In this policy paper we critically analyze the design and implementation of the subsidy mechanism for the expansion of rural telephony in India. The main focus of the paper is the Indian Universal Service Obligation (USO) for telecom.

Auctions should be an integral part of policy debate but creating a conducive environment implies ensuring clarity of objectives and transparency in policy making, understanding the issues of market structure and regulation that limit competition and enhancing the political process by making the general public aware of the issues at stake.