Universal Access to Broadband
and Service Programs
A Comparative Study
Antonio García Zaballos
Nathalia Foditsch
Inter-American Development Bank
Cataloging-in-Publication data provided by the
Inter-American Development Bank
Felipe Herrera Library
García Zaballos, Antonio.
Universal access to broadband and service programs: a comparative study / Antonio
García Zaballos, Nathalia Foditsch.
p. cm.
Includes bibliographic references.
978-1-59782-195-7 (Paperback)
978-1-59782-196-4 (PDF)
1. Telecommunication policy—Latin America. 2. Broadband communication systems—Government policy—Latin America. 3. Telecommunication—Government
policy—Latin America. 4. Broadband communication systems—Economic aspects—
Latin America. 5. Broadband communication systems—Social aspects—Latin America.
I. Foditsch, Nathalia. II. Inter-American Development Bank. Capital Markets and
Financial Institutions Division. III. Title.
HE7820.5.G37
IDB-BK-134
Publication Code: IDB-BK-134
JEL Codes: L1, L5, O1, O4, L96, L98
Keywords: universal service access, telecommunications, public policy, regulation,
infrastructure
The opinions expressed in this publication are those of the authors and do not
necessarily relect the views of the Inter-American Development Bank, its Board of
Directors, or the countries they represent.
The unauthorized commercial use of Bank documents is prohibited and may be
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Table of Contents
About the Authors and Contributing Organizations ..........................
v
Glossary of Terms ...................................................................................
vii
Foreword .................................................................................................
ix
Executive Summary ...............................................................................
xi
Introduction............................................................................................
xv
Key Deinitions..........................................................................................................................
xvi
The Beneits of Broadband UAS .........................................................................................
xviii
Structure of this Publication ................................................................................................
xxiii
n Chapter 1: Analysis of Reference Countries....................................
1
United States .............................................................................................................................
2
United Kingdom.......................................................................................................................
13
The Republic of Korea ............................................................................................................
21
India ..............................................................................................................................................
28
Lessons Learned.......................................................................................................................
36
n Chapter 2: Analysis of Asian and Latin American Countries .........
43
Costa Rica ...................................................................................................................................
43
Dominican Republic ...............................................................................................................
48
Chile ..............................................................................................................................................
54
Bolivia...........................................................................................................................................
59
Sri Lanka ......................................................................................................................................
64
Pakistan .......................................................................................................................................
69
Vietnam .......................................................................................................................................
77
Bangladesh ................................................................................................................................
86
Lessons Learned.......................................................................................................................
92
iii
iv
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
n Chapter 3: Conclusions and Recommendations ............................ 101
Policy and Regulatory Issues ...............................................................................................
101
Planning ......................................................................................................................................
111
Funding .......................................................................................................................................
115
Implementation .......................................................................................................................
117
Conclusions................................................................................................................................
122
References............................................................................................... 125
About the Authors
and Contributing Organizations
Antonio García Zaballos, Lead Telecommunications Specialist in the
Institutions for Development Sector at the Inter-American Development Bank
(IDB), has more than 15 years of experience in the telecom sector. Previously, at
Deloitte Spain, Antonio led the practice of regulation and strategy. He was also
the head of the Cabinet for Economic Studies of Regulation for Telefónica in
Spain and a deputy director of economic analysis and markets at the Spanish
Telecom Regulator. He holds a PhD in economics from the University Carlos III
of Madrid and is an associate professor of applied inance in telecommunications at the IE Business School in Madrid. Antonio is the author of several publications on the economic and regulatory aspects of the telecommunications
sector.
Nathalia Foditsch, Licensed Attorney, specializes in public policy and regulatory practice. Before working for the Broadband Special Program at the IDB,
Nathalia worked at the Brookings Institution, the World Bank, the Brazilian
Antitrust Authority, and various law irms. She holds master’s degrees in law
and public policy. Nathalia is currently a co-lecturer for the Brazil-U.S. Legal
and Judicial Studies Program at American University Washington College of
Law.
The Asian Development Bank’s (ADB) vision is an Asia and Paciic region
that is free of poverty. Its mission is to help the member countries that are in
the process of developing to reduce poverty and improve the livelihoods of
the people. Despite the region’s many successes, it represents two-thirds of
the world’s poor, with 1.8 billion people living on less than US$2 a day and 903
million struggling on less than US$1.25 a day. The ADB is committed to poverty
reduction through inclusive and sustainable economic and environmental
growth and regional integration. Based in Manila, the ADB has 67 shareholding
v
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
member countries, of which 48 are from the Asia and Paciic region. Its main instruments to assist developing members are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.
The Inter-American Development Bank (IDB) supports eforts by Latin
American and Caribbean countries to reduce poverty and inequality. It aims to
bring about development in a sustainable and environmentally friendly way.
The IDB is the largest source of development inancing for the Latin American
and Caribbean region, with a strong commitment to achieve measurable results, increased integrity, transparency, and accountability. It has an evolving
reform agenda that seeks to increase its development impact in the region.
The IDB provides loans, grants, and technical assistance, as well as develops
research. Its member include 48 shareholding countries, 26 of which are from
the Latin American and Caribbean region.
The authors would also like to recognize Charles Hurpy and John Krzywicki,
who produced the initial report for this publication, and Sarah Schineller, who
oversaw the editing and production of the inal product.
Glossary of Terms
ADSL (Asymmetric Digital Subscriber Line): A form of Digital Subscriber
Line technology, a data communications technology that enables faster data
transmission over copper telephone lines than that of a conventional voiceband modem. It accomplishes this by utilizing frequencies that are not used
by voice telephone calls.
Backbone: A local backbone refers to the main network lines that connect
several local area networks. The result is a wide-area network linked by a backbone connection. Internet backbones are huge data pipes (routes) that connect networks, countries, and even continents.
Bandwidth: The range of frequencies available to be occupied by signals. In
analogue systems, it is measured in terms of Hertz (Hz) and in digital systems,
in bits per second (bit/s). The higher the bandwidth, the greater the amount of
information that can be transmitted in a given time.
Digital dividend: The spectrum eiciency gain due to the switchover from analogue to digital in the frequency bands currently allocated to broadcasting.
Last mile: The inal leg of delivering connectivity from a communications provider to a customer.
Spectrum: The radio-frequency spectrum waves used as a transmission medium for cellular radio, radio paging, satellite communication, over-the-air
broadcasting, and other services.
VoIP: Any of a family of methodologies, communication protocols, and transmission technologies for delivery of voice communications and multimedia
sessions over Internet Protocol (IP) networks, such as the Internet.
vii
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
WiMAX: Fixed wireless standard IEEE 802.16 that allows for long-range wireless communication at 70 Mbps over 50 kms. It can be used as a backbone
Internet connection to rural areas.
Source: United Nations (2011).
Foreword
We are currently experiencing one of the greatest transformations of our
economy and social life—the Digital Economy Transformation—and broadband has emerged as the true backbone of this transformation. As governments all around the world become aware of this reality, they are introducing
broadband in their economic development agenda as a lagship element to
ensure that all of their citizens are included in the digital revolution, with the
goal of bridging the existing social divide in regards to digital access.
However, in the Latin American and Caribbean (LAC) region, it is possible
to identify diferent types of digital divides, such as (i) between the LAC countries and other regions of the world, (ii) within the LAC countries, and (iii) between the geographic areas and economic levels of households in any speciic
country. In addition, these divides take diferent dimensions depending on access, quality, price, use, and speed. In fact, the proactive policies that could be
implemented on a public and/or private level may vary according to the combinations of the diferent factors mentioned above, and they should take into
account the maturity of the broadband market as it relates to the these factors.
The telecom sector is no longer just a private sector; there is a need for
an active role on the part of governments to reduce not only the digital divide but, in so doing, also reduce the social divide. It seems that the region is
at a crossroads; failure to act efectively could result in even larger connectivity
gaps with spillover efects that could increase the social divide, or efective action that increases connectivity could decrease the social divide.
The sum of the beneits that broadband can bring to the economy is
leading many governments to announce signiicant broadband development
programs to take advantage of the new and diferent technologies that are
available. These programs include improvements in the delivery and accessibility of education and training; promotion of equality and inclusion of rural
or disadvantaged communities; support to civil disaster relief; remote medical
assistance (known as “telemedicine”); and increased competition, social cohesion, and interaction.
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
To achieve the goals of universality and afordability in broadband, it is essential for stakeholders in both the private and public sectors to cooperate;
this is important because broadband is a highly capital intensive sector that
is subject to public regulation. It is equally important to attract private and
public capital, which will require innovative inancing solutions. As we witness
the Digital Economy Transformation, this publication arrives at an opportune
time. We must address the issue of strategic regulation and inance of broadband collectively and promptly, as the universality of access to digital technologies is critical to the achievement of sustainable development goals.
Antonio García Zaballos
Lead Telecommunications Specialist
Institutions for Development Sector
Executive Summary
Broadband is key to inclusive growth. It contributes substantially to social and
economic development in areas such as job creation, business investment,
online services (e.g., e-health and e-learning), among others. Many countries
now recognize the need to ensure that the beneits of broadband are not only
enjoyed by a fraction of the population; rather that everyone should enjoy
them. For this reason, universal access and service (UAS) broadband programs
have been speciically developed to meet the needs of people in urban and
remote areas.
Several countries have initiated substantial reforms of their telecommunications framework in order to advance broadband towards universal usage.
Broadband is now, for example, the centerpiece of the national information and communication technology (ICT) development plans of the United
Kingdom and the United States, where considerable eforts are being made
to transform the existing Universal Service Funds (USF) and to support the investments that are being made by the private sector (e.g., public–private partnerships (PPP) and stimulus packages). Similarly, in India, broadband is at the
heart of a much broader economic development strategy and is one of the pillars of India’s UAS program. South Korea is the most outstanding example of
national policy driving higher levels of penetration and usage throughout the
economy.
Countries in Asia and the Latin American and Caribbean (LAC) regions,
which are subject to greater inancial constraint and less favorable socioeconomic conditions, have been following diferent approaches. Most UAS policies are generally more nascent, relecting the need for objectives, strategies,
and capital investment. In particular, these countries are prone to the numerous barriers that prevent the supply of and demand for UAS broadband.
These challenges will require greater political commitment to and a higher priority for broadband initiatives and relevant strategies that are well planned
and comprehensive. Table 1 summarizes the challenges that are faced in the
development of UAS broadband; it also provides examples of strategies that
can be implemented to successfully overcome these challenges.
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
TABLE 1: Challenges to the Development of Universal Broadband Access
and the Strategies to Overcome Them
Challenges
Demand side
Strategies
• Low level of purchasing power and • Subsidies for service fees or
relatively high service prices
• Low level of education, especially
regarding ICT skills
• Limited availability of (and high
equipment purchases
• Mandated discounts for certain
classes of end users
• Reduced taxation for broadband-
taxes on) consumer electronic
related services and equipment
equipment
• ICT training (in schools, institutes,
• Limited availability of relevant local etc.)
content
• Public telecenters
Supply side
• Limited inancial resources
• Limited in-country infrastructure,
especially national iber optic
networks, and limited or very
expensive infrastructure for
international connectivity
• Limited amount of spectrum
available for wireless broadband
• Inadequate coverage of wireless
broadband networks
• Limited prospects for economic
growth
• Levies on operators to inance USFs
• Additional sources of funding (e.g.,
from international institutions)
• Grants to build infrastructure,
mandatory infrastructure sharing
• Prioritization of development
programs based on strict criteria
• Roll out of public WiFi in public
spaces
• Spectrum refarming
Source: Authors’ elaboration.
Analysis of these UAS strategies suggests that there are a number of best
practices available, such as the following:
i.
ii.
Policy and regulation: The full beneits of broadband should be recognized and its development should be holistic; the role of broadband USFs
as an economic development tool and catalyst for social inclusion must
be fully acknowledged; UAS policies should be designed in collaboration
with relevant stakeholders; UAS policies should have a clear vision, as well
as ambitious but achievable objectives; lexible or demand-based service provisions (as opposed to mandatory Universal Service Obligations
[USOs]) should be used to obtain broadband UAS policy objectives.
Planning: A thorough gap analysis is required to understand the focus of
UAS; the governance structure of the USF should be adapted to the local
context to ensure that there is full viability, integration, coordination, and
that the checks and balances are in place; and the sustainability of UAS
projects is critical.
ExECUTIVE SUMMARY
iii. Funding: The source of funding should be adapted to the strategic vision
of the UAS policy and the enabling environment; the level of spending
should be signiicant in order to bring the best results; and the requirements for USF spending should be fair and transparent.
iv. Implementation: Cooperation between the public and private sectors is
essential (e.g., PPPs); UAS programs must address the supply side, as well
as the demand side, with some degree of lexibility; and implementation
requires centralized control to monitor progress.
The Asian Development Bank (ADB) and the Inter-American Development
Bank (IDB) are well placed to provide strategic and inancial support to countries in Asia and the LAC region that are willing to embark on this path.
Box 1: Broadband and the IDB
In 2013, the IDB launched a Broadband Special Program. This is an initiative established to assist in accelerating broadband development in the LAC region. The program is based on three strategic areas that deine the approach to be taken by the IDB
in the LAC region with regard to broadband:
i.
ii.
iii.
Develop public policy and governance models to ensure leadership in the design and implementation of broadband strategies.
Develop strategic regulation conducive to efective and sustainable competition, while providing an enabling environment for investment.
Strengthen the capacity of the various institutions involved to achieve the goals
of universal access, adoption, and use of broadband services.
The expected impacts of the program are related to the access, adoption, and
use of broadband. Various projects are already being implemented, such as those
relating to national broadband plans, regulatory reform, broadband maps, and deployment of backbones. The IDB is fully equipped to provide technical and inancial
support to countries that are willing to develop their respective broadband market to
achieve universality.
xiii
Introduction
As the world becomes increasingly dependent on information and communication technology (ICT), access to broadband services is becoming recognized
as essential to economic growth. Access also contributes to social inclusion
through a wide range of services that can be ofered. There is a growing push by
countries to ensure that the beneits that can be drawn from ICT can be made
available to not only businesses, but also to unserved and underserved populations. This can be done by adopting universal access and service (UAS) policies,
which are attracting growing attention in developing countries in their eforts
to develop broadband access to promote growth and social inclusion.
There are, however, many challenges that developing countries face in
their attempt to expand broadband programs on a national scale. These include, in particular, a lack of knowledge, skills, and political commitment to
holistically develop the necessary policies and strategies and, often, a lack of
resources. This book relects the indings of a study, undertaken by Analysys
Mason, on behalf of the IDB and ADB.1 The aim of the study is to share international best practices with the countries of the LAC region so that they can
apply this knowledge to their own speciic needs in their aim to develop universal access to broadband services.
Deinitions for several concepts used throughout this publication are included below. These are followed by a summary of the beneits ofered by UAS
programs and a description of the methodology used in the study. This introductory section will end with an overview of the book’s structure.
This study was commissioned in order to gather knowledge and best practices on UAS
policies and programs and to propose a framework to address basic universal broadband policies and services. It compares what has been done in India, the Republic of
Korea, the United Kingdom, and the United States with the progress of countries in Asia
and Latin America. The observations that are included in this publication are intended
to assist countries in understanding some of the key challenges and opportunities.
These recommendations will assist in creating, improving, and better managing the
policies that are necessary to achieve the goal of universal broadband service.
1
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
Key Deinitions
The concept of UAS encompasses two distinct notions: universal access and
universal service. As deined by the International Telecommunications Union
(ITU), universal access is
(…) when everyone can access the service somewhere, at a public place, [and
is] thus also called public, community or shared access while universal service
is the situation when every individual or household can have service, using it
privately, either at home, or increasingly carried with the individual through
wireless devices (ITU, 2012a).
Previously, developing countries mainly focused on universal access;
the development of mobile technologies, in particular, now enables them
to set realistic universal service objectives. Many countries have plans to develop broadband. Their objectives not only include universal access; they
also include universal services for telephony, (transmission of speech). This
report will use the generic notion of UAS, which includes both.
In general, UAS policies are those that deine the regulatory framework
for access and services. They cover issues speciically related to UAS within
a broader ICT regulatory framework context that might include a national
broadband strategy. UAS policies, in general, cover the following key areas:
i.
Services that are included within the scope of UAS and their deinition
(e.g., voice telephony, broadband).
ii. Vision of UAS, with a focus on the population groups that should be targeted (e.g., rural population, poor households, and disabled people).
iii. Entities that will oversee the implementation of the UAS policies (e.g., governance structure).
iv. Targets set for the services and the population groups that are included in
the UAS scope, with a deined time frame for achievement.
v. Approach to be used and the strategies to be employed to achieve UAS
targets (e.g., planning and implementation).
vi. Required funding, source of funding, and disbursement methods. Funds
are typically transferred to a USF.
Universal access and service policies include investment plans, referred
to as UAS programs, which include details for inancing and implementation.
Projects are designed under the umbrella of programs and typically include
the following:
INTRODUCTION
i.
ii.
Amount of inancial resources to be used.
Type (or a comprehensive list) of projects and their costs (e.g., demand
stimulation projects or supply projects).
iii. Entities responsible for implementing UAS projects or the method used to
select those entities.
iv. Monitoring of activities.
Finally, policymakers use the deinition of broadband service, in general,
to deine their vision and establish their UAS objectives. Broadband services
can include various investment options for the communications industry and
diferent levels of service for the end user. In developed countries, broadband
Internet access is not deined by the transmission technology used (ADSL,
cable, satellite, wireless, etc.). Instead, it is used as a general term and covers
all the technical capabilities of broadband service, which include transmission
speed (as well as the symmetric network of wave speeds), contention ratio, latency, jitter, and resilience. On the other hand, narrowband Internet access, in
general, refers to a service that does not qualify as broadband. Examples include dial-up Internet and “general packet radio service” (GPRS). Each of these
factors (especially speed, in addition to other measures of quality, such as symmetry and latency) are critical to broadband users and are based on their individual needs.
The most common network metric that is used to distinguish between
narrowband and broadband services is the transmission download speed,
which has a wide range of thresholds. The United Kingdom, for example, has
set its universal availability target at 2 Mbit/s (megabits per second) in 2010,
the United States at 4Mbit/s in 2010, and the Republic of Korea at 1Mbit/s in
2008, while Sri Lanka set it at only 128kbit/s (kilobits per second) in 2009.
The Broadband Commission of the International Telecommunications Union
(ITU) does not deine broadband in terms of speciic speeds in recognition of
the diverse deinitions in diferent countries. Rather, it “views broadband as
a cluster of concepts: always-on; high capacity connectivity enabling combined provision of multiple services simultaneously” (ITU, 2013).2 This shows
that there is a lack of homogeneity between the reference countries and developing countries.
