Utilization of USF Money: $840 Million Lying with Government to Fill Budgetary Deficits

Universal Service Fund in Pakistan has generated over US$ one billion (Rs. 100 billion) since its creation in 2006, however, just $160 million (or merely 16% of the total fund) were used for the purpose they were collected for, while remaining US$840 million is lying with the government un-used or say for no good use, revealed Parvez Iftikhar, former CEO of USF Pakistan, in a blogpost.

Status of USF Pakistan Funds (Approx)

USF_Pakistan

Universal Service Fund was created as per Telecom Act of Pakistan as a company that is suppose to ensure the availability of ICT services in un-served and under-served areas of Pakistan by subsidizing network roll-out and services.

USF is primarily funded by 1.5% of annual revenues of cellular companies and they have been paying this share since the fund was created in 2006.

However, after eight years of its creation, it is apparent that a huge chunk of fund remains un-utilized and instead the money is now lying with the government that it uses to fill its budgetary deficits.

Parvez Iftikhar, the most authoritative individual on USF in Pakistan who has actually helped several countries around the globe in setting up the USF fund, argues that efforts should be made to utilize such a huge fund (which is actually 0.3% of Pakistan’s 2013 GDP) in deploying ICT connectivity and services (real ICT services) in rural areas at a much faster pace.

“It is obligatory upon all of us to do our best to improve utilization of these funds as this still gives us the best chance to bridge that ever increasing digital divide – at least to an extent, if not fully”, said Parvez Iftikhar.

Interestingly, cellular companies have never voiced against the (ab)use of USF money, that is essentially funded by them. Instead they tend to remain silent on the matter and leave it to the government to decide the fate of several hundred million dollars.

Parvez Iftikhar, for the sake of argument, also discusses that there is not point of maintaining a fund if it is not used.

While referring to India, which recently slashed its USF levy from 5% to 3% of the annual adjusted gross revenues of telecom operators, Mr. Iftikhar said that Pakistan can either think of lowering the USF contributions from operator or simply stop collecting the USF levy until the previous fund is consumed properly.

“Since the USF collections are now being diverted to the Government (Federal Consolidated Fund), instead of helping the unserved areas.

Does that raise questions if the USF levy in Pakistan (a very reasonable 1.5%) should also be brought down further? Perhaps even discontinued for the time being?”

It is sad to see a USF evangelist like Parvez Iftikhar raising such questions. This shows that there is something seriously wrong with the utilization of USF fund and that the concerned authorities must pay the due attention to revive the work that USF is mandated to do.

Ironically, according to International Telecommunications Union (ITU), Pakistan remains one of the least connected countries and ranks 142nd on a global ICT index of 166 economies. This shows that how behind we are and how incompetent our authorities have become in combating our national deficiencies.

Tech reporter with over 10 years of experience, founder of ProPakistani.PK