originally set up to provide telecom services in remote and rural regions through a universal access levy, has been renamed and restructured as the DBN.

The USOF was established through the Indian Telegraph Act of 1885, amended in December 2003 to grant it statutory status. The USOF’s role was to ensure affordable telecom services in less accessible areas. The DBN now takes over this mandate, reflecting the evolving landscape of telecommunications.

New Rules and Their Implementation

The draft rules for the DBN were released for public consultation on July 4, 2024, and the final notified rules are nearly identical to the draft, with only minor language adjustments. Sections 24 to 26 of the Act, which renamed the USOF as DBN and outlined its funding mechanisms, came into effect on June 26, 2024.

The new rules replace the old Indian Telegraph Rules of 1951 (rules 523 to 527) governing the USOF’s operation. However, the USOF’s previous arrangements will remain in place until their scheduled expiry.

Funding and Administration of DBN

According to Section 25 of the new rules, payments made to the DBN will first be credited to the Consolidated Fund of India. Subsequently, these funds will be allocated to the DBN by the central government, following parliamentary approval. The funds are earmarked for:

• Expanding telecom services in underserved rural, remote, and urban areas
• Supporting pilot projects and consultancy assistance for underserved regions
• Promoting research and development in telecommunications
• Facilitating the introduction of new telecom services, technologies, and products

Role and Appointment of DBN Administrator

The central government will appoint a DBN administrator through a gazette notification. This administrator will be responsible for selecting “DBN implementers” via bidding or applications. Implementers are entities with whom the administrator enters into agreements for executing projects funded by the DBN.

For telecom service access in underserved areas, implementers will be chosen through competitive bidding. For research and development, selections will be made based on proposals or expressions of interest, specifying technical criteria. In special cases, the administrator may nominate an implementer with the central government’s approval.

Operational Guidelines and Oversight

The rules mandate that DBN-funded implementers offer services in an “open and non-discriminatory” manner and adhere to instructions from the DBN administrator. The administrator will determine the funding modalities, which may include full or partial funding, co-funding, market risk mitigation, and risk capital.

The DBN administrator has the authority to formulate bidding procedures, eligibility criteria, and evaluation standards. They will also oversee the disbursement of funds and set terms and conditions related to the assets created through DBN funding.

A digital portal will be established by the DBN administrator to facilitate service provision, reporting, and monitoring of projects by DBN implementers and other stakeholders.

Monitoring and Evaluation

Much like the USOF administrator, the DBN administrator will have the authority to monitor, evaluate, and verify the work of DBN implementers. They will specify procedures and record-keeping requirements for the implementers and can engage consultants for planning, formulation, review, verification, monitoring, and impact assessment of schemes and projects.