2 See http://ict-industry-reports.com/wp-content/uploads/sites/4/2013/09/2013-GlobalState-of-Broadband-ITU-Sept-2013.pdf
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
The Beneits of Broadband UAS
There are a number of reasons why governments and their broadband network agencies may consider supporting UAS in an efort to reduce the digital
divide and improve access to the unserved and underserved in urban and rural
areas. These relate, primarily, to the socioeconomic beneits that can result
from UAS, such as economic growth and job creation; stronger community
networks; regional development; and increased competition and investment.
Supporting Economic Development in Unserved and Underserved
Areas
Broadband UAS can beneit consumers and businesses. A number of academic studies indicate the direct link between broadband penetration and
economic growth. A recent study undertaken for the IDB reveals that in the
LAC region, a 10 percent greater broadband penetration, on average, relates
to a 3.19 percent increase in gross domestic product (GDP), a 2.61 percent increase in productivity, and 67,016 new jobs (García Zaballos and López-Rivas,
2012). The multiplier efect on GDP, productivity, and employment increases as
the penetration rate increases. Generally, UAS policies can channel these economic beneits to particular areas (e.g., rural areas) or to speciic populations
(e.g., poor households) that would otherwise be deprived of the beneits of
broadband due to the digital divide.
Minimizing the Digital Divide
One of the principal objectives of broadband UAS is to minimize the digital divide
between urban and rural areas and between aluent and poor areas, referred to
as the distributional objective. This will ensure that all regions within a country
can enjoy similar levels of digital connectivity. Most UAS policies in emerging and
developed markets should include this as one of the main goals, given that a digital divide can result in a poor economy that will discourage private investment
from regional commercial operators. This includes the following:
i.
ii.
Geographic characteristics that make for diicult access, such as mountainous terrain or sparse populations.
Low-income levels that will likely reduce the demand for more expensive
(and newer) services. In emerging markets, this factor may even inhibit the
uptake of basic telecommunication services. Public investment in broadband networks in these areas, therefore, is likely to have the most impact.
INTRODUCTION
Improving Social Inclusion
Policies that solely focus on the supply side will not create a sustainable broadband ecosystem. Demand for broadband is closely linked to socioeconomic
beneits and access to it will relect on (i) education; (ii) health; (iii) participation
in policymaking; (iv) work environment; (v) consumption; (vi) family and community; and (vii) innovation (University of Siegen, 2010).
i.
Education: Internet is becoming increasingly important for knowledge
and learning. It is cost-efective, enables new forms of learning outside
the school environment, and allows for an interactive learning process.
Students from remote areas who can access learning online for their education can be considered as part of the policy objectives for social
inclusion.
ii. Health: One of the key social beneits that the Internet ofers is increased
access to quality and afordable health services. Telemedicine is a wellknown example and its beneits create opportunities for people to share
information on their speciic conditions. It also provides access to products and specialized services that were not previously accessible, making
health decisions easier. The use of such broadband applications in rural
areas has provided an incentive for new policies.
iii. Participation in policymaking: Universal access and service promotes an
informed citizenship, leading to increased social engagement with regard
to the challenges society faces. E-government services have improved the
linkages between government and citizens and digital participation has
the potential to promote cost-efective and rapid public engagement.
iv. Work environment: Reliance on ICT at work is so high that it blurs the concept of how the work environment functioned prior to ICT. In general, ICT
has reduced the costs for business and government, as well as decreased
asymmetric costs. It has promoted opportunities for peer and online collaboration, such as telecommuting, by overcoming geographic barriers.
v. Consumption: Broadband has spurred the increase in goods and services
and allowed the development of new business models. Overall access to
information allows for price comparisons, making markets more competitive. It has reduced information asymmetries, which has resulted in more
conscious purchase decisions.
vi. Family and community: The use of the Internet goes hand in hand with the
use of social networks, which have become a prominent medium through
which to communicate with friends and family. In addition, online community spaces are now available to people seeking those with similar interests.
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
vii. Innovation: With people connecting in unprecedented ways, broadband
has encouraged innovation. New concepts have been created, such as
peer collaboration, crowd-funding, multiple applications, and new business models. Industries that depend on the generation and sharing of
knowledge and information are known as creative economies and creative industries.3
Stimulating the Demand for Broadband
Governments have a role in promoting the beneits of UAS in order to stimulate demand, an important factor when formulating policies. This, however,
is frequently underestimated. The examples below demonstrate how governments can efectively motivate the use of broadband by promoting its value
and cost-efectiveness.
i.
ii.
Promotion and usage of e-governance
E-governance refers to the use of ICT in government transparency. In their
move to promote and improve transparency, governments are recognizing the need for broadband and are striving to encourage usage. The
e-Sri Lanka initiative, for example, recommends the use of ICT within government through the introduction of e-government into its key processes.
The Lanka Gate program that is integrated within the e-Sri Lanka platform
provides a wide range of dynamic and accessible citizen-centric services.4
Stimulation for the creation of national digital content
Digital content relates to digital data, which has been increasing profusely
in parallel with the increase in Internet usage. As has been experienced in
the Republic of Korea, digital content can bolster the demand for broadband and, thus, encourage the development of local content. The Korea
Creative Content Agency (KOCCA)5 was established in 2009 to support the
creation of local content, such as games, cartoons, music, animation, and
broadcasting. The agency mainly supports the following: production of
local content; international expansion of projects; content production that
See the website of John Howkins, The Creative Economy, at http://www.creativeeconomy.
com.
4 For more information on the Lanka Gate Initiative, see http://www.icta.lk/index.php/
en/programmes/re-engineering-government/131-main-projects/556-the-lankagate-initiative.
5 For information on the Korea Creative Content Agency, see http://eng.kocca.kr.
3
INTRODUCTION
its the convergence of the media environment; development of human
resources; and creation and management of infrastructure. One example
of KOCCA’s successes is that it has contributed to the overseas momentum
gained by the K-Pop musical genre.
Incentives to Stimulate the Use of Broadband Devices and Services
Various direct and indirect programs can spur broadband interest, one of
which is a connection voucher, a program that has been implemented in the
United Kingdom. This has helped small- and medium-size enterprises (SMEs) in
22 cities across the United Kingdom to be super-connected. SMEs will be able
to use up to £3,000 toward the cost of equipment installation.6
Relative Status of Broadband in Developed and Developing Countries
A brief comparison of the overall experience regarding broadband in developed countries will be made against that in developing countries, based on
the latest ITU data relating to 2011. Table 2 shows the signiicant diferences.
The igures below are predictable, since developed countries have long
understood the beneits of broadband and have acted accordingly. While the
developing world more or less has caught up in terms of narrowband mobile
subscriptions, it woefully lags behind with regard to broadband ixed-line and
TABLE 2: Penetration Indicators for Telephony, Broadband, and PCs in
Developing and Developed Countries
Fixed
Fixed
Mobile
Households
telephone
Mobile
broadband
broadband
with a
subscriptions subscriptions subscriptions subscriptions computer
per 100
per 100
per 100
per 100
per 100
Developed
countries
41.6
128.2
27.2
74.8
75.5
Developing
countries
11.1
89.4
6.1
19.8
27.6
Source: ITU database.
For more information on the SME voucher program in the United Kingdom, see
https://www.gov.uk/government/news/100m-broadband-funding-boost-for-smallbusinesses-in-22-cities.
6
xxi
xxii
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
FIGURE 1: Geographical Distribution of Mobile Subscribers, 2000–11 (in percent)
100
90
80
70
60
50
30
40
20
10
0
2000
2001
2002
2003
2004
United States and Canada
2005
2006
Europe
2007
Asia
2008
2009
2010
Latin America
2011
2011
(pop.)
Africa
Source: Databases of Wireless Intelligence and ITU.
mobile plans. This is due to various factors, the most important of which is
that developing countries are, by deinition, more resource constrained. Their
poorly developed infrastructures—especially with regard to ixed telephony
networks—have not been conducive to the development of broadband accessibility. Over the period of a decade, however, there has been a move by
developing regions to catch up to those that are developed, particularly with
regard to narrowband mobile penetration (see Figure 1).
The above igure indicates that in 2001, Canada, Europe, and the United
States accounted for 52 percent of the world’s mobile subscribers, while Africa,
Asia (including developing and developed countries), and the LAC region (developing and emerging countries) represented 48 percent. While Canada, the
EU, and the United States, however, represented approximately 15 percent of
the world’s population in 2000, combined they represented approximately
three times the number of global mobile subscribers. In 2011, nevertheless,
these three areas had only 1.5 times the number, with Africa, Asia, and the LAC
region making up 85 percent of subscribers.
During the next decade, this evolution is expected to continue, although
only in terms of broadband. The developed world currently has a signiicant
lead in the number of broadband subscribers (Figure 1) and the developing
world has begun eforts to catch up. This study reviews the role of UAS programs in order to establish what approaches will be the most efective in
closing the gap.
INTRODUCTION
Structure of this Publication
Chapter 1 analyzes the UAS policies that have been implemented in four countries: the United States, the United Kingdom, the Republic of Korea, and India.
The irst three countries represent developed countries with mature, state-ofthe-art UAS policies in place; the last country, India, is a developing country
that has made substantial progress in developing its UAS delivery framework.
For each country, there is an overview of the previous and current UAS programs that have been implemented and how they it together (e.g., ICT development and geographic constraints). This is followed by a two-fold analysis
of the UAS policies (regulatory framework) and programs (investment, with a
focus on planning and implementation issues). This will constitute the key lessons that will be relevant to developing countries in the Asian and LAC regions.
Chapter 2 provides an analysis of the UAS policies that have been implemented in eight selected countries in Asia (Bangladesh, Pakistan, Sri Lanka,
and Vietnam) and Latin America (Bolivia, Chile, Costa Rica, the Dominican
Republic). This follows the same approach used for the four reference countries, but will include governance issues (e.g., integration, coordination, visibility, and checks and balances) in detail, as well as speciic projects relating
to UAS. From this analysis, key indings and lessons will be drawn. Finally,
Chapter 3 summarizes the recommendations and provides a generic set of
best practices to address issues relating to UAS.
xxiii
CHAPTER 1
Analysis of Reference Countries
Overview
The following is an overview of the UAS programs that have been implemented in the four reference countries: the United States, United Kingdom,
Republic of Korea, and India.
United States: Universal access and service (UAS) has been a key policy issue
in the United States for the past few years. As such, the country has adopted
comprehensive reforms of its USF to accelerate broadband distribution. The
Federal Communications Commission (FCC) noted that providing UAS broadband is “the universal service challenge of our time.”1 The U.S. government
has put in place a broadband stimulus package with signiicant funding from
a combination of large one-of investments and yearly subsidies to operators.
The United States has encouraged the private sector to play a leading role in
extending broadband networks to areas that are unserved.
United Kingdom: Like the United States, the UK government views the development of broadband—especially superfast broadband—as a key priority. It acknowledges the considerable economic and social beneits that it
can provide. While broadband access and usage are already well developed
in the country, the UK government has unfolded a very comprehensive and
bold national broadband plan with signiicant inancial resources and a strong
commitment from local authorities to implement well-designed programs.
See http://www.fcc.gov/document/fcc-releases-connect-america-fund-order-reformsusicc-broadband.
1
1
2
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
Broadband is not within the scope of USO that British Telecom (BT) is subject to
as an incumbent operator; BT, however, has endorsed the nationwide broadband roll-out objectives and has committed large investments to complement
public eforts. In general, Internet Service Providers (ISPs) are encouraged to
make a universal service commitment, representing their obligations to citizens with regard to universal broadband access. There are, however, no legally
binding broadband USOs.
Republic of Korea: The government of the Republic of Korea has had more
inluence on the telecom sector than have the UK and U.S. governments. In
particular, it has developed inclusive master plans that afect the country’s
telecom industry at various levels, including research, infrastructure, competition, industry structure, user awareness, and ICT education. The government
of the Republic of Korea has succeeded in stimulating supply and demand by
implementing lexible policies, adapting well to rapidly evolving technologies and markets, addressing potential market failures, and ensuring fair competition. More importantly, while it has long held the view that information
and technology (IT) and telecommunications are key to the economy, it has
(with the exception of some direct investment, limited subsidies, and loans)
depended on the private sector to fund network rollouts.
India: The drive to facilitate widespread broadband access is a high priority
on India’s national agenda. The National Telecom Policy (NTP, 2012)2 recognizes
the importance of broadband access as a basic need, on a par with education
and healthcare. The cost of deploying iber optic connectivity to the last mile
and that of customer premises equipment remain a bottleneck in achieving
the objective of providing access to households. In contrast to the other three
reference countries, each of which has an extensive ixed broadband service
network infrastructure and larger economies, India’s mobile technology, which
has boomed in the past decade, is a key to increasing the adoption of broadband. The rollout of its mobile infrastructure has been inanced mainly by the
private sector, although subsidies have been provided through the USF.
United States
The economic and social beneits of broadband connectivity and innovation
are widely acknowledged by diferent stakeholders within the United States,
2
Available at http://www.dot.gov.in/sites/default/iles/NTP-06.06.2012-inal.pdf.
ANALYSIS OF REFERENCE COUNTRIES
TABLE 1.1: Macroeconomic and Broadband Indicators for the United States
Indicator
Year
Unit
Value
Population
2012
Million
316
Land area
—
Million hectares
915
Urbanization rate
2012
%
83
GDP per capita at purchasing power parity
2012
USD
51,749
Fixed broadband penetration per capita
2012
%
28.0
Mobile (active) broadband subscribers per capita
2012
%
74.7
Percent of individuals using the Internet
2012
%
81
ITU ICT development rank
2012
#
17 (/157)
Sources: Databases of the Central Intelligence Agency, ITU, FCC, and World Bank.
which is a pioneer with regard to the Internet and takes the lead in this area.
The United States, through its large USF and the implementation of dedicated
programs for UAS, has an extensive ixed telephone network, which has had
strong public sector support, particularly in rural areas. In terms of broadband,
the United States is the second largest ixed broadband market in the world,
behind China. Table 1.1 summarizes the main macroeconomic and broadband
indicators for the United States.
While major operators such as AT&T, Verizon, and Comcast dominate the
Internet landscape, rural areas account for a multitude of small operators. It is
seldom the case that more than two landline operators cover the same area;
rather, it is usual to have a telephone and a cable television irm. There are,
however, major gaps in uptake, as approximately 18.8 million households in
rural areas remain without access to broadband.3
Overview of UAS Programs
The United States introduced universal service objectives in its telecom policy
as early as the 1930s. Initially, the focus of universal policy was on voice services, but there was a partial shift to broadband with the enactment of the
Telecommunications Act of 1996, which deined the structure and mechanisms of the current universal service. Table 1.2 provides an overview of the
UAS programs in the United States, which are discussed in more detail.
Today, universal service is addressed through four distinct programs,
which represented a total disbursement of US$8.10 billion in 2011:
See http://www.connectednation.org/sites/default/iles/bb_pp/connected_nation_usf_update_2012_04_27.pdf.
3
3
4
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
TABLE 1.2: Summary of Key Characteristics of UAS Programs in
the United States
Characteristic
Overview
Description
• The USF covers four programs that include provision of broadband
(High Cost, Lifeline, Schools and Libraries, and Rural Health Care
programs).
• The Connect America Fund (CAF) and the Mobility Fund are one-of
investment programs, followed by yearly investments which will replace
the High Cost component of the USF.
• The Broadband Initiatives Program (BIP) and the Broadband Technology
Opportunities Program (BTOP) are one-of investments in rural areas.
Broadband
deinition
• 4Mbit/s download and 1Mbit/s upload (in the 2010 National Broadband
Regulatory
framework
• The Communications Act of1934 introduced a USF for voice
Plan) with acceptable quality of service for interactive applications.
transmission.
• The Communications Act of 1996 restructured the USF and included
broadband.
• The American Recovery and Reinvestment Act, which was ratiied in
2009, created ad hoc development funds (BIP and BTOP).
• The 2010 National Broadband Plan set speciic goals for broadband and
initiated the transition of the USF to the CAF and Mobility Fund.
Planning
• The National Telecommunications Information Administration (NTIA) is
the principal advisor on telecom policies.
• The FCC oversees the use of the CAF.
• The Universal Service Administrative Company (USAC) oversees the four
universal service programs.
• The Rural Utilities Service (RUS) is in charge of awarding projects under
the BIP.
Funding
• The USF is inanced via a levy on operators’ revenues.
• The CAF and Mobility Fund Phase I (one-of investments) are funded
from the U.S. government budget.
Implementation
• The CAF and Mobility Fund Phase II will be inanced via the USF.
• The BIP and the BTOP are funded from the U.S. government budget.
• Rural carriers are compensated for the cost of service provision by the
High Cost component of the USF.
• CAF Phase I projects are implemented via PPPs.
• The Phase I Mobility Funds have been allocated via a reverse auction
(where the bid that requests the lowest amount of subsidy wins the
contract).
Source: Authors’ elaboration.
i.
ii.
High Cost Program (US$4.03 billion in 2011): ensures that rural and urban
consumers pay comparable rates for telecom services. In 2011, over 1,900
carriers received subsidies through this program.
Low-Income Program (US$1.75 billion in 2011): helps low-income consumers to have telephone service by ofering them a discount on service
costs. Over 13.7 million households beneited from the program in 2011.
ANALYSIS OF REFERENCE COUNTRIES
iii. Rural Health Care Program (US$81.5 million in 2011): provides reduced
rates to rural healthcare providers for telecom and Internet services. Over
3,000 healthcare providers received support from this program in 2011.
iv. Schools and Libraries Program (US$2.23 billion in 2011): ofers discounts
on telecom and Internet services to schools and libraries. Over 21,000
schools and libraries beneited from this program in 2011.
In 2010, the U.S. government unveiled its National Broadband Plan. The
plan aims to improve broadband access across the United States and includes
speciic goals related to UAS. The Plan states that
(…) every American should have afordable access to robust broadband service, and the means and skills to subscribe if they so choose, and that every
American community should have afordable access to at least 1 gigabit per
second broadband service to anchor institutions such as schools, hospitals,
and government buildings.4
The National Broadband Plan initiated the creation of the Connect
America Fund (CAF) and the Mobility Fund in order to shift resources from the
High Cost Program component of the current USF. This allowed for these funds
Box 1.1: Beneits of Broadband Access
The FCC highlights the following beneits of broadband access to consumers:a
i.
