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Despite the tremendous growth of mobile services in most developing countries, these have largely remained limited to urban areas. This has further aggravated the existing urban and rural divide. Policy makers and regulators perceive the need for an effective regulatory and policy environment to reduce the gap, as there are several market challenges in this endeavor, including low commercial viability. However, most such interventions have had little success. This paper outlines India's experience of increasing rural teledensity, including its recent policy initiative to increase penetration through creation of a Universal Service Obligation Fund (USOF) that supported a variety of innovative initiatives. USOF's most ambitious program to date had been the design and deployment of mobile services in rural areas.
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