The New Telecom Policy (NTP) 1999 of Department of Telecom, GoI had Universal Service as one of its main objectives, as reproduced below -
Strive to provide a balance between the provision of Universal Service to all uncovered areas, including the rural areas, and the provision of high-level services capable of meeting the needs of the country's economy and encourage development of telecommunication facilities in remote, hilly and tribal areas of the country The NTP 1999 provided that the resources for meeting the Universal Service Obligation (USO) were to be generated through a Universal Access Levy (UAL), at a prescribed percentage of the revenue earned by the telecom licensees to be decided in consultation with the Telecom Regulatory Authority of India (TRAI).
Further, NTP 1999 envisaged the implementation of USO Obligation for rural and remote areas would be undertaken by all fixed service providers who shall be reimbursed from the USOF. Other service providers would also be encouraged to participate in USO provision subject to technical feasibility and would be reimbursed from the USOF.
The Universal Service Support Policy came into effect from 01.04.2002. The guidelines for universal service support policy were issued by DoT on 27th March 2002.The Indian Telegraph (Amendment) Act, 2003 giving statutory status to the Universal Service Obligation Fund (USOF) was passed by both Houses of Parliament in December 2003.
The Rules for administration of the Fund known as Indian Telegraph (Amendment) Rules, 2004 were notified on 26.03.2004. As per the Indian Telegraph Act 1885 (as amended in 2003, 2006), the Fund is to be utilized exclusively for meeting the Universal Service Obligation.