Americans living in unserved rural areas who will receive access to broadband
over the next decade: 18 million.
ii. Consumers who will get mobile broadband coverage where they live, work, and
travel: multiple millions.
iii. Jobs created related to new deployment in rural areas over ive years: 500,000.
iv. Annual economic beneits in rural areas from new deployment: US$700 million.
v. Annual increase in economic growth, creating jobs: US$50 billion.
vi. Beneit to cost ratio for consumers: US$3 to US$1.
vii. Percentage of FORTUNE 500 companies that post job openings online
only—and require online applications: over 80 percent.
viii. Graduation rates for students with broadband at home compared to similar students with no broadband access: 6 to 8 percent higher.
a
4
See http://www.fcc.gov/encyclopedia/connecting-america.
See http://www.broadband.gov/plan/goals-action-items.html.
5
6
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
to focus on broadband services. The CAF has a budget of up to US$4.5 billion
per year to connect 7 million unserved rural residents to broadband within six
years and, ultimately, 19 million by 2020. The Mobility Fund amounts to approximately US$500 million per year to inance the installation of 3G mobile
wireless services in unserved areas. In Phase 1, these two programs take the
form of one-of investments, which were allocated in 2012. Both of these programs will provide inancing on a yearly basis in Phase 2 through mechanisms
that have not yet been disclosed. These programs are described in more detail later in this section.
The American Recovery and Reinvestment Act of 2009 also provided a
one-of stimulus package of US$7.2 billion to two separate agencies to expand
broadband access and adoption in communities across the United States.
i.
ii.
The Department of Commerce’s National Telecommunications Information
Administration (NTIA) was allocated US$4.7 billion to fund the Broadband
Technology Opportunities Program (BTOP), which aims to: (a) promote
broadband adoption, especially among vulnerable population groups
(sustainable broadband adoption); (b) construct broadband networks and
deploy public safety wireless broadband networks (comprehensive community infrastructure); and (c) provide access to broadband, computer
equipment, computer training, job training, and educational resources to
the public and vulnerable populations (public computer centers).
The Department of Agriculture’s Rural Utilities Service (RUS) was allocated
US$3.5 billion to make loans and grants for broadband infrastructure projects speciically in rural areas via its Broadband Initiatives Program (BIP).
The RUS used most of the US$3.5 billion to provide loans where the parties receiving the funds had to contribute some of their own money (typically 20 percent). Unlike grants, the loans have to be repaid; the repaid
amounts can then be loaned again. Thus the total impact of the RUS program is likely to be far in excess of the US$3.5 billion of funding that was
originally allocated.
It should be noted that the BTOP awarded grants to a range of projects,
principally in rural areas. More importantly, it is interesting to note that neither
of the two large national operators—AT&T and Verizon—has applied for any of
these grants. Furthermore, while some regional carriers did apply for a grant,
most of them did not, and most of the entities that secured a grant were startups or other organizations with community ties and not necessarily telecom
operators.
ANALYSIS OF REFERENCE COUNTRIES
Other programs include, for instance, the Connect to Compete program.
This is a nationwide, private, and nonproit partnership that was created to
increase broadband adoption and digital literacy training in disadvantaged
communities.
Lastly, Connected Nation is an organization that facilitates PPPs to
(…) increase access to and use of broadband and related technology, creating
dramatic results that translate into economic and community development,
better education, higher quality healthcare, more eicient public service and
improved quality of life.5
Connected Nation provides diferent broadband-related services to communities and states, including digital literacy (broadband awareness, technology training, and computer ownership) to targeted populations; research
and analysis (in order to gather data on supply and demand conditions); and
policy consultation (supporting broadband planning activities). The organization also identiies and maps areas unserved by broadband services in order
to identify demand-stimulation programs designed to increase broadband
adoption and encourage network deployment.
Regulatory Framework
The origin of the USF in the United States traces back to the Communications
Act of 1934, which created the FCC. The act stated that the purpose of the new
body was to regulate
(…) interstate and foreign commerce in communication by wire and radio so
as to make available, so far as possible, to all the people of the U.S. a rapid, eicient, nationwide, and worldwide wire and radio communication service with
adequate facilities at reasonable charges.6
As a result, the FCC, at that time, was mainly concerned with developing
rural telephony and reducing local call charges. To that end, a charging mechanism was put in place to transfer funds from interstate long-distance carriers
to rural carriers (so-called rural local exchange companies or RLECs) through
extra call charges.
By the end of the 1990s, the structure of the market had evolved to include the seven large Regional Bell Operating Companies, plus GTE, and
5
6
See http://www.connectednation.org/who-we-are.
See http://www.criminalgovernment.com/docs/61StatL101/ComAct34.html.
7
8
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
over 1,000 generally very small RLECs. The USF then overwhelmingly went
to the RLECs. Over the next 15 years, the Regional Bell Operating Companies,
plus GTE, merged and consolidated, leaving the current structure of two
very large players (AT&T and Verizon) and one company of intermediate size
(CenturyLink). The rural phone companies have also consolidated, but there
are still over 500 of them. It is notable that the operations of AT&T and Verizon
became more urban, as they transferred portions of their rural service territory to other rural specialist operators. Even more signiicantly, USF monies
did not go to the large incumbents, but rather to these hundreds of smaller
operators.
In this context, the Telecommunications Act of 19967 was the most signiicant regulation since the Communications Act of 1934. Beginning to take
a close look at broadband services, this act expanded the existing USF into
the four programs discussed earlier (High Cost, Low Income, Rural Health Care,
and Schools and Libraries) and created the Universal Service Administrative
Company (USAC), whose role is to collect universal service contributions from
telecom carriers and administer support mechanisms.
The Telecommunications Act also addressed whether or not the federal government should intervene to prevent a digital divide in relation to
broadband access. In particular, Section 706 of the act requires the FCC to
determine whether “advanced telecom capability is being deployed to all
Americans in a reasonable and timely fashion.” If not, the act requires the FCC
to “take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition
in the telecom market.”
Policymakers in the United States widely understood that urban households were a tougher challenge to target, as they included large blocks of two
demographic groups that were not as easily motivated by telephony eforts:
the elderly and the poor. During the policy debates of the mid-2000s, in explaining why the United States lagged behind other top-tier countries in terms
of broadband penetration, the FCC regularly pointed out that the nation had
a large elderly population that did not possess laptops. Urban low-income
households comprised the second-largest group, and some of the stimulus
programs were eventually aimed at this segment.
Rural households without broadband, however, became the main policy
target. Numerous studies concluded that traditional telecom carriers (i.e., AT&T,
Verizon, and the RLECs) were not going to reach these households—at least
7
See http://transition.fcc.gov/telecom.html.
ANALYSIS OF REFERENCE COUNTRIES
not at an afordable price. Furthermore, in poor, densely urban areas, there are
community centers and a surprising number of households without coverage
that are near others that do have coverage. In the rural areas, however, many
households and even small communities were very distant from any alternative means of access to the Internet, so policymakers chose to concentrate on
the rural areas.
In this context, the American Recovery and Reinvestment Act, which
was ratiied in 2009, included signiicant funding for broadband (US$7.2 billion), through both the BTOP and the BIP. More importantly, the policy debates led the FCC to develop the 2010 National Broadband Plan, which sets
speciic goals for broadband and initiated the beginning of the transition of
the USF and the Intercarrier Compensation systems to the CAF. Policymakers
in the United States have, in efect, now declared victory in the battle to spread
voice-grade copper-based telephony and, as a result, have dramatically reduced the funding for such eforts. They now are putting nearly all of their
funding eforts into a more widespread provision of broadband. The central
theory of the new efort regarding broadband is to subsidize only in situations
where private industry will not make the investment on its own.
The National Broadband Plan deines broadband in terms of speed (plus
an additional mention of quality in relatively vague terms): it set an “initial
universalization target of 4Mbit/s of actual download speed and 1Mbit/s of
actual upload speed, with an acceptable quality of service for interactive
applications.”8
The plan notes that these targets are aggressive, but has set 2020 as the
deadline for achieving them. The plan also mandates the FCC to review and
reset this target every four years, to account for technology developments.
Overall, the FCC understands not only that new doctrines must be developed, but also that the validity of existing ones needs to be scrutinized with
regard to the development of technology and society. The regulatory framework, therefore, is evolving to cater to the changing dynamics of the sector.
Investments
Planning: The following entities are involved in the management and control
of the UAS program in the United States:
i.
8
Congress: Sets universal service goals
See http://www.broadband.gov/plan/8-availability/.
9
10
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
ii.
NTIA: The principal advisor on telecom policies related to economic and
technological advancement, as well as regulation of the telecom industry;
also receives funds to inance the BTOP
iii. FCC: Oversees the use of the CAF to inance broadband development programs to be implemented by private companies
iv. USAC: An independent and nonproit administration which oversees the
four universal service programs
v. RUS: In charge of awarding projects under the BIP.
Other agencies also have a more minor role in relation to UAS. For instance,
the National Exchange Carrier Association is responsible for administering interstate access charge revenue pools, and the state regulation commissions
designate the eligibility status of most carriers to receive USF funds.
Funding: The USF includes a total of US$8.1 billion a year to use for grants, loans
and other subsidy programs.9 Originally, it was funded by fees on long-distance calls collected from telecom carriers. After the 1996 Telecommunication
Act, the fees were transformed into a levy on operators’ revenues, and other
types of operators were included in the list of contributors in addition to longdistance carriers. Today, all telecom companies that provide service between
states (such as long-distance carriers, local carriers, international carriers, wireless operators, payphone providers, voice over Internet Protocol (VoIP) service
providers) are required to contribute to the USF. Each quarter, the FCC calculates the contribution factor used to determine the universal service contributions required from telecom carriers, based on information provided by USAC
in terms of program needs and operators’ reported revenues.10
In the irst phase of the CAF, about US$115 million (out of the initial
US$300 million ofered) of public funding was awarded in July 2012. The
companies that accepted the subsidies (US$775 per household) would be
required to independently invest in network broadband infrastructure. Not
all the potential resources were allocated, as some carriers refused the subsidy, which they estimated to be too small.11 Similarly, US$300 million was
See http://www.usac.org/_res/documents/about/pdf/annual-reports/usac-annualreport-2011.pdf.
10 See http://www.fcc.gov/encyclopedia/contribution-methodology-administrativeilings.
11 See http://content.usatoday.com/communities/technologylive/post/2012/07/fccto-spend-115-million-on-rural-broadband-subsidies/1#.UHg9jG-SaoQ.
9
ANALYSIS OF REFERENCE COUNTRIES
awarded during the second phase of the Mobility Fund through a reverse
auction, held in October 2012.
The funding for Phase 2 of these two programs will be taken from the actual High Cost component of the current USF. Finally, both the BIP and BTOP
programs rely on direct funding from the U.S. government.
Implementation: Below are some details regarding implementation of the
High Cost, Low Income, Rural Health Care, and Schools and Libraries programs,
as disclosed by the USAC:12
High Cost Program In 2011, the High Cost Program supported areas in all 50 states and U.S.
territories, and over 1,850 eligible telecom carriers received support. In
order to get support from this fund, rural and nonrural incumbent local
exchange carriers and competitive carriers must be eligible telecom
carriers (ETCs, as designated by state regulatory commissions). Then they
must submit line count data, certain cost data (e.g., ixed asset property
accounting records; general ledgers; invoice copies for the purchase and
maintenance of equipment; maintenance contracts for the upgrade of
equipment), and certiications to USAC to receive High Cost support.
The program can be broken down into ive components, with diferent
eligibility criteria:
The High Cost Loop provides intrastate support for the last mile of
connectivity for rural companies in high-cost service areas, where the
cost to provide service exceeds 115 percent of the national average cost
per line.
The High Cost Model provides intrastate support for nonrural carriers,
where the cost to provide service in the state exceeds two standard
deviations above the national average cost per line.
Interstate Access Support helps ofset interstate access charges and
is available only for price-cap carriers (mostly nonrural and some rural
carriers) and competitive ETCs.
Interstate Common Line Support provides support to rate-of-return
carriers (mostly rural and some nonrural carriers) to the extent that
Subscriber Line Charge caps do not permit them to recover their
common line revenue requirements.
Local Switching Support provides intrastate assistance that helps cover
the high ixed switching costs for companies that serve 50,000 or fewer
access lines.
12
See http://www.usac.org/about/about/universal-service/faqs.aspx.
11
12
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
Low-Income
Program
Under the Low-Income Program, ETCs that provide consumers with
Lifeline discounts ile an FCC form with USAC to receive support that
reimburses them for providing service at discounted rates. Eligibility
requirements for the program vary from state to state. Lifeline eligibility
is based upon participation in certain means-tested programs
and, in most states, upon income. The federal default criteria for
eligibility—which apply in eight states and two territories—require
consumers either to have a household income at or below 135 percent
of the Federal Poverty Guidelines or to participate in at least one of
a number of federal assistance programs. The remaining states and
territories have established their own eligibility criteria that are based
solely on income or factors directly related to income, usually in line
with the federal default criteria, but not always.a
Rural Health Care
Program
Each year, over 3,000 rural healthcare providers (HCP) receive beneits
from the Rural Health Care Program. The level of support depends on the
location and the type of services chosen and is calculated individually
for each HCP. For telecom services, the program provides support for
monthly mileage-based charges (minus the Standard Urban Distance) or
for the diference between the rural and urban rate for nonmileage-based
charges. For Internet access, The Rural Health Care Program provides
support for 25 percent of an HCP’s Internet access charges.b
The USAC requires that all healthcare providers (HCPs), or consortia of
HCPs seeking to participate in the Rural Health Care Program, conduct
a competitive bidding process for services to be used in providing
healthcare. Once the service providers and services are selected, the
healthcare provider completes and submits a funding request to USAC
and, later, a notice that actual service has begun. The HCP then receives
the beneit of the reduced rates from the Rural Health Care Program,
which pays the selected service provider for the discounts it provides to
the HCP.
Schools and
Libraries Program
a
b
The Schools and Libraries Program provides discounts of between
20 percent and 90 percent on the service prices: the discount level
depends on the level of poverty and the urban/rural status of the
population served. Eligible beneiciaries include public and most
nonproit K-12 schools (primary and secondary schools) as well as all
public and many private libraries. In terms of process, eligible applicants
in this program open a competitive bidding process to receive bids on
the products and services they seek. Service providers submit bids, which
are reviewed by applicants under applicable program rules. Applicants
select the service provider for the service or product and submit the
appropriate forms to USAC to process support payment invoices.
See http://www.universalservice.org/_res/documents/li/pdf/fcc/FCC-12-11.pdf.
See http://www.fcc.gov/guides/universal-service-program-rural-health-care-providers
As part of the CAF and the Mobility Fund, carriers receive support to invest in broadband in two phases: one-of support (Phase 1) and ongoing
support (Phase 2). In addition, the projects inanced by the CAF are to be implemented by PPPs, and so carriers will be required to match the inancial effort and commit to quantiied objectives.
ANALYSIS OF REFERENCE COUNTRIES
The irst phase of the CAF was designed to award additional funding as
a one-of capital injection across large carriers (price cap, incumbent local exchange carriers) willing to accept the subsidy in exchange for carrying out the
necessary investments. This funding is meant to ensure that broadband is included in the UAS ofers. Implementation of Phase 1 started in July 2012 with
the aim of connecting nearly 400,000 residents and SMEs in 37 states to broadband within three years.13
Funding relating to Phase 1 of the Mobility Fund has been awarded to
38 companies through a nationwide reverse auction, held in October 2012.
Recipients of the Mobility Fund will be required to upgrade 83,000 miles of
road, nationwide, with mobile broadband capabilities over the next two to
three years. They will also be subject to public interest obligations, including
data roaming and co-location requirements.14
The FCC is still working on the details for implementation of Phase 2 of
the CAF, which will eventually transfer all recurring subsidies accruing to large
price-cap carriers to support expansion of broadband networks. Similarly, the
FCC is also currently considering rules for awarding funds relating to Phase 2 of
the Mobility Fund, also through competitive bidding.
United Kingdom
The United Kingdom has a relatively high population density. This factor has
favored the development of an established ixed telephony infrastructure
across the country, which is mostly owned by the incumbent operator, BT. The
table below summarizes the main macroeconomic and broadband indicators
for the United Kingdom.
The broadband market in the United Kingdom is well developed, and more
than 70 percent of British households have access to broadband. Available connection speeds continue to rise: the regulator Ofcom reports that 86 percent
of existing connections in the United Kingdom ofer up to 2Mbit/s, and that superfast broadband (i.e., at least 50Mbit/s) is available to around 60 percent of
premises across the country. There are signiicant geographic variations, however: for instance, 94 percent of premises in Northern Ireland have access to
See http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0727/DOC315436A1.pdf.
14 See http://www.connectednation.org/sites/default/iles/bb_pp/cn_policy_brief_-_
mobility_fund_phase_i_inal.pdf.
13
13
14
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
TABLE 1.3: Macroeconomic and Broadband Indicators for the United
Kingdom
Indicator
Year
Unit
Value
Population
2012
Million
63
Land area
—
Million hectares
24
Urbanization rate
2012
%
80
GDP per capita at purchasing power parity
2012
USD
37,456
Fixed broadband penetration per capita
2012
%
34.0
Mobile (active) broadband subscribers per capita
2012
%
72.0
Percent of individuals using the Internet
2012
%
87
ITU ICT development rank
2012
#
8 (/157)
Sources: Databases of the Economist Intelligence Unit (EIU), Euromonitor, ITU, Ofcom, and World Bank.
MAP 1.1: Average Broadband Uptake in the United Kingdom
(as of September 2012)
1
2
3
4
5
Inverness
Rank
Aberdeen
Perth
Kirkcaldy
Edinburgh
Glasgow
Londonderry/
Derry
Average broadband uptake
Each area has been ranked from 1 to 5 based on the
number of broadband connections as a percentage of the
total postal addresses in the area.
United
Kingdom
Belfast
Isle of Man
Irish Sea
Lucan
Dublin
eland
Blackpool Leeds
Manchester
Sheffield
Liverpool Nottingham
Norwich
Birmingham
Waterford
Cambridge
1 = 80% or more
2 = 70% – less than 80%
3 = 60% – less than 70%
4 = 50% – less than 60%
5 = less than 50%
London
Cardiff
Bristol
Southampton
Brighton
Portsmouth
Exeter
English Channel
Plymouth
Barnstaple
Source: Ofcom database.
superfast broadband but, for Wales and Scotland, this proportion goes down
to 30–40 percent (Map 1.1).15
15
See http://www.publications.parliament.uk/pa/ld201213/ldselect/ldcomuni/41/4105.htm.
