Apart from the higher capital cost of providing telecom services in rural and remote areas, these areas also generate lower revenue due to lower population density, low income and lack of commercial activity. Thus normal market forces alone would not direct the telecom sector to adequately serve backward and rural areas. Keeping in mind the inadequacy of the market mechanism to serve rural and inaccessible areas on one hand and the importance of providing vital telecom connectivity on the other, most countries of the world have put in place policies to provide Universal Access and Universal Service to ICT.

The New Telecom Policy - 1999 (NTP'99) provided that the resources for meeting the Universal Service Obligation (USO) would be raised through a 'Universal Access Levy (UAL)', which would be a percentage of the revenue earned by the operators under various licenses. The Universal Service Support Policy came into effect from 01.04.2002. The Indian Telegraph (Amendment) Act, 2003 giving statutory status to the Digital Bharat Nidhi  (DBN) 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 and 2008), the Fund is to be utilized exclusively for meeting the Universal Service Obligation. 

In 1837, concept originated by Rowland Hill with his postal reforms, which included uniform rates across United Kingdom and prepayment by sender via postage stamps. Universal Service is a key objective of the Universal Postal Union.

By some accounts, the term Universal Service was first used by Theodore Vail, the President of AT & T. In the 1910 Annual Report of the company, he described. Universal Service by writing that, the telephone system should be universal, interdependent and intercommunicating, affording opportunity for any subscriber to any exchange to communicate with any other subscriber of any other exchange. In the more modern sense, Universal Service refers to having a phone and affordable phone service in every home. To be more legalistic, universal service means providing telecommunication service with access to a defined minimum service of specified quality to all users everywhere at an affordable price.

The Constitution of the International Telecommunication Union (ITU), Article 1(d), provides that one of the purposes of the Union is to promote the extension of the benefits of the new telecommunication technologies to all the world's inhabitants.

The precise parameters for Universal Service are usually set by national law or regulation, or may be contained in the license of the dominant operator.

The New Telecom Policy (NTP) 1999 of the 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 the development of telecommunication facilities in remote, hilly and tribal areas of the country The NTP 1999 provided that the resources for meeting the Digital Bharat Nidhi  (DBN) 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 DBN. Other service providers would also be encouraged to participate in DBN provision subject to technical feasibility and would be reimbursed from the DBN.

The Universal Service Support Policy came into effect on 01.04.2002. The guidelines for the universal service support policy were issued by DoT on 27th March 2002. The Indian Telegraph (Amendment) Act, 2003 giving statutory status to the Digital Bharat Nidhi (DBN) 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 Digital Bharat Nidhi.