Internet service providers may soon come under the universal service obligation (USO), thanks to the government's determination to increase the penetration of broadband in rural India.

This means that ISPs like Sify, Tulip and Worldphone may have to subsidise their broadband rates for rural India, reports the Economic Times. The government is in the process of considering a proposal to bring Value Added Service, (VAS) under USO.

However, if the proposal is accepted, ISPs and VAS providers who currently are exempted from the Universal Service Levy (USL) will, like telecom service providers, be required to pay five percent of their Adjusted Gross Revenue as USL.

The government aimed to have nine million broadband connections by 2007, but total connections on April 30th, 2008 were only 4.01 million, and the figures for rural areas were particularly low. To achieve its target of 20 million connections by the end of 2010, the government is contemplating several measures. Levying USL on ISPs is one of them.

Money raised from the USL will be used to subsidise BSNL’s broadband connections in rural India. But considering the “slow and steady” pace with which BSNL installs its connections, the government’s 2010 target could still be hard to achieve.

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Economic Times