ANALYSIS OF REFERENCE COUNTRIES
Increasing broadband provision is a priority in the United Kingdom. As
a result, there has been strong involvement by the central and local governments to increase broadband adoption, and British Telecom (BT) has made signiicant investments to expand and upgrade its broadband infrastructure.
Overview of UAS Programs
Table 1.4 provides an overview of UAS programs in the United Kingdom. These
are discussed in further detail below.
The UK government, through the Department for Culture, Media, and
Sport (DCMS), set the direction for a national broadband policy in December
2010. This policy aims to
(…) provide everyone in the UK with access to broadband speeds of at least
2Mbit/s, and superfast (deined as 24Mbit/s) broadband should be available
to 90 percent of people in each local authority by 2015.
To achieve this universal service objective, the commercial eforts of BT
in its ixed network are being supplemented with a host of government, private, and European funding, while gaps in the ixed networks will be complemented by mobile broadband.
The DCMS has funded Broadband Delivery UK (BDUK) with £530 million
(US$840 million) to bring superfast broadband to a third of UK homes and
businesses in rural communities. In the period up to 2017, the DCMS may make
a further £300 million (US$475 million) available for investment in broadband
(DCMS, 2009).
The Rural Community Broadband Fund, which is jointly funded by BDUK
and The Department for Environment, Food and Rural Afairs (DEFRA), was created to subsidize the provision of superfast broadband, not only to the inal third
of the population in the United Kingdom but also to local communities in the
inal 10 percent if they can demonstrate a need or demand for broadband, feasibility, and cost efectiveness. The Fund has around £20 million (US$32 million).
The Mobile Infrastructure Project aims
(…) to improve mobile voice coverage to outside of premises for the ive to
ten percent of consumers and businesses that live and work in areas of the
UK where existing mobile coverage is poor or nonexistent” and “to enable
the removal of ‘complete’ voice not-spots without converting them to ‘partial’ not-spots.16
16 See http://www.culture.gov.uk/images/publications/Mobile_Infrastructure_
engagement_Rel_1_0.pdf.
15
16
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
TABLE 1.4: Summary of the Key Characteristics of UAS Programs in the
United Kingdom
Characteristic
Description
Overview
Broadband is not part of the USO.
Broadband Delivery UK (BDUK) makes funds available for broadband
development until 2017.
The Rural Community Broadband Fund (RCBF) is a one-of fund for rural
areas.
The Super-Connected Cities program will provide superfast broadband to
certain cities (one-of investment).
The Mobile Infrastructure Project (MIP) aims to extend mobile coverage
(one-of investment).
Broadband
deinition
2Mbit/s is the universal availability target (by 2015), while 90 percent
of the population should enjoy superfast broadband at 24Mbit/s, and
populations of Super-Connected Cities will have access to speeds of at
least 80–100Mbit/s.
Regulatory
framework
The Universal Service Order, dated July 25, 2003, transposed the 2002
European Commission’s Universal Service Directives on USO policy.
The 2010 National Broadband Policy set broadband development
guidelines, legislated in the 2010 Digital Economy Act.
Planning
The UK Parliament deines the legal framework.
The European Commission (EC) provides guidelines and directives.
The Broadband Stakeholder Group (BSG) is the leading advisory group on
broadband.
The Department for Culture, Media and Sport (DCMS) is responsible for
telecoms and broadband policy and delivery via Broadband Delivery UK.
Ofcom is the national media and telecom regulator.
The Department for Environment, Food, and Rural Afairs (DEFRA) is in
charge of the Rural Community Broadband Fund.
Funding
BDUK funding comes from the BBC’s license fee and from underspending
of the country’s digital TV switchover fund.
Local authorities have to match national subsidies from the BDUK fund,
and private operators are bearing part of the efort (there is competitive
bidding for projects).
The Rural Community Broadband Fund, the Super-Connected Cities
program, and the Mobile Infrastructure Project are funded from the
government budget.
European funds can also be obtained at the local level.
Implementation
Private operators are bidding for public funds to support broadband
development.
Source: Authors’ elaboration.
The Mobile Infrastructure Project has around £150 million (US$240 million). The UK government has also established a separate fund (£150 million,
or approximately US$240 million) to create Super-Connected Cities with access to speeds of at least 80–100Mbit/s.17 Broadband is not included as part of
17
See http://www.culture.gov.uk/news/media_releases/9331.aspx.
ANALYSIS OF REFERENCE COUNTRIES
the USO, as the UK government considers the current nonregulatory approach
to delivering universal broadband to be the most efective means to stimulate
commercial investment. Finally, the UAS program for broadband in the United
Kingdom relies on mobile broadband to ill in the gaps in ixed network coverage. To this end, Ofcom plans to auction spectrum in the 800MHz (megahertz) and 2.6GHz (gigahertz) bands in 2013 for Long-Term Evolution services
and to refarm spectrum in the 900MHz band.
Regulatory Framework
As explained earlier, broadband is not included in the USO, but is part of a
broader national broadband plan. The 2010 national broadband policy is
based on the 2009 Digital Britain report (DCMS, 2009), 18 which was legislated
for in the 2010 Digital Economy Act.19 Originally, the report set the targets for
2012 (including speeds of at least 2Mbit/s to the entire population, and speeds
of at least 24Mbit/s to at least 90 percent of the population), but these were
later pushed back to 2015. It is important to note that the objectives set in the
Digital Britain report are considered as targets; not as legal obligations.
The UK’s Obligations as a Member of the European Union
As a member state of the EU, the United Kingdom must abide by EC Directives
and translate them into its national legislation. The EU, via the EC’s Universal
Service Directive of 2002 (European Commission, 2002),20 requires all member
states to ensure that citizens are able to connect to the public phone network
at a ixed location and access public phone services for voice and data communications with functional access to the Internet (no speciic speed is mandated). This directive was implemented in the United Kingdom via the USO
made by the secretary of state in July 2003. The services and facilities covered
by the order included
(…) the provision of access to the public telephone network and publicly
available telephone services at data speeds suicient to support functional
internet access; the adequate provision of public pay telephones; the availability of comprehensive directories and directory enquiry services; and special measures for users with low incomes or disabilities.21
See http://www.oicial-documents.gov.uk/document/cm76/7650/7650.pdf.
See http://www.legislation.gov.uk/ukpga/2010/24/contents.
20 See http://www.etsi.org/images/iles/ECDirectives/Authorisation_Directive.pdf.
21 See http://www.ofcom.org.uk/static/archive/oftel/ind_info/eu_directives/index.htm.
18
19
17
18
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
The scope of the order did not include broadband. Therefore, broadband
Internet access in the United Kingdom does not currently fall within the scope
of the EC’s Universal Service Directive, but the debate on whether to include it
has begun at the European level, as part of the regular review of the directive.
Nevertheless, the EC has stated that “by 2020, all Europeans should have access
to Internet of above 30 Mbit/s and 50 percent or more of European households
have subscriptions above 100Mbit/s.”22
The UK government has not put forward speciic measures to reach these
targets. While broadband is not included in the scope of USO as deined in the
Universal Service Directive, the need for this potential requirement is reviewed
regularly. To be included within the scope of a UAS policy, a service has to satisfy two questions: (a) In the light of social, economic, and technological developments, has the ability to use the service become essential for social inclusion?
and (b) Are normal commercial forces unable to make the service available for all
to use? The EC concluded from its 2006 review that broadband still should not
be included, as fewer than half of European households subscribed to broadband Internet, and so it was not seen as essential for social inclusion. In its 2008
review, and for similar reasons, the EC concluded that broadband should still not
be included, but the review noted that broadband was proving more and more
of a necessity to access a range of services and, therefore, its impact on competitiveness and economic growth was gradually turning this infrastructure into an
essential commodity. It was also thought unlikely that the market would provide
access within a reasonable period of time to the most isolated regions of Europe.
Most recently, in 2011, the EC decided not to set a single broadband connection speed at the EU level under the universal service rules, given the very
diferent stages of development of telecom networks in the member states and
the potential costs involved. Member states, however, can retain the lexibility
to include broadband connections in their national USO in justiied cases, typically when broadband uptake is already suiciently high. The EC also noted
that making broadband availability obligatory would not automatically result in
higher uptake. The EC, therefore, called on member states to reinforce measures
to drive demand and stimulate uptake, rather than just ensure a connection.
The EC also considers that USO might eventually—possibly as a medium-term
target—become an additional incentive to the development of broadband, but
that properly designed national programs should achieve universal broadband
objectives. The EC also believes that other important instruments in increasing
22
European Commission. Digital Agenda for Europe.
ANALYSIS OF REFERENCE COUNTRIES
broadband coverage are an eicient radio spectrum policy, which will enable
harmonized use of the digital dividend (spectrum freed up as the result of the
switch-of of analogue TV networks), and investment-friendly regulations.
Investments
Planning: The following entities are involved in the management and control
of the UAS program in the UK:
i.
Parliament: Deines the legal framework, based on the political agenda,
guidelines from the EC, and advice from the Broadband Stakeholder
Group (see below).
ii. EC: Provides guidelines and directives for the deployment of broadband
and ensures that no aid distorts or threatens to distort competition in the
market.
iii. BSG: The UK government’s leading advisory group on broadband was
established in 2001 to tackle the strategic issues afecting the broadband value chain. It provides a forum for organizations across the value
chain to discuss and resolve policy, regulatory, and commercial issues.
The BSG’s network includes telecom operators, manufacturers, investors, ISPs, broadcasters, news media companies, mobile operators, content producers, and rights holders, as well as government departments
(including the DCMS and the Department for Business, Innovation, and
Skills), Ofcom, and regional development agencies.
iv. DCMS: Responsible for the government’s telecom and broadband policy
and delivery via its BDUK unit. Individual projects remain the responsibility of local authorities and the devolved administrations (i.e., regional
governments).
v. Ofcom: National media and telecom regulator, accountable to Parliament.
Ofcom is funded by fees from industry for regulating broadcasting and
communications networks and grants-in-aid from the government.
Ofcom is in charge of controlling and reviewing the USO.
vi. DEFRA: In charge of the Rural Community Broadband Fund as part of its
role to deliver policies addressing rural communities.
Funding: Funding of UAS programs comes from regulatory resources (sale of
digital dividends and license fees) and ad hoc public funds. The £530 million
(US$840 million) of BDUK funding comes from the BBC’s license fee of £300
million (US$475 million) and from the underspending by the country’s digital
19
20
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
TV switchover fund of £230 million (US$365 million). This funding is released to
local authorities and the devolved administrations in stages, beginning with
four pilot areas (Cumbria, the Highlands and Islands, Herefordshire, and North
Yorkshire). Each area has been allocated between £5 million and £10 million
(US$8–16 million); the government notes that the four regions selected are in
some of the most remote and geographically challenging parts of the UK.23
To access funding for rollout, local authorities in the United Kingdom
were asked by the government to prepare local broadband plans for approval. Moreover, local authorities in England and the devolved administrations have to put in place matching funding from their own resources and,
possibly, access European funds: for example, the government has suggested
that the European Regional Development Fund could provide up to £100 million (US$160 million) (Parliament of the United Kingdom, 2012).
As of July 10, 2012, a total of 44 out of 45 local broadband plans had been
approved by the secretary of state, detailing exactly how local authorities
in England will rollout superfast broadband in their areas. Operators obtain
funding through competitive bidding processes administered by the UK government, using a dedicated gap-funded subsidy model (the investment gap
being the public contribution required to the private sector’s investment to
make the project economically viable).
The other funds are directly inanced from the government budget.
For example, the Rural Community Broadband Fund received a £20 million fund (US$32 million) speciically for rural areas; £100 million (US$160 million) will be invested to create up to ten “Super-Connected Cities” across the
United Kingdom (with potentially more funding to follow); and the Mobile
Infrastructure Project will represent an investment of up to £150 million
(US$240 million) by the UK government.
It is also worth mentioning that as an EU member, the United Kingdom
is entitled to aid from the EC, which can be signiicant. In 2011, the EC proposed to spend almost EUR9.2 billion on pan-European projects related to
high-speed broadband networks and services over the period from 2014 to
2020.24 The funding would take the form of both equity and debt instruments
and grants, and would complement private investment and public funds at
the local, regional, and national levels, as well as existing EU structural or cohesion funds. The EC considers that these resources could leverage a total of
EUR50–100 billion of public and private investments.
23
24
See http://www.culture.gov.uk/news/news_stories/7509.aspx.
See http://europa.eu/rapid/press-release_MEMO-11-709_en.htm?locale=en.
ANALYSIS OF REFERENCE COUNTRIES
Implementation: BT and KCOM are the designated USPs for telephone services
in the United Kingdom.25 This designation is based on competition law principles, according to which market interventions are permissible, as these companies hold a position of signiicant market power in narrowly deined markets
(according to a detailed market analysis). As USPs, the two operators are required to provide a connection upon reasonable request and at uniform prices,
irrespective of geographic location. This obligation encompasses the provision
of an Internet narrowband connection capable of functional Internet access.
British Telecom is bidding for public funding from the total amount of £530
million (US$840 million) that is available, and it is working with local authorities to
extend rollout into areas where the commercial case for investment is more diicult—referred to as the inal third. The company has also indicated that in order to
support the government’s policy objectives, it is willing to spend a further £1 billion (approximately US$1.6 billion) of BT’s capital to match government funding,
to roll it out into the inal third, and to get as far as possibly into the inal third.
If successful in most of these bids, BT claims that it can deliver superfast
broadband to more than 90 percent of UK premises. In parallel, BT is undertaking a very signiicant upgrade of its network and has already committed
£2.5 billion (US$4 billion) to rollout iber optic connectivity, which will deliver
speeds of up to 80Mbit/s to two-thirds of UK premises by the end of 2014.
The Republic of Korea
The Republic of Korea is one of the most advanced countries in the world in terms
of broadband development, with approximately 18 million ixed broadband
Internet subscribers as of the end of 2012 (ITU, 2012b). It holds irst position in the
ITU’s ICT Development rankings. This is due to a combination of factors, including
strong economic growth, a dense and restricted geography, as well as efective
and extensive broadband policies that were put in place early by the government
(Table 1.5). These policies have been implemented, in particular, through diferent
master plans, funded by the government and the private sector.
The Republic of Korea was one of the irst countries to develop an all-IP iber
optic network called the Broadband Convergence Network (BcN)—as early as
2004—gathering a consortium of industry players together with the Ministry
of Information and Communications. This infrastructure ofers seamless multimedia service with speeds ranging from 50Mbit/s to 100Mbit/s. The BcN ofers
KCOM is not a national telecom provider; its network is limited to the area of Hull in
East Yorkshire.
25
21
22
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
TABLE 1.5: Macroeconomic and Broadband Indicators for
the Republic of Korea
Indicator
Year
Unit
Value
Population
2012
Million
49
Land area
—
Million hectares
10
Urbanization rate
2012
%
83
GDP per capita at purchasing power parity
2012
USD
30,801
Fixed broadband subscribers per capita
2012
%
37.6
Mobile (active) broadband subscribers per capita
2012
%
106.0
Percent of individuals using the Internet
2012
%
84
ITU ICT development rank
2012
#
1 (/157)
Sources: Databases of the EIU, Euromonitor, ITU, FCC, and World Bank.
speciic services for rural areas, such as monitoring of e-farming facilities, online direct trading of agricultural and marine products, and remote Internet
Protocol television study rooms. The number of BcN subscriptions exceeded
52 million at the end of 2011 (comprising 16 million wired subscribers and 36
million mobile subscribers) (KCC, 2011).
In 2009, the national regulator, the Korea Communications Commission
(KCC), announced further investment in next-generation broadcasting and
communications services, with an investment of W34.1 trillion (US$31 billion)
to build a so-called Ultra-Broadband Convergence Network (UBcN). This network will replace the public switched telephone network (PSTN) with a fully
IP-based telephony network. By the end of 2013, KCC expects that download
speeds achieved on this network will reach 1Gbit/s for ixed and 10Mbit/s for
mobile connections.
In terms of targets, the original goal of the BcN was to provide 100Mbit/s
ixed-line connections to 10 million households and at least 1Mbit/s wireless
connections to 10 million mobile subscribers by 2010. Later, UBcN’s new targets included 14.5 million households with at least 50Mbit/s and at least 46
million subscribers with 1–2Mbit/s wireless broadband by the end of 2013.
Despite the exceptional broadband penetration rates already achieved, the
Government continues to take measures to ensure solid broadband coverage
in rural regions.
Overview of UAS Programs
Table 1.6 provides an overview of the UAS programs in the Republic of Korea,
These are discussed in more detail below.
ANALYSIS OF REFERENCE COUNTRIES
TABLE 1.6: Summary of Key Characteristics of UAS Programs in the Republic
of Korea
Characteristic
Description
Overview
Operators must provide broadband services (as well as voice services) at a
discount to eligible subscribers (poor households, etc.), but broadband is
not included in the USO.
Broadband deployment has been made a condition for privatization or
takeovers.
The Broadcasting and Telecommunications Development Fund provides
selected support.
Broadband development is typically included in holistic master plans,
which are mostly inanced by the private sector.
Broadband
deinition
The original goal of the Broadband Convergence Network (BcN) was to
provide 100Mbit/s ixed-line connections to 10 million households and at
least 1Mbit/s wireless connections to 10 million mobile subscribers by 2010.
With the ultrafast broadband initiative (UBcN), the targets are to provide
14.5 million households with at least 50Mbit/s and at least 46 million
subscribers with 1–2Mbit/s wireless broadband by the end of 2013.
Regulatory
framework
The Framework Act of Informatization Promotion of 1995 introduced the
USF.
Several master plans (2001, 2006, 2007, etc.) have deined national ICT
development plans.
In 2009, the National Informatization Act established the National
Information Society Agency (NIA).
The 2007 Korea Disability Discrimination Act set guidelines for broadband
availability.
Planning
The Korea Communications Commission (KCC) is the national regulator,
and is in charge of overseeing the regulation of the broadcasting and
telecom sectors.
The Ministry of Knowledge Economy manages the Broadcasting and
Telecommunications Development Fund.
The NIA identiies and supports the development of national policies and
technologies to close the digital divide.
Funding
Operators are not compensated for the discounts on broadband services
given to eligible subscribers.
The Broadcasting and Telecommunications Development Fund includes
contributions from the government and private companies (spectrum
licensing fees, and revenue-based contributions from operators).
The allocation of national funds is leveraged by local authorities (matching
the national funding) and the operators building the network (matching
the overall public funding).
Large-scale broadband deployment eforts are mostly supported by the
private sector.
Implementation
Private operators have been forced to comply with broadband coverage
targets as part of privatization or takeovers.
Private operators receive matching support for UAS investments from
public authorities.
Source: Authors’ elaboration.
23
24
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
The Republic of Korea launched a Universal Service program in 2000. This
covers local calls, emergency calls and discount-rate phone service; it does not,
however, include an obligation to provide broadband access. Carriers are required to provide telecom services to disabled and low-income people at a
discounted rate. These services include broadband, which should be ofered
at a 30 percent discount rate. To compensate for the lack of broadband obligations and to guarantee broadband access for all, the Republic of Korea has
introduced additional regulatory requirements in rural areas in terms of privatization within the sector. For instance, in 2002, it privatized the incumbent
Korea Telecom (KT) and made it subject to expand broadband infrastructure
to rural areas. The government imposed a levy on KT to provide broadband access at a minimum of 1Mbit/s in all rural areas by 2005. Similarly, in 2008, the
government approved the acquisition of Hanaro Telecom by SK Telecom on
condition that SK Telecom meet speciic rural broadband service targets.
The Republic of Korea, in fact, has taken a rather holistic approach to universal service, applying it to wider strategies since as early as the 1990s. The government’s approach to develop ICT and, in particular, broadband, has been to
create several national frameworks (master plans). The current master plan is the
U-Korea Master Plan, and covers the period 2006–15 (Phase 1 for 2006–10; Phase
2 for 2011–15). The Plan is based on the principle of the so-called four Us—universal acceptance in society, services usable by all, unisonous (harmonious) use
of technologies and services, and continual upgrading and creation of services.
Through this plan and other older informatization master plans, the government has promoted broadband policies on the supply and demand sides. With
regard to supply, it has developed policies relating to regulation, competition,
infrastructure development, content promotion, as well as other sectoral policies. In terms of demand, it has sought to stimulate usage, creation of content,
and promotion of services such as e-government, e-learning, and e-commerce.
These plans are mostly inanced by the private sector with contributions
from the state. For this purpose, the government created an Informatization
Promotion Fund in 1996 (later known as the Information and Communications
Fund) to inance speciic projects relating to the development of ICT. In
January 2011, this fund became the Broadcasting and Telecommunications
Development Fund, following the enactment of the Framework Act on
Broadcasting Communications Development in March 2010, which merged
the existing Broadcasting Development Fund and the Information and
Communications Fund into a single fund under the Ministry of Knowledge and
Economy. The Republic of Korea also actively promotes interest in, and demand
for, broadband service through dedicated training programs aimed at speciic
groups, such as elderly and disabled people, and public sector employees.
ANALYSIS OF REFERENCE COUNTRIES
Regulatory Framework
The Republic of Korea has made informatization a key policy objective as early
as the 1990s, by enacting the Framework Act of Informatization Promotion in
1995 (revised in 1999 and 2006). The Act on Informatization Promotion grants
authority to the regulator to prepare informatization master plans (such as
the current U-Korea Master Plan 2006–15) and authorizes the Informatization
Promotion Committee to undertake ICT policymaking. The act also created
the Informatization Promotion Fund, which was established as a special vehicle to overcome the budgetary restrictions to promote the informatization
project; the promotion of informatization requires large-scale investment and
lasts for several years.26 Since the establishment of this framework, the government formulates new plans on a regular basis, such as the Master Plan for
Closing the Digital Divide 2001, e-Korea Vision 2006 (2002–06) and Broadband
IT Korea Vision 2007 (2003–07). For each plan, the government has revised
its objectives, strategy, and implementation tools in line with evolving technology and market conditions.
In 2009, the National Informatization Act established the NIA, whose role
is to support the development of national broadband policies. In addition, the
act speciically covers ICT access and usage for the disabled and the elderly.
The act mandates government agencies to conform to web accessibility standards, deines ICT access guidelines, supports technology, promotes the enabling environment, and provides training programs. This followed a 2007
Korea Disability Discrimination Act, which deined Web Access Obligations for
2009–15 for various entities (government agencies, universities, colleges, hospitals, private institutions, and cultural entities).
Investments
Planning: The following entities are involved in the management and control
of the UAS program:
i.
ii.
26
KCC: Established in 2008 as the Republic of Korea’s national telecom regulator, it falls under the mandate of the Executive Oice of the President
in the Blue House. The KCC oversees the regulation of the entire broadcasting and telecom sector.
Ministry of Knowledge Economy: Responsible for managing the
Broadcasting and Telecommunications Development Fund. The TeleSee http://www.cepal.org/noticias/noticias/3/12743/kijoolee2.pdf.
25
26
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
communications Development Fund was previously managed by KCC and
the Ministry of Information and Communications. A fund management
council supervises the utilization of the resources of the fund.
iii. NIA: (formerly the National Computerization Agency): Identiies and supports the national policies and technologies to close the digital divide. As
such, NIA monitors pilot projects for new technologies to the public sector
and supervises ICT technologies and standards.
Funding: The Broadcasting and Telecommunications Development Fund includes contributions from the government and private companies through
spectrum licensing fees and revenue-based contributions from operators (as
well as earnings from the operation of the fund). The total budget in 2011 was
W544 billion (US$500 million) (KCC, 2011). It should be noted, however, that the
30 percent discount provided by all carriers to eligible subscribers (mentioned
above) is not funded as part of universal service (Government of India, 2011).27
In the past, especially at the end of the 1990s and at the start of the 2000s
(during the KII Master Plan), the government applied several methods to stimulate private investment in broadband, such as tax incentives, low-rate loans, and
loan underwriting. In its current support for rural broadband deployment, the
KCC has adopted the matching fund method, under which the government provides 25 percent of the investment, the local authority provides another 25 percent, and the operator that wishes to build the network contributes the remaining
50 percent. Based on data-driven international telecommunications market research and analysis from TeleGeography, in April 2010, the KCC announced that
for villages of fewer than 50 households, a total of W10.5 billion (US$9.6 million)
would be made available to match investments made by local autonomous entities and service providers in bringing broadband to such villages.
The government can also invest directly when it considers it to be necessary. For example, in April 2010, it announced an investment of around
W150 billion (US$138 million) to rollout 100Mbit/s-capable services in rural
areas. This initiative is being supervised by a newly created Rural Village Smart
Infrastructure Implementation Council together with representatives from
government ministries, local authorities, operators, and equipment manufacturers (TeleGeography).
See http://www.censusindia.gov.in/2011-prov-results/data_iles/india/Final_
PPT_2011_chapter3.pdf.
27
ANALYSIS OF REFERENCE COUNTRIES
Nevertheless, in spite of public funding, the bulk of the inancial efort to
support broadband deployment is expected to come from the private sector.
This will particularly be the case for the recent UBcN deployment. The contributions of public and private funding for this initiative have been estimated
at W1.3 trillion (US$1.1 billion) and W32.8 trillion (US$27.8 billion), respectively
(World Bank database).
Implementation: Korea Telecom has been designated as the sole universal
service provider with the obligation to provide local call service and public
phone service at the same price for all users. As mentioned earlier, however,
this obligation excludes broadband. In addition, all carriers must provide
broadband service (as well as voice service) at a discount to eligible subscribers
(e.g., poor households and the disabled).
Broadband expansion is one of the objectives covered by the master plans.
The Framework Act on Informatization Promotion speciies that an implementation plan should be formulated for each master plan and should be executed by the heads of the relevant administrative agencies. Each agency must
submit a performance report to the Informatization Promotion Committee
at the end of each year, along with an implementation plan for the following
year. The implementation plans include the overall mission and goals; a review
of existing policies; a performance assessment; and project and investment
plans for the following year. As explained earlier, the KCC has also ensured development of rural broadband by applying speciic conditions to acquisitions
in the telecom sector.
In 2002, the inal privatization of KT was subject to obligations to expand
broadband infrastructure to rural areas. The company was to provide broadband access at a minimum of 1Mbit/s in all rural areas by 2005. As a result,
KT upgraded the broadband service of towns with more than 50 households
between 2002 and 2006. It received additional funding from the Ministry of
Information and Communications and the local governments to do likewise
in towns with fewer than 50 households. As of the end of 2008, 99 percent of
Korea’s 3.77 million households in rural areas had access to broadband service
of at least 1Mbit/s through KT’s networks (Calvo, 2012).
When the KCC approved SK Telecom’s US$1.15 billion acquisition of Hanaro
Telecom in February, it required SK Telecom to provide BcN service to approximately 41 percent of towns of 50–240 households before 2013. The rationale
for this condition was that the acquisition might reduce broadband competition in rural areas.
27
28
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
India
India is the second most populous country in the world, with over 1.2 billion inhabitants as of March 2011 (Table 1.7). Providing Internet access to such a large
population is a challenging task, especially when close to 69 percent of this population resides in rural areas. This is further complicated by the fact that in 2010,
more than 32 percent of the population lived below the international poverty
line (US$1.25 per day at purchasing price parity).28 This means that a very large
section of the population within reach of broadband access cannot make use of
it due to the high cost. Apart from the digital divide caused by urban/rural and
rich/poor polarities, India’s geographic diversity poses constraints in some regions (e.g., mountainous areas) and, hence, requires intervention.
Unlike the rapid uptake that has been seen with mobile services in the
past decade, access to broadband is lagging far behind. After a boom in
broadband uptake in the irst half of the 2000s, with subscribers increasing
by around 50 percent per quarter in 2004/2005, expansion then slowed, dipping to around 12 percent growth in 2008 before falling to 6.7 percent in
Q1 2010 and 3.3 percent in Q1 2012. At the end of March 2012, India had about
13.8 million ixed broadband subscribers, representing a household penetration of approximately 6 percent and a population penetration of just 1.1 percent (TeleGeography).
The Indian USF was established in April 2002. It was originally used to
set up village community phones, but was expanded in 2006 to fund mobile
services and broadband connectivity in rural and remote areas. Since then,
TABLE 1.7: Macroeconomic and Broadband Indicators for India
Indicator
Year
Population
2012
Billion
1.2
Land area
—
Million hectares
297
2012
%
32
GDP per capita at purchasing power parity
2012
USD
3,813
Fixed broadband penetration per capita
2012
%
1.1
Mobile (active) broadband subscribers per capita
2012
%
4.9
Percent of individuals using the Internet
2012
%
13
ITU ICT development rank
2012
#
121 (/157)
Urbanization rate
Unit
Sources: Databases of the EIU, Euromonitor, ITU, and World Bank.
28
See http://povertydata.worldbank.org/poverty/country/IND.
Value
ANALYSIS OF REFERENCE COUNTRIES
several broadband schemes have been subsidized through the USF, including
the most recent national iber optic network at an investment of INR200 billion (US$3.72 billion).
Overview of UAS Programs
Table 1.8 below provides an overview of the UAS programs in India. These are
discussed in further detail below.
The USF is inanced through a Universal Service Levy, which is collected
from operators in the form of a speciic percentage of their revenues. These
funds are used to subsidize services across six service areas, ranging from basic
voice services to pilot projects to establish new technology developments in
rural and remote areas:29
Stream I:
Stream II:
Stream III:
Stream IV:
Stream V:
Stream VI:
Provision of public telecom and information services
Provision of household telephones in rural and remote areas
Creation of infrastructure for provision of mobile services in
rural and remote areas
Provision of broadband connectivity to villages by stages
Creation of general infrastructure in rural and remote areas
for development of telecom facilities
Introduction of new technolog developments in the telecom
sector in rural and remote areas.
As part of the broadband-related Streams IV and V, a number of programs
have already been initiated:
iv. National Optical Fibre Network: In October 2011, the Cabinet approved
a plan for this network to provide broadband connectivity to 250,000 village Panchayats (councils) with a budget of INR200 billion (US$3.72 billion), funded in full by the government of India, initially through the USF
and subsequently by private companies.30 The project will add new links
to existing core networks of public operators that already have iber optic
cable infrastructure in place (including Bharat Sanchar Nigam Ltd. [BSNL],
RailTel, and Power Grid).
29
30
Indian Telegraph (Amendment) Rules 2004, 2006.
See http://www.odisha.gov.in/portal/ESDM%20Strategic%20Roadmap.pdf.
29
30
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
TABLE 1.8: Summary of Key Characteristics of UAS Programs in India
Characteristic
Description
Overview
• The USF includes dedicated streams of action for broadband, including
national backbone deployment, rural Internet access development, and
the launch of targeted services (e.g., women’s self-help groups).
• Speciic initiatives run in parallel (e.g., the Bharat Nirman, which aims to
improve rural infrastructure).
Broadband
deinition
• The goal of the 2012 National Telecom Policy is to reach 600 million
Regulatory
framework
• The 1999 New Telecom Policy introduced USO.
• The 2003 Indian Telegraph (Amendment) Act gave status to the USF.
• The 2004 Indian Telegraph (Amendment) Rules deines the USF rules
broadband connections by 2020, with a minimum download speed of
2Mbit/s.
• The deinition of broadband will thus be progressively increased from
the current 256kbit/s to 512kbit/s, and then to 2Mbit/s by 2015, with
higher speeds thereafter.
(amended in 2006 and in 2012).
• The 2004 National Broadband Policy, revised in 2012, sets broadband
development objectives.
• The Department of Telecommunications (DoT) strategic plan for
2011–15 includes broadband development.
Planning
• DoT is the governing body for all telecom services, including policy
formulation.
• The Telecom Regulatory Authority of India (TRAI) is the national
•
•
•
•
•
Funding
Implementation
regulator; it provides recommendations to DoT on various issues relating
to the USF.
The Ministry of Communication and Information Technology oversees
the working of the DoT and its various subunits.
The Oice of the Administrator USOF formulates and implements USF
projects.
An Inter-Ministerial Advisory Committee provides advice and
recommendations relating to the USF.
The Controller of Communication Accounts oversees subsidy
disbursement.
The Comptroller and Auditor General of India is responsible for auditing
the accounts of the USF.
• The USF is inanced via a levy on operators’ revenues.
• The incumbent, Bharat Sanchar Nigam Ltd. (BSNL), has been selected to
implement most of the USF schemes (following competitive bids)
• Projects are typically awarded via competitive bidding.
Source: Authors’ elaboration.
v.
Wire-Line Broadband Plan: This is an agreement that was signed with the
incumbent BSNL in January 2009 to provide rural, ixed broadband from
about 28,000 rural wire-line exchanges spread across the country. Apart
from subsidized broadband connectivity for individuals and government
ANALYSIS OF REFERENCE COUNTRIES
institutions and preferential connectivity for women’s self-help groups,
one broadband kiosk for public access is to be provided from each eligible
rural wire-line exchange.31
vi. Rural Public Service Terminal (RPST) pilot for inancial inclusion and
value-added services: A Memorandum of Understanding has been
signed with BSNL for subsidy support from the USF for the provision of
broadband-enabled RPSTs to eligible women’s self-help groups on a pilot
basis. It is envisaged that the subsidized RPSTs will enable these groups
to provide banking services and other value-added services to the rural
public.
In addition, the BSNL initiative has been developed to improve all
rural infrastructures in India. As a part of its larger plan, the Department of
Telecommunications (DoT) sought to achieve broadband coverage to all
247,864 village Panchayats by the end of 2012.32 Of these, 110,695 village
Panchayats were covered by the end of the inancial year 2010–11.33 It is notable that support for mobile broadband deployment is currently excluded
from the USO fund, in view of the mandatory rural rollout obligation imposed
on broadband wireless access and 3G operators, which were allotted spectrum following an auction in 2010.34
Regulatory Framework
The 1999 New Telecom Policy introduced the USO and sought to achieve the
following objectives: (i) voice and narrowband data service acces to the remaining 0.3 million uncovered villages by 2002; (ii) Internet access to all district headquarters by 2000; and (iii) telephone on demand in urban and rural
areas by 2002. Since then, there have been a number of changes in the legislation regarding UAS. The 2003 Indian Telegraph (Amendment) Act gave statutory status to the USF. The 2004 Indian Telegraph (Amendment) Rules deine
the regulations for USF administration and include Streams I and II as the areas
See http://usof.gov.in/usof-cms/USFO-2-Folder.pdf.
See http://articles.economictimes.indiatimes.com/2012-12-14/news/35820022_1_broadband-policy-broadband-connectivity-bharat-broadband-network.
33 See http://www.isrj.net/UploadedData/3017.pdf.
34 See USOF Results Framework Document at http://usof.gov.in/usof-cms/GagendaPdf/
bb/USOFs_VisionMissionObject_and_Functions.pdf.
31
32
31
32
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
to be funded by the USF. In 2006, an ordinance was passed to enable support
for mobile services and broadband connectivity in rural and remote areas; this
was put into place by the 2006 Indian Telegraph (Amendment) Act. In parallel
to this act, the central government amended the administration regulations of
the USF so that Streams II to VI would be included.
With regard to the national broadband plans, DoT formulated a National
Broadband Policy in 2004.35 Since broadband was not part of the USF at the
time, the 2004 Broadband Policy did not include a mechanism for funding
broadband through the USF. To incentivize service providers, however, the
policy reduced the license fee for certain types of infrastructure providers.36
DoT’s strategic plan for 2011–15, formulated in 2010,37 restated the need
for broadband development. Moreover, the plan acknowledged that the 2004
Broadband Plan had failed to achieve its goals and a new set of objectives were
identiied:
i.
Broadband penetration: Broadband for all by increasing access to highspeed broadband in Gram Panchayat.38
ii. Allocation of resources for broadband: Ensure a suicient allocation of
resources such as spectrum, rights-of-way management, and infrastructure sharing for broadband.
iii. Cross-sectoral use of broadband: Provide incentives to encourage the
uptake of broadband in sectors such as education, healthcare, public
safety, and government operations, by subsidizing equipment for
customers.
iv. Expansion of broadband in rural areas: Provide funding and support to
encourage the speedy rollout of mobile broadband on 3G and broadband
wireless access spectrum in rural and remote areas.
Of the above four areas, the second (allocation) was an action item to be
the responsibility of the various government entities, while the other three
areas were clearly identiied as programs to be inanced through the USF. The
See http://pib.nic.in/archieve/image/broadband_policy04.pdf.
See Broadband Plan, article 4.1.
37 See http://www.dot.gov.in/sites/default/iles/Final_Strategic_Plan-uploaded.pdf.
38 The Village Panchayat is the main institution that runs the administration of local affairs of the village. The Gram Panchayat consists of one or more villages. For the purpose of this publication, the terms are used interchangeably.
35
36
ANALYSIS OF REFERENCE COUNTRIES
objectives for broadband development were then revised in the 2012 National
Telecom Policy as follows (Government of India, 2012):39
i. Access to broadband by 2015.
ii. 175 million broadband connections by 2017.
iii. 600 million broadband connections by 2020, with a minimum download speed of 2Mbit/s (and speeds of at least 100Mbit/s to be available on
demand).
iv. High-speed and high-quality broadband access to all village Panchayats
through a combination of technologies by 2014, and progressively to all villages and habitations by 2020.
v. Signiicant transition to Internet Protocol version 6 in a phased manner
by 2020.
The strategic activities under the 2012 National Telecom Policy include the
following:
i.
Develop an ecosystem for broadband in close coordination with all stakeholders, including ministries and other government departments and
agencies to ensure access to media at all levels (last-mile access, aggregation, core network, and user devices) and a favorable environment for development of relevant applications.
ii. Work toward the right to broadband, recognizing that it is basic need for
citizens, especially in terms of education and healthcare.
iii. Speciically provide reliable and afordable broadband access for rural and
remote areas through a combination of iber optic, wireless, satellite and
other technologies. In particular, the iber optic network will extend to the
village Panchayat level with USF funding, and access to the network will
be open, nondiscriminatory, and technologically neutral. The extension of
iber optic connectivity for village Panchayats will be made progressively.
iv. Provide appropriate incentives for rural rollout of telephony and
broadband.
v. Increase the existing download speed of 256kbit/s to 512kbit/s, and then
to 2Mbit/s by 2015, with higher speeds of at least 100Mbit/s thereafter.
vi. Encourage the uptake of iber optic communications in the home to transform cities and towns into a connected society.
39
See http://www.trai.gov.in/WriteReadData/useriles/ile/NTP%202012.pdf.
33
34
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
vii. Continue support by the USF of telecom services, including combined
communications services in commercially unviable rural and remote areas.
In March 2012, DoT formulated the 2012 Indian Telegraph (Amendment)
Rules. These ensure that the forthcoming National Optical Fibre Network
project will receive funding from the USF for a period of ive years from the
date the rules came into force.40
Investments
Planning: The following entities are involved in the management and control
of the USF in India:
i.
Department of Telecommunications (DoT): The governing body for all
telecom services. Its duties include policy formulation, licensing, international cooperation, and dispute resolution.
ii. Telecom Regulatory Authority of India (TRAI): The independent
telecom regulator, established in 1997, which is part of the DoT. One of the
TRAI’s main objectives is to provide a fair and transparent policy environment to promote fair competition. In terms of USF management, the TRAI
provides recommendations to DoT on various issues relating to the USF.
iii. Ministry of Communication and Information Technology: Responsible
for supervising the work of the DoT and its various subunits, such as
Telecom Regulatory Authority of India (TRAI), Oice of the Administrator
(USOF), and the state-owned telecommunications companies Bharat
Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam Limited (MTNL).
iv. Oice of the Administrator, USOF: An oice of DoT with responsibilities
that include formulating USF projects within the various streams; designing
the bidding process and carrying out tenders; entering into implementation agreements with operators; monitoring the implementation of USF
projects; funding subsidies; budgeting; and auditing the USF activities.
v. Inter-Ministerial Advisory Committee: Provides advice and recommendations on important issues relating to the USF. It is constituted under the
chairmanship of the Administrator of the USOF and includes representatives from the Indian Institute of Technology (Chennai), Indian Institute of
Management (Ahmedabad), Ministry of Finance, Ministry of Law and Justice,
Planning Commission, TRAI, and DoT.
40
See http://www.ijlt.in/pdiles/Telegraph-Rules-2012.pdf.
ANALYSIS OF REFERENCE COUNTRIES
vi. Controller of Communications Accounts: Twenty-three oices assist
the USOF Administrator. These ield units of DoT have been delegated
the duties of disbursing subsidies and verifying claims. They assist the
USOF Administrator to monitor implementation, at the ield level, of USF
agreements.
vii. Comptroller and Auditor General of India: An independent authority
that audits all government accounts; as part of this, it is responsible for auditing the accounts of the USF.
Funding: The USF has accumulated considerable resources over the past few
years and, according to DoT accounts, INR440 billion (US$8.5 billion) has been
collected in the form of the Universal Service Levy to date. The USF had INR218
billion (US$4.05 billion) available at the end of the inancial year 2011–12 and, in
three years, this sum has risen to INR360 billion (US$6.7 billion).41
The USF is inanced through a Universal Service Levy collected from certain telecom operators at a speciic percentage of their adjusted gross revenue.
The levy is currently ixed at 5 percent of adjusted gross revenue for all telecom
service providers, except pure value-added service providers such as Internet,
voice-mail, and email.42 The levy is irst credited to the Consolidated Fund of
India and allocated to the USF through parliamentary approval. The balance of
credit does not lapse at the end of the year.43 Furthermore, additional grants
and loans may be provided by the central government, if required.
Implementation: BSNL, the incumbent ixed operator, has been selected to
implement most of the projects under Stream IV (broadband connectivity to
villages) and Stream V (general infrastructure in rural and remote areas). Under
Stream IV, an agreement has been signed with BSNL to provide wireline broadband connectivity to rural areas through the 28,000 wireline exchanges that it
owns (as discussed above). The agreement requires BSNL to provide 861,459
wireline broadband connections by 2014. By the end of April 2012, BSNL had
provided 360,966 broadband connections under this plan.44 Under Stream V,
following a request for Expressions of Interest, BSNL was selected to lay the
network and an agreement was signed in February 2010. As of the end of 2011,
174 nodes (out of 354) had been installed.
See http://usof.gov.in/usof-cms/usof_fundstatus.htm.
See http://usof.gov.in/usof-cms/usof_home_contd.htm.
43 See http://www.itu.int/ITU-D/treg/related-links/links-docs/USOF-India.pdf.
44 See http://usof.gov.in/usof-cms/GagendaPdf/bb/BB7A_16-05-2012.xls.
41
42
35
36
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
Another agreement was signed with RailTel Corporation in January 2012,
whereby it will receive subsidies from the USF for the deployment and management of an intradistrict iber optic network in rural and remote areas.45
The tendering process for the rollout of the National Optical Fibre Network
started at the end of 2012. A total of 500,000 kilometers of ibre will be needed
to achieve the objective to connect all 250,000 village Panchayats by the end
of 2013.46 This infrastructure will complete an already large backbone of iber
optic network (close to 670,000 kilometers.) that is available from BSNL, Railtel,
and Power Grid, most of which is located in urban and semi-urban areas. This
network will be rolled out and operated by Bharat Broadband Network Ltd.,
under the legal status of a business that establishes, manages, and operates
the national iber optic network. The company’s objective is to provide highspeed broadband connectivity to all Gram panchayats and act as an independent wholesaler of network capacity to service providers.
Lessons Learned
The reference countries have clearly understood the need to adapt to UAS.
Some have done so sooner (e.g., the Republic of Korea) than others (e.g., the
United States). All four countries have carried out signiicant reforms of their
legacy policy and regulatory frameworks and have followed diferent approaches to develop UAS that have been tailored to their respective macroeconomic and sectoral settings and political objectives. There are many
approaches, one of which is to implement a speciic UAS broadband policy.
This option will generally rely on an existing UAS telephony policy that can
be extended and adapted to include broadband as an additional supported
service. Other options include direct public investments and direct subsidies,
among others. The following table summarizes how the four reference countries have handled these issues.
The four countries share some similarities in increasing broadband access
to the population, but the speciic measures difer due to the uniqueness of
each country. The key lessons learned from their experiences are summarized
below:
i.
45
46
Target segments: UAS initiatives usually target the poor population
and the rural and remote areas. The government can also include other
See http://usof.gov.in/usof-cms/usof_Implementation_status.htm.
See http://www.lightreading.in/document.asp?doc_id=222414.
ANALYSIS OF REFERENCE COUNTRIES
ii.
iii.
iv.
v.
vi.
vii.
viii.
segments, such as healthcare providers, schools, and women’s groups, according to the priorities of the social inclusion programs in that country.
USO imposition: USO imposed on the incumbent operator alone is not
considered an optimal way to achieve the objectives of broadband UAS
policies in these four countries. A deregulated market moves toward a
market where the cost of UAS is shared proportionally among industry
stakeholders.
Funding sources: Well-funded UAS programs rely on multiple sources.
Other than the conventional USF, there are other ways to fund programs,
such as in the case of operators’ discounts to eligible poor and disabled
subscribers in the Republic of Korea and the EU funds to the United
Kingdom.
Budget allocation mechanism: It is possible to optimize the impact of
a government budget by allocating a fund via reverse auction (United
States) or a gap-funded subsidy model (United Kingdom). The diferent
competitive bidding methods have the same principle: the bid requiring a
minimum subsidy/investment gap will win.
Private sector participation: Active private sector participation is essential to the success of UAS policies. In the Republic of Korea, the private
sector mostly inances broadband deployment, and the local authorities (matching national funding) and operators building the network
(matching overall public funding) leverage the allocation of national
funds. Similar arrangements exist in the United Kingdom.
Alternative technology: Mobile broadband can be deployed to bridge
the gaps in ixed broadband networks; this especially applies to extreme
remote areas with low population density where ixed broadband deployment does not make economic sense. India, the United Kingdom, and the
United States complement ixed broadband with wireless options.
Demand-side focus: Stimulating broadband uptake cannot be ignored to increase broadband access. The European Commission called
on member states to reinforce measures to drive demand. The Republic
of Korea also has actively promoted interest in and demand for broadband services through dedicated training programs. India launched the
RPST pilot for inancial inclusion and value-added services to encourage
uptake.
Holistic plan: A country is mostly likely to achieve its objectives when
a broadband deployment plan is part of a holistic ICT master plan and
when challenging—yet feasible—goals are clearly deined. The Republic
of Korea is a good example.
37
38
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
TABLE 1.9: UAS Comparisons Across Four Countries
United
States
United
Kingdom
Republic of
Korea
India
GDP per capita
(USD PPP) 2012
51,749
37,456
30,801
3, 813
Population
geography
High
Relatively high
urbanization
population
but low density density
in the large rural
areas
Dense and
restricted
geography
Populous and
~70% resides in
rural areas
UAS target
segment
• Poor
• Rural and
• Poor
• Rural and
• Poor
• Disabled
• Poor
• Rural and
remote
remote
remote
• Healthcare
• School and
• Women
library
Imposition of
Broadband USO
No
Funding
• USF (a levy
Stimulus
approach
No
No
• BBC’s license fee • Discounts to
on operators’
and digital TV
eligible poor
revenues)
switchover fund and disabled
• Government • Government
subscribers by
budget
budget
operators
• Private sector • Private sector • Government
contribution
contribution
budget
• European funds • Private sector
contribution
• USF (a levy
Mainly supply
side
Mobile broadband Yes
to complement?
Uniqueness
No
• Public-led
Supply side and
demand side
Supply side and
demand side
Mainly supply side
Yes
—
Yes (considered
very important)
• Multiple funding • Mostly inanced • USF plays an
funding
• A combination•
of major
one-of
investments
and yearly
•
subsidies to
operators
from the
•
government
• PPP to
implement
some projects
• Fund
allocation
via reverse
auction
Source: Authors’ elaboration.
on operators’
revenues)
• Government
budget
• Private sector
contribution
sources
by private sector
Operators bid • Holistic master •
for public funds plans for ICT
to support
development
deployment
• Broadband
deployment as
EC provides
guidelines and
a condition for
privatization or
aid for UAS
The incumbent
take-overs
•
BT matches
• A clear vision
to encourage
government’s
capital and
broadband
works with local uptake
authorities for
diicult rollout
important role
The Rural Public
Service Terminal
(RPST) pilot
for inancial
inclusion and
value-added
services
Mobile
broadband is
an important
alternative to ill
the gaps
ANALYSIS OF REFERENCE COUNTRIES
United States
In the United States, broadband is now centered in UAS policy and, more generally, the U.S. government has made broadband the core of its ICT development plans. The beneits of broadband and UAS are well understood: the
United States was the irst country to implement a UAS policy to address the
fact that it has a large number of low-density areas where it would not be economically viable to establish and maintain telecom services without subsidies.
The USF is relatively mature and has signiicant resources and has a well-deined structure.
The national regulator, the FCC, has recently made substantial efort to
transform the existing USF in order to put broadband at the heart of UAS policies. In particular, a large part of the funds that were previously used to support traditional voice services are currently being earmarked exclusively for
broadband initiatives by shifting resources from the High Cost Program into
the Connect America Fund.
In addition to the USF, the U.S. government has put in place speciic stimulus packages with signiicant resources (e.g., the Mobility Fund and the
Broadband Technology Opportunities Program). These initiatives use a combination of large one-of investments and grants, plus annual subsidies to operators. The government has also encouraged the private sector to invest in
unserved areas to the largest possible extent.
United Kingdom
The United Kingdom, similar to the United States, is a wealthy country that is
technologically advanced. London is a major inancial hub in Europe, and the
government is fully aware of the strategic importance of broadband for economic development. Unlike the United States, however, the United Kingdom
has a traditional decentralized approach to promote UAS, with a strong focus
on partnerships between local authorities and the private sector in the form
of PPPs.
Universal access and service in the United Kingdom does not include broadband; it only covers basic ixed services (i.e., a ixed connection to the PSTN for
individual users, public payphones, telephone bill monitoring capabilities, and
discounted tarifs for certain types of subscribers). As a memberof the EU, the
United Kingdom’s UAS policy is a transposition of its legislation. The framework
for EU legislation is particularly sensitive to the potential impact that UAS might
39
40
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
have on competition, and market interventions are not permitted if they could
disrupt competition.
In relation to broadband, the UK government is following a multifold approach to ensure broadband UAS. In particular, it is relying heavily on PPPs
and providing relevant subsidies or grants to leverage local broadband development plans for remote areas. The government is also funding several stimulus packages that are of strategic importance to the economy. Lastly, ISPs
are encouraged to make a Universal Service Commitment, stating their ambitions regarding broadband UAS; however, there are no legally binding broadband USOs. It is notable that the government’s broadband policies include
a number of speed targets: by 2015, the target is to have UAS broadband at
2Mbit/s, while 90 percent of the population will enjoy superfast broadband at
24Mbit/s, and residents of Super-Connected Cities will have access to speeds
of at least 80–100Mbit/s.
Republic of Korea
The Republic of Korea is also a relatively wealthy country and is one of the most
advanced countries in the world in terms of broadband development. This is
due to a combination of factors, including strong economic growth, a densely
populated and relatively small nation, and efective and extensive broadband
policies that were put into place at an early stage. These policies have been implemented through various master plans, funded by the government and the
private sector. The master plans are the crystallization of a very centralized,
detailed, and well-designed approach to ICT development in general and especially, to broadband development. For example, the Republic of Korea was
one of the irst countries to develop an all-IP iber optic network—as early as
2004—as a result of extensive government involvement.
Broadband UAS is less of an issue in the Republic of Korea than in the
United Kingdom and the United States, given the tremendous development
that has been achieved so far and its demographic (a small proportion of the
population lives in rural areas), economic enabling environments, and market
conditions. As a result, UAS also includes local telephone calls, public telephone service, emergency call services, as well as discounted tarifs for eligible
households; it excludes, however, broadband. To support broadband service
in the few remaining unserved or underserved areas, the Republic of Korea has
had to rely, instead, on ad hoc regulatory requirements, particularly when the
country’s telecom industry was in the process of being privatized.
ANALYSIS OF REFERENCE COUNTRIES
India
In comparison to the previous three reference countries, India faces many
more economic and demographic challenges. It is much less developed and
in 2011 had a GDP per capita at purchasing power parity of only US$3,825. It
is also the second most populous country in the world, and 70 percent of the
population reside in rural areas. To provide Internet access to such a large population is a challenge. Apart from the digital divide that exists between urban
and rural areas and between the wealthy and the poor, India’s topography also
poses a challenge in some areas (e.g., mountainous regions); thus government
intervention will be needed to support broadband UAS.
India recognized at a relatively early stage that ICT represents a tremendous opportunity for economic development and could contribute toward
reducing poverty in remote areas. In particular, there is strong emphasis on
low-cost software and the outsourcing of services that rely heavily on broadband. Thus, broadband is central to a much broader economic development
strategy. In view of this, India established a USF for village community phones
as early as 2006. The USF has expanded since to include broadband and mobile services, and considerably signiicant inancial resources have been invested in the development of ICT. Broadband is thus one of the pillars of the
UAS programs that are inanced by the USF.
41
CHAPTER 2
Analysis of Asian and
Latin American Countries
This chapter analyzes the universal access and service (UAS) programs that
have been implemented in eight Asian and Latin American countries: Costa
Rica; Dominican Republic; Chile; Bolivia; Sri Lanka; Pakistan; Vietnam; and
Bangladesh. The chapter concludes with a summary of the key lessons derived
from the analysis.
LATIN AMERICA
Costa Rica
Table 2.1 summarizes the main macroeconomic and broadband indicators for
Costa Rica. Costa Rica’s telecom market had been under the monopoly of the
state-owned incumbent operator, ICE (Instituto Costarricense de Electricidad)
and its subsidiary RACSA (Radiográica Costarricense S.A.) until 2008. Since
TABLE 2.1: Macroeconomic and Broadband Indicators for Costa Rica
Indicator
Unit
Year
Population
Million
2012
5
Land area
Million hectares
—
5
%
2012
65
12,733
Urbanization rate
GDP per capita at PPP
Value
USD
2012
Fixed broadband penetration per capita
%
2012
9.3
Mobile (active) broadband subscribers per capita
%
2012
14.5
Percent of individuals using the Internet
%
2012
48
ITU ICT development rank
#
2012
60 (/157)
Sources: Databases of the ITU and World Bank.
43
44
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
then, the telecom sector has undergone extensive change, primarily due to
deregulation of the market and the creation of SUTEL (Superintendencia de
Telecomunicaciones de Costa Rica), the new telecom regulator, in 2009.
In terms of broadband, the main obstacle to growth is the high price of
telecom services, since almost a quarter of Costa Rica’s population lives below
the poverty line. As a result, the adoption of broadband services is often limited to urban areas.
In 2009, the Costa Rican government published its National Plan for the
Development of Telecommunications (Plan Nacional de Desarrollo de las
Telecomunicaciones, or PNDT) (MINAET, 2009), deining its UAS program for
2009–14. Implementation of the program, however, is still in its early stage and
the results of the initiatives are yet to materialize.
Overview of UAS Programs
In 2008, General Telecommunications Law No. 8642 (Ley General de
Telecomunicaciones) created a USF, the National Telecommunications Fund
(Fondo Nacional de Telecomunicaciones, or FONATEL), which falls under the
responsibility of SUTEL. In 2011, the government of Costa Rica published its national broadband plan as part of its PNDT. Overall, the plan aims to improve the
country’s economy by rolling out broadband to rural areas and by fostering
ICT innovation. The principal objectives are the following:
i.
To provide broadband access through wireless technology when installation and maintenance costs of ixed infrastructure are too high.
ii. To install dedicated centers ofering broadband access to rural and urban
communities.
iii. To provide broadband access to public education institutions (pre school,
elementary, and high school).
iv. To provide broadband access in hospitals, clinics, and public health centers, as well as in Ministry of Health buildings.
The irst phase of the plan began in June 2011, leading to the identiication
of priority areas. In August 2012, the First FONATEL Program (Primer Programa
FONATEL) was published, which is a comprehensive, ive-year program that
integrates the various objectives of the PNDT. The First FONATEL Program is
based on the following pillars: the provision of (i) ixed telephone services;
(ii) Internet services to unserved or underserved communities; and (iii) access
to ICT access by public service centers in communities.
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
Governance
FONATEL was established in March 2012 and is currently recruiting its key staf.
As of November 2012, the fund had a director and a few managerial oicers.
FONATEL ultimately will oversee the management of funds, which is currently
the responsibility of SUTEL. The National Bank of Costa Rica currently manages
the trust fund.
The role of SUTEL, as regulator, is to ensure eiciency, equality, continuity,
quality, and coverage with regard to telecom services in Costa Rica. Besides
managing the USF, SUTEL’s primary functions include mandating open access
to networks and services by operators; encouraging investments in ICT; providing licenses and authorizations to service providers; managing the radio
spectrum; and resolving disputes between service providers.1
The Ministry of the Environment, Energy, and Telecommunications is in
charge of deining telecommunications laws and implementing the national
telecommunications strategy, in particular, the national broadband plan. In
August 2012, the government announced that management of the telecom
sector would migrate into the Ministry of Science and Technology.
Regulatory Framework
The legal framework for UAS in Costa Rica was established by General
Telecommunications Law No. 8642 and the Law No. 8660 to Strengthen and
Modernize Public Entities in the Telecommunications Sector (Fortalecimiento
y Modernización de las Entidades Públicas del Sector), both of which were
published in 2008. In particular, FONATEL was created under Article 34 of the
General Telecommunications Law, which sets out its objectives as follows:
i.
ii.
1
Accessibility: Promote access to high-quality telecom services in a timely,
eicient, afordable, and competitive manner to areas of the country
where the installation and maintenance of infrastructure for the supply of
these services is not commercially viable.
Afordability: Promote access to high-quality telecom services in rural
areas—where people do not have suicient resources to access them—in
a timely, eicient, afordable, and competitive manner.
See http://www.sutel.go.cr/.
45
46
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
iii. Education and health: Provide high-quality telecom services in a timely,
eicient, afordable, and competitive manner to institutions and people
with special needs, such as children’s shelters, the elderly, persons with
disabilities, indigenous people, schools and colleges, as well as public and
private health centers.
iv. Social inclusion: Narrow the digital divide and ensure that there is equal
opportunity for access and greater enjoyment of the beneits of information and knowledge through connectivity, infrastructure development,
and available ICT devices and broadband.
FONATEL programs are implemented by SUTEL, following an assessment of the applications for subsidies. The programs are designed in accordance with the goals and priorities deined in the PNTD and in line with the
UAS principles listed above. In addition, the management of FONATEL’s inancial resources includes ensuring that (i) resources are efectively and eficiently utilized; (ii) solutions are sustainable; and (iii) the award of funding
is transparent.
Investments
Planning: The irst phase of the PNDT started in June 2011 and set out to
identify the areas with the most urgent needs. The First FONATEL Program
determined approximately 190 locations in 5 regions and classiied them
into three levels of priority (1 to 3), based on a measure called the Human
Development Index at the Community Level (Índice de Desarrollo Humano
Cantonal) and the density of population. The irst trials were conducted in
Siquirres in 2012. In 2013, it was anticipated that the program would focus on
the northern region, where more than 80 priority locations have been identiied (Map 2.1).
In Siquirres, the program involves connecting six villages of approximately
750 households and 7 educational centers. In addition to access to residential
ixed telephony, the program intends to provide download speeds of up to
2Mbit/s for households and up to 8Mbit/s for public centers.
Funding: As deined in Article 38 of the General Telecommunications Law,
FONATEL’s resources originate from a special contribution from telecom operators. This contribution is set annually at between 1.5 percent and 3 percent
of their gross revenues; for 2012, it was set at 1.5 percent of gross revenues.
FONATEL receives additional funding from other revenue streams, including
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
MAP 2.1: Location of Sites in the Northern Region to Beneit from FONATEL
+80 Sites:
• Priority 1
• Priority 2
• Priority 3
Source: FONATEL and SUTEL.
from those such as telecom licenses, penalties from operators, late-payment
interest on transfers, and revenues from FONATEL’s investments. At the end
of July 2012, FONATEL had CRC96.5 billion (US$193 million) in resources. Most
of this originated from mobile spectrum concessions that had been awarded
(US$170 million), while the rest came from the contributions of operators
(US$23 million between March 2012 and July 2012).
FONATEL’s resources are invested in government bonds, which are placed
by the Ministry of Finance through a dedicated trust fund that was created in
October 2011, in line with Article 35 of the General Telecommunications Law.
As the money is invested in UAS projects, the trust fund, ultimately, will monitor and manage the use of FONATEL’s resources. It is believed that FONATEL
considers that its resources are suicient to cover the implementation cost of
potential projects that have been identiied so far, although the tendering process was not yet complete at the time of writing. Nevertheless, it should be
noted that FONATEL has considerable inancial resources to cover the cost of
Internet access for a relatively small population.
Implementation: As deined in Article 36 of the General Telecommunications
Law, FONATEL’s resources can be allocated toward (i) network operators and
47
48
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
telecom service providers to inance UAS-related projects, (ii) the shortfall in
services relating to the USO imposed on operators, or (iii) possible competitive disadvantages. As described earlier, SUTEL published its First FONATEL
Program only recently, and the tendering process to award the work contract
is in its inal stage of completion.
Projects: Other than FONATEL, there is currently no major program in place
that directly relates to broadband UAS in Costa Rica.
Dominican Republic
Table 2.2 summarizes the main macroeconomic and broadband indicators for the Dominican Republic, where broadband penetration is relatively
high (17 percent of households, as of June 2012) (TeleGeography) and where
45.9 percent of the population were Internet users by the end of 2013 (ITU database). Wireline infrastructure is relatively well developed compared to other
LAC countries, with broadband access across the country.
The main factors that hinder further installation, especially in rural areas,
include the following:
i.
ii.
Low purchasing power of the local population in some rural and suburban
areas, combined with low levels of education
Low afordability of broadband services—a main barrier to the adoption
of broadband by a high proportion of the population, since many households do not yet have access to basic commodities, such as drinking water
and electricity
TABLE 2.2: Macroeconomic and Broadband Indicators for the Dominican
Republic
Indicator
Unit
Year
Value
Population
Million
2012
10
Land area
Million hectares
—
5
%
2012
70
USD
2012
10,038
%
2012
4.3
15.4
Urbanization rate
GDP per capita at PPP
Fixed broadband penetration per capita
Mobile (active) broadband subscribers per capita
%
2012
Percent of individuals using Internet
%
2012
45
ITU ICT development rank
#
2012
94 (/157)
Sources: Databases of the ITU and World Bank.
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
iii. Relatively high tax rate applicable to telecom services (28 percent in 2012
and 30 percent planned for 2013), which indicates that broadband is not
a priority within the government’s development agenda, nor is it considered a basic service for citizens and businesses
iv. High cost of installing broadband infrastructure in rural areas, combined
with a lack of critical infrastructure, such as a national iber optic backbone,
the implementation of which has been delayed for several years
v. High cost of national connectivity—internal connectivity costs are high and
can signiicantly afect the economic viability of broadband in rural areas
As a result, according to the Dominican Telecommunications Institute
(Instituto Dominicano de las Telecomunicaciones, or INDOTEL), broadband
penetration rates can vary across provinces—75 percent of Internet users are
concentrated in just 4 of the 31 provinces.
Overview of UAS Programs
The Dominican Republic has established a USF, the Fund for the Development
of Telecommunications (Fondo de Desarrollo de las Telecomunicaciones) to
expand broadband coverage and ensure that people who live in remote rural
areas have access to broadband. The USF is administered by the national regulator, INDOTEL, and funded from the revenue that originates from telecoms
operators. The primary objectives of the Fund are the following:2
i.
ii.
iii.
iv.
Contribute to the economic and social welfare of the country
Promote technological innovation in the telecom sector
Foster competition in the telecom market
Render self-sustainable and market-oriented services, as well as operations and businesses to promote access to communications services
Many of the projects that are eligible for funding are development projects, which form part of INDOTEL’s biannual plans to extend UAS to rural areas
of the country. These projects are led by INDOTEL and implemented by the
private sector. Ultimately, the goal is to achieve the highest rate of social return on investment while, at the same time, ensuring that the projects are selfsustainable and proitable for the private sector in the long term.
See http://www.indotel.gob.do/index.php/indotel/fondo-de-desarrollo-de-las-telecomunicaciones.
2
49
50
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
INDOTEL has identiied 21 projects for 2012–13.3 These will be awarded to
private companies through open tender. The projects, totaling RD$1,063 billion (US$26.7 million), fall into three categories:
i.
UAS to advanced telecom services: These projects aim to improve access to telecom services. Initiatives include providing WiFi Internet access
and terminals to Santo Domingo’s metro stations, public spaces, and educational institutions; installing iber optic backbone; bringing broadband
Internet service to underserved areas; and promoting the development
and use of e-government applications.
ii. ICT training: Training projects include e-education services and applications to improve ICT literacy among students, such as Virtual Technology
Higher Education (virtual classrooms); Computers for Outstanding
Young (computer labs); Digital Salas; Fund for Academic Excellence; and
Community Technology.
iii. Increase of broadband uptake and usage by speciic groups and
communities: These projects aim to increase the adoption and usage of
broadband by speciic groups and communities. Initiatives include the development of a web portal to empower the agricultural industry; an integrated platform for the Ministry of Labor; and a virtual management
system that enables hospitals and healthcare organizations to remotely
manage the allocation and use of resources.
The USF also funds some ad hoc projects of a strategic and social nature.
These are outside the scope of INDOTEL’s biannual plans.
Governance
INDOTEL, as the telecom regulator, is in charge of managing the USF. More
generally, its mission is to promote the development of telecommunications
by implementing UAS; to ensure fair competition for the provision of public
telecom services; and to enforce the rights of customers and the providers of
these services. INDOTEL regulates the entire telecom sector, grants licenses,
prevents anticompetitive behavior, manages spectrum resources, monitors
the fulillment of operator obligations, and regulates interconnectivity, among
others.
“Resolución” No. 015-12 and Biannual Plan2012–2013. Available at http://www.
indotel.gob.do/index.php/indotel/proyectos-indotel/planes-bienales.
3
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
At a more global level, the National Commission for Information Society
and Knowledge (Comisión Nacional de la Sociedad de la Información y el
Conocimiento, or CNSIC) deines the national policies and strategies related
to ICT.
INDOTEL coordinates the work of CNSIC with other stakeholders, including
the Presidential Oice of Information Technology and Communication (Oicina
Presidencial de las Tecnologías de la Información y Comunicación); National
Statistics Oice (Oicina Nacional de Estadística); Ministry of Education, Ministry
of Higher Education, Science, and Technology; representatives of operators;
and other government agencies and nongovernmental organizations.
Regulatory Framework
The USF (Fondo de Desarrollo de las Telecomunicaciones) of the Dominican
Republic originated in 1998 under General Telecommunications Law
No. 153–98 (Ley General de Telecomunicaciones). INDOTEL’s 2010 policy guideline, the Universal Service Social Policy for the Telecom Development Fund,
sets the guidelines for implementation.
In 2007, the government published its national ICT plan, the e-Dominicana
Strategy (CNSIC, 2007).4 The plan has eight priorities: access to infrastructure;
digital inclusion; promotion of e-education; computer and Internet training;
promotion of public awareness of the beneits of broadband services; development of digital content; e-government; and e-services by the private sector.
With regard to broadband, the government set the following access targets:
i.
Broadband access for households within 5 kilometers at speeds of at least
128kbit/s.
ii. Internet access for 40 percent of the population, with at least 30 percent of
connectivity supporting speeds of at least 128kbit/s.
iii. Personal computer ownership by at least 50 percent of the population.
To achieve these objectives, INDOTEL established speciic goals to include
the following:
i.
4
Create incentives for broadband usage by making services afordable to
all citizens.
See http://www.cnsic.org.do/documentos/task,doc_view/gid,104/.
51
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
ii.
Stimulate the ICT market and contribute to its growth through the joint effort of the government and the private sector.
iii. Reduce the costs of broadband access by encouraging competition.
iv. Promote the use of the Internet in small companies and throughout the
public sector.
The Rural Broadband Connectivity Project, which was launched in 2007 as
part of the eDominicana Strategy, was the irst and most important project to
promote broadband and the use of computers across the country. The project
provided 508 unserved municipalities with access to residential and public
telephones; broadband services; broadband Internet access through Internet
cafés; and telephony through public call centers.
In March 2010, INDOTEL adopted Resolution No 024.10, which includes
broadband as part of UAS. This underlines the need to include broadband
in future development projects. The government of the Dominican Republic
has also implemented a number of spectrum management policies to foster
broadband usage. For instance, Decree No. 520-11 of August 2011 modiied
the national frequency allocation plan, providing additional spectrum to wireless broadband services. INDOTEL also intends to compel operators to share
their infrastructure, in order to increase broadband penetration and reduce
the cost of rolling out infrastructure.
Investments
Planning: The following criteria, along with cost-efectiveness, are considered
when selecting UAS projects:
i.
ii.
Average income level of the population and the level of poverty.
Integration of the population into economically developing areas, according to economic development opportunities and existing commercial activities.
iii. Density and distribution of the population.
iv. Infrastructure availability and accessibility.
Funding: The development projects that form part of INDOTEL’s biannual
plans to extend UAS to rural areas are led by INDOTEL and implemented by
the private sector. These projects are partly or wholly funded by the USF, which
has invested US$63 million since 1998. To date, the only broadband initiative
funded by the USF has been the Rural Broadband Connectivity project. There
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
has been a recent policy shift, however, toward broadband development,
especially since INDOTEL has included broadband within the scope of UAS.
INDOTEL plans to use 20 percent of the funding to support broadband-related
projects in 2013 and to invest US$60 million over the next ive years on the installation of a iber optic infrastructure.
Each telecom operator contributes 2 percent of its gross income through
the Telecom Development Contribution (Contribución al Desarrollo de las
Telecomunicaciones), of which 40 percent is used to inance INDOTEL’s regulatory activities. The remaining 60 percent is used to inance the USF. It should
be noted that there have been objections relating to the fact that a large part
of the funds has not been utilized.
Implementation: INDOTEL’s development projects include inputs received
from local organizations and authorities. Relevant details are published explaining the purpose, objectives, and characteristics of each project, including
the technical speciications and the terms of reference relating to the bidding
process. Following publication, INDOTEL launches the tender process, either
nationally or internationally, depending on the project. Public and private entities are encouraged to submit a proposal, and those whose bids meet the
criteria participate in a reverse auction to be selected. Companies that receive subsidies, but fail to fulill their obligations, are excluded from further
contributions.
The implementation of the project is generally made either through a direct subsidy to public telecom service providers or through direct contracts. It
should be noted that INDOTEL plans to put in place a PPP for the development
of iber optic networks, representing a signiicant investment. The State will invest in network infrastructure and the private sector will operate the network.
The USF gives preference to projects with high social returns that beneit groups residing in rural and low-income urban areas, where incentives
for private sector investment are inadequate and where secure access to
telecom services is required. Projects are prioritized according to a comprehensive assessment of the socio-economics of these areas, including household income and poverty levels, demographics, existing infrastructure, and
the cost-efectiveness of projects.
According to INDOTEL, there have been diiculties in obtaining environmental and local permits at the municipal level to allow for the installation of
infrastructure and facilities. Additionally, in the case of PPPs, there have been
issues relating to management changes within the relevant private entities,
which have afected the continuation and sustainability of projects. Diiculties
53
54
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
have also been experienced in relation to the promotion of ICT in educational,
health, and public safety institutions. In some cases, the institutions have neglected to sustain the projects, resulting in their ultimate failure.
Finally, in terms of assigning spectrum, discount rates for access and service have been made available to incentivize usage. There has been, however,
a lack of communication of these incentives to the public.
Projects: Broadband projects relating to UAS are implemented within the
framework established by INDOTEL. The government of the Dominican
Republic is currently developing a National Development Strategy (Estrategia
Nacional de Desarrollo) which will set targets for 2030. These will include
broadband as one of its priorities: to achieve UAS and encourage the use of
ICT. The focus will be on increasing the level of connectivity and access to
broadband at an afordable price. The strategy also aims to raise the capacity
and quality of the country’s international telecommunications access by expanding and upgrading the physical infrastructure and installing an openaccess iber optic backbone. This strategy will ensure that 60 percent of the
population is connected to the Internet by 2020 and 80 percent by 2030
(INDOTEL). Details relating to the implementation of this project have not yet
been released.
Chile
Chile is one of the most advanced countries in Latin America in terms of broadband uptake and, according to the ITU, it is the leading country with regard to
Internet penetration (53.9 users per 100 inhabitants at the end of 2011). This
is principally due to a highly competitive broadband market, which has led
private operators to invest in the expansion and upgrade of their infrastructure, coupled with a well adapted regulatory environment (including competition regulation, net neutrality, and afordable pricing). In terms of Chile’s
main macroeconomic and broadband indicators, a summary is included in
Table 2.3.
The Chilean government subsidizes the roll out of broadband infrastructure in rural areas through a USF, which is directly funded by the Treasury.
There has been some success, with the telecom regulator—Subtel—reporting
that over 90 percent of the country’s population had access to the Internet by
the end of 2011. Nevertheless, according to Subtel, there are several barriers to
broadband penetration, which include the following:
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
i.
Large investments are required to make broadband available in remote
rural areas, given the country’s geography
ii. High cost of operations and maintenance of broadband networks in remote rural areas
iii. High cost of international connectivity
iv. Relatively limited digital literacy
v. Cost of IT equipment
The Chilean government has taken the approach of not imposing a USO,
but rather to inance a USF, as explained below.
Overview of UAS Programs
Chile’s UAS policy encompasses broadband, with its USF—the Development
Fund for Telecommunications (Fondo de Desarrollo de las Telecomunicaciones)—as its key component. This fund was created in 1994 by the government to increase telecom service coverage in rural and low-income urban
areas through subsidies to private companies.
The initial objective of the USF was to improve access to payphones in
areas with low teledensity. Subsequently, it has supported telecenter projects,
Internet access for schools, broadband access, and broadband backbone infrastructure. Unlike in many countries, the inancing of the USF derives from the
national budget rather than from levies on telecom operators. The USF, itself,
does not implement telecom projects; rather, implementation is carried out by
public tender, awarded to companies and institutions willing to invest within
speciic conditions and obligations.
TABLE 2.3: Macroeconomic and Broadband Indicators for Chile
Indicator
Unit
Year
Value
Population
Million
2012
17
Land area
Million hectares
—
74
%
2012
89
USD
2012
22,363
Fixed broadband subscriber per capita
%
2012
12.4
Mobile (active) broadband subscribers per capita
%
2012
28.0
Percent of individuals using the Internet
%
2012
61
ITU ICT development rank
#
2012
51 (/157)
Urbanization rate
GDP per capita at PPP
Sources: Databases of the FCC, ITU, and World Bank.
55
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
Governance
Subtel, the telecom regulator, is responsible for managing the USF to coordinate, promote, encourage and develop Chile’s telecom sector, and make it
an instrument for economic and social development. Subtel focuses on four
areas, speciically to reduce the digital divide, increase market competition,
award grants to development programs, and reform institutions.
The Executive Secretary of Digital Development is responsible for the
national Digital Development Strategy. Implementation of the strategy is a
collaborative process that involves public and private entities, as well as academics and citizens. The State Modernization Unit and Electronic Government
(Unidad de Modernización del Estado y Gobierno Electrónico) of the General
Secretariat of the Presidency is dedicated to e-government services. Its key
objective is to promote the development of e-government policies, in order
to provide more eicient service to citizens and to increase transparency and
participation. The Ministry of Education is responsible for enhancing the digital literacy of children and young people.
Regulatory Framework
In February 2007, a Committee of Ministers for Digital Development was established by Chile’s administration. It is responsible for the design and implementation of Chile’s Digital Development Strategy for 2007–12 (Government
of Chile, 2007). This is the irst national broadband strategy in Latin America.
It was developed through public participation that included the input of citizens, professionals, consultants, activists, and civil society organizations.
The process included a blog on which people could post comments, proposals, and suggestions over a one-month period. The overall aim of the digital strategy was to contribute to Chile’s economic and social development
by means of the potential ofered by the use of information and communication technologies to improve the quality of education, increase transparency,
productivity and competitiveness, and provide better governance through
greater citizen participation and commitment. One of the objectives was to
increase the intensity and sophistication of ICT utilization by students and
civil society. To achieve this objective, the strategy sets a number of speciic
goals, as follows:
i.
ii.
Double the number of broadband connections to cover the entire country.
Double the current ICT investment rate of businesses and institutions.
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
iii. Strengthen the institutional digital framework through the participation
of the public and private sectors and civil society.
With regard to universal service for unserved and underserved areas,
Chile’s policy envisages that mechanisms have to be studied to provide high
quality Internet access at afordable prices. Extending coverage to areas that
still do not have access is also an issue. In addition, the policy for the development of “infocenters” would be strengthened and redirected, converting
them into not only places in which the population has access to the Internet,
but also into relevant service centers for communities.
In 2012, the President of Chile launched a Program for Change, Future and
Hope (Programa de Gobierno para el Cambio, el Futuro y la Esperanza, Chile
2012–2014) to include broadband as one of its objectives. This program sets
the stage to reduce the digital divide by recommending that the USF be redeined to provide broadband services to educational institutions and households in isolated and vulnerable areas. In line with this, projects are now
providing telecom connectivity to these areas. The program’s objectives by
2014 are as follows:
i. 70 percent of households to have access to broadband access.
ii. 99 percent of the country to be covered.
iii. 98 percent of schools to have Internet connectivity.
Following Subtel’s success in increasing access to the Internet by 98 percent of the population through wireless or ixed technology, the government
is now developing its Digital Agenda for 2013–20. This is divided into ive components, each with its own initiatives. One of them—Connectivity and Digital
Inclusion—is designed to ensure that all citizens have access to the Internet
and ICT, with a focus to shift from supply to demand. In particular, broadband
usage will be increased, the quality of services will be improved, and support
will be given to the generation of content.
Investments
Planning: Subtel is responsible for administering and managing the USF.
Projects are not initiated in response to the requests of telecom carriers, municipalities, neighborhood associations, and other community and social organizations. These are aggregated into a portfolio for evaluation by Subtel from
a technical and economic standpoint only and later transformed into formal
57
58
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
proposals by the Development Council of Telecommunications. If approved,
the proposals are integrated into projects that are eligible for subsidies, in
which case a tender is called the following year. The Development Council of
Telecommunications decides on the annual program, selects the projects that
are eligible for subsidy, awards the subsidies through competitive tender, and
publishes an annual report.
Funding: The USF receives resources directly from the state budget on an annual basis, as established by the Budget Law. It also receives additional funding
from regional governments. Funds can be fully utilized annually.
The Rural Internet Network program will invest approximately US$100
million, which includes a US$43 million subsidy inanced, equally, by the
Telecommunications Development Fund and regional governments. The
balance will be provided by the incumbent ixed operator, Entel (Empresa
Nacional de Telecomunicaciones), which was awarded the project in
December 2009.
Subtel has carried out a cost–beneit analysis to ensure the viability of the
project. Estimates were made, using an engineering model based on a combination of iber and wireless technologies and including investment, operations,
and maintenance expenses. The potential beneits covered forecast revenues,
business productivity gains, and the advantages of e-government. The analysis demonstrated that, among other beneits, a small but positive inancial
net present value would result and the impact on education and employment
would be positive. The maximum amount of subsidies to be awarded was set
at US$63 million, triggering a net present value of zero. The actual funding required would then be determined through open competitive bidding and the
successful bidder would receive US$43 million.
Implementation: Subtel inances projects through subsidies to the private sector. According to the legislation governing the USF (Law 18.168 and
Supreme Decree No. 353, 2001), those operators that wish to participate in
a particular project, inanced by the fund, must follow a public tender process. According to Subtel, a PPP approach allows for greater transparency in
the allocation of resources, ensures technological neutrality, and has proved
to be an eicient mechanism for attracting foreign capital. Periodic reports
are published relating to the assessment of achievements in terms of coverage, access (e.g., population penetration), and usage. These reports are
subject to audits.
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
In 2010, the Chilean government initiated the Rural Internet Network,5 program to provide Internet connectivity to households, businesses, schools, health
centers, and government buildings in 1,474 localities (representing approximately 3 million people) across the country. The program provides download
speeds of up to 1Mbit/s and upload speeds of up to 512kbit/s, as well as service
quality and prices in rural areas similar to those ofered in larger towns (Ministerio
de Transportes y Telecomunicaciones, 2010). The selection of locations was provided by local and regional authorities and civil organizations. The program also
relects the development priorities relating to agriculture, SMEs, and tourism.
Projects: Chile has been particularly successful in providing and subsidizing
broadband access for schools, funded by the USF. Broadband access for schools
reached 92 percent in 2012 (a signiicant increase of 49 percent in 2009). This
level compares with the 93 percent average in developed countries. In addition, the 4G licenses that were recently introduced in Chile are compelled to
provide coverage to 554 isolated locations.
Bolivia
The Bolivian telecom market is still in the early stage of development, although
broadband usage and Internet connectivity, in general, have increased in recent years. Between 40–50 percent of the population has Internet access,6 but
the level of penetration is negligible, since only 3 percent of households had
broadband connections as of June 2012 (TeleGeography). Moreover, connection speeds are usually quite low: 1.1 Mbits/s as of the third quarter of 2013.7
Reasons for the low level of Internet penetration are deemed to include
the lack of infrastructure; the landlocked position of the country (preventing
international telecommunications access via submarine cables, which results
in expensive communications traic); the limited level of competition in the
broadband market; and the focus of operators on the roll out of ADSL services
at the expense of dial-up Internet. Furthermore, the relatively high cost of
ADSL makes this service out of the reach of the majority of Bolivians. Table 2.4
summarizes the main macroeconomic and broadband indicators for Bolivia.
Red de Internet Rural: Todo Chile Comunicado (Rural Internet Network: Chile Connected).
6 See http://www.bolpress.com/art.php?Cod=2012051804.
7 See http://www.akamai.com/dl/akamai/akamai-soti-q313-infographic.pdf.
5
59
60
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
TABLE 2.4: Macroeconomic and Broadband Indicators for Bolivia
Indicator
Unit
Year
Population
Million
2012
10
Land area
Million hectares
—
108
Urbanization rate
GDP per capita at PPP
Fixed broadband penetration per capita
Value
%
2012
67
USD
2012
5,196
%
2012
1.1
Mobile (active) broadband subscribers per capita
%
2012
6.7
Percent of individuals using Internet
%
2012
34
ITU ICT development rank
#
2012
99 (/157)
Sources: Databases of the ITU and World Bank.
Overview of UAS Programs
There was no telecom-speciic USF until 2011. Prior to this, a nonsector-speciic
national fund, the National Fund for Regional Development (Fondo Nacional
de Desarrollo Regional) provided inance for nonproit social projects in the
rural areas of Bolivia. Resources originated from the telecom sector (e.g.,
through frequency assignments and penalties to operators).
Once the national development policy, Bolivia Digniied, Sovereign,
Productive and Democratic by Living Well (Bolivia Digna, Soberana,
Productiva y Democrática para Vivir Bien) came into place, telecommunications gained more attention. Covering the period 2006–11, it was approved
by a Supreme Decree in September 2007, establishing that UAS in relation to
information, knowledge, and communications was the responsibility of the
State. This policy led to the creation, in 2011, of a USF—the National Telecom
Program for Social Inclusion (Programa Nacional de Telecomunicaciones de
Inclusión Social), which replaced the National Fund for Regional Development.
It is managed by the General Directorate of Telecommunications (Dirección
General de Servicios de Telecomunicaciones) within the Vice-Ministry of
Telecommunications (Viceministerio de Telecomunicaciones). The USF will inance programs and projects in the ICT sector to achieve UAS in rural areas
and for the beneit of social interest.
The government of Bolivia has also established the National Committee
on ICT (Comité Plurinacional de Tecnologías de Información y Comunicación).
This committee will promote policies and development plans for the ICT
sector; coordinate projects with relevant stakeholders; deine mechanisms to
implement projects; and monitor activities.
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
Governance
The Telecom and Transport Authority (Autoridad Telecomunicaciones y
Transportes, or ATT) is the Bolivian telecom regulator. Its role is to supervise, monitor, and regulate the telecom sector and to promote UAS quality
and eicient services. It is also responsible for the USF. The ATT role in UAS
programs is complemented by the Agency for the Development of the
Information Society in Bolivia (Agencia para el Desarrollo de la Sociedad de
la Informacion en Bolivia). It was established in 2002 and proposes policies,
implements strategies, and coordinates actions to reduce the digital divide
in the country through the promotion of ICT in all areas. The following entities are also involved indirectly in the management and control of the UAS
programs:
i.
ii.
The Vice-Ministry of Telecommunications: This falls under the Ministry
of Works, Services and Housing, whose mission it is to design, implement,
and evaluate policies, legislation, and strategies for the development,
monitoring, regulation, and control of the telecom and postal sectors. It
also promotes equitable UAS to public telecom services and prioritizes the
poorest sectors. The Vice-Ministry leads the development of the telecom
sector through the Directorate-General of Telecom Services.
The Council: The advisory agency that oversees the executive director of
the ATT and recommends measures and actions relating to the telecom
sector. The Council consists of the Minister of Works, Services and Housing;
Deputy Minister of Telecommunications; Deputy Minister of Transport;
and two representatives of private organizations and/or users.
Regulatory Framework
The 1995 Telecommunications Law originally oversaw the expansion of rural
coverage and quality of service through USOs that were licensed to four main
operators (ENTEL, COMTECO, COTEL, and COTAS). These USOs referred to local
telephone networks and included the expansion and installation of ixed lines.
Subsequent to 2000, new targets have been set, including the installation of
telephones for free local calls in schools and social assistance centers.
In June 2007, the government published Decree No. 29174 to ofer incentives and funding to operators to expand telecom access in rural areas. The incentives included direct award of concessions for rural services; licenses for
frequency use; exemption from spectrum usage fees in rural projects; the
61
62
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
possibility to interconnect rural networks with other operators’ networks;
and special interconnection rates for operators involved in rural projects. The
UAS was addressed by the constitution and enacted in February 2009, establishing the right of all to UAS through ICT and postal services. It also states that
the provision of ICT services is the responsibility of the State through public,
mixed, cooperative, or community-based entities (telecom services may be
provided through contracts with private companies).
Bolivia’s national development policy (Bolivia Digna, Soberana, Productiva
y Democrática para Vivir Bien) was approved by Supreme Decree in September
2007. Its objectives are the following:
i.
Universal access to information, knowledge, and communications through
signiicant expansion of service coverage.
ii. Management and control of the telecom sector and creation of a new regulatory framework.
iii. Improvement in the quality, continuity, and afordability of public telecom
services through mechanisms that will ensure the sustainability of services and contribute to better livelihoods.
The means to achieve these outcomes was the enactment, in August
2011, of the General Telecommunications, Information, and Communications
Technologies Law No. 164. This law ensures that people have a right to UAS
and ICT, stipulated by Article 5, which includes the right to communications,
education, knowledge, science, technology, and culture. Article 66 states that
the government will expand the telecom infrastructure for broadband Internet
services by 2015 (deined for the irst time as a basic service). Furthermore,
Article 71 declares it a national priority to promote the use of ICT for the wellbeing of Bolivians. To support these objectives, Article 65 established a USF,
the National Telecom Program for Social Inclusion (Programa Nacional de
Telecomunicaciones de Inclusión Social).
Investments
Planning: The coordination of plans and projects is carried out by the Ministry
of Public Works, Services, and Housing; the USF; and the National Committee
on ICT. Since the creation of these last two entities is fairly recent, the project
has not yet been deined, given that broadband is new to Bolivia—the
Internet, until 2011, was considered a value-added rather than a basic service.
The Ministry of Public Works, Services, and Housing sets the guidelines, which
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
are published in its Social Economic Development Plan (Plan de Desarrollo
Económico Social) and outlines the objectives and milestones of projects to
achieve the state’s goals. To date, no information on broadband projects has
been published, although there is speculation that they will address three
challenges, identiied by ATT: the (i) lack of infrastructure in rural areas where
a large percentage of Bolivians live; (ii) high cost of services due, in part, to expensive national and international capacity building; and (iii) low afordability
of Internet services.
Funding: Since January 2012, UAS projects have been inanced by the regulator from the contributions, licenses, and ines it has collected. The funding is
administered by the Ministry Public Works, Services, and Housing.
Implementation: The Project Execution Unit (Unidad de Ejecución de
Proyectos) of the National Committee on ICT carries out UAS projects.
According to Article 67 of the General Telecommunications and ICT Law, the
unit requests public companies (i.e., majority-owned by the State) to undertake the development of telecom services for social inclusion. In cases where
this is not possible, private operators are encouraged to bid competitively
through public tender. The monitoring of project activities falls to the ViceMinistry of Telecommunications.
Projects: The Agency for the Development of an Information Society
(Agencia para el Desarrollo de la Sociedad de la Información) currently manages several UAS programs, one of which relates to e-government, which differs from the traditional approach where ICT is used to support existing public
administration systems. Instead, ICT will transform and improve existing institutional structures for greater transparency and accessibility. Other programs
include the following:
i.
Promotion of ICT through communication campaigns and promotional
events for multiple segments of the population.
ii. Bolivian Observatory on the Information Society (Observatorio Boliviano
de la Sociedad de la Información), which is the point of contact for various
international public, private, academic, and scientiic entities relating to
ICT issues.
iii. Creation of an advanced telecom network, Latin American Cooperation
for Advanced Networks (Cooperación Latino Americana de Redes
Avanzadas), for academic research in the region.
63
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
ASIA
Sri Lanka
The broadband market remains at a nascent stage in Sri Lanka and, as of June
2012, broadband household penetration was only 7.7 percent. Sri Lanka, therefore, remains relatively behind in terms of broadband development within
the Asia region (TeleGeography). This is due to what has been its comparatively limited economic growth and, more importantly, to the impact—until
recently—of a civil war on its economy. Sri Lanka’s economy, nevertheless, is
now growing rapidly. Like many other developing countries, it has a poor ixed
telecom infrastructure, although there are recent signs of a very signiicant
increase in broadband accessibility and usage, due primarily to widespread
development of mobile broadband. Table 2.5 relects the country’s main macroeconomic and broadband indicators.
A USF was formed in 2003. Previously managed by the regulatory
agency, it is now managed—since 2010—by the ICT Agency and is inanced
by a compulsory contribution from operators. Partial contributions can be
reclaimed by operators when they invest in UAS projects. More generally,
the telecom regulator and the ICT Agency have focused on ICT development in the country within a 10-year initiative, e-Sri Lanka, which was initiated in 2006.
Since 2012, the regulator has been involved in policies, standardization,
and installation plans to boost broadband penetration, especially in underserved areas. At the same time, it encourages investments in the roll out of the
broadband infrastructure8—in particular, the installation of next-generation
broadband services. In its forthcoming National Broadband Policy, the regulator expects to provide guidance and encouragement to operators to install
iber optic networks (which included households as of 2012). The draft version
of the policy has several initiatives to encourage stakeholders to install highspeed broadband services in underserved areas, including special subsidies
and tax incentives. It also provides for the promotion of broadband in schools
and other educational facilities, while supporting distance learning programs.
Alternative technologies to take broadband to rural communities have also
been considered (Jayasekera, 2012).
8
See http://www.dailynews.lk/2012/04/26/bus35.asp.
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
TABLE 2.5: Macroeconomic and Broadband Indicators for Sri Lanka
Indicator
Unit
Year
Value
Population
Million
2012
20
Land area
Million hectares
—
6
Urbanization rate
%
2012
15
USD
2012
6,146
Fixed broadband penetration per capita
%
2012
1.7
Mobile (active) broadband subscribers per capita
%
2012
4.4
Percent of individuals using Internet
%
2012
18
ITU ICT development rank
#
2012
107 (/157)
GDP per capita at PPP
Sources: Databases of the FCC, ITU, and World Bank.
Overview of UAS Programs
As part of the deregulation process in 2003, the government of Sri Lanka imposed a levy on international calls relating to UAS. Two-thirds of contributions
can be reimbursed to operators within three years to inance the development
of networks in unserved and vulnerable areas. The areas, which meet USO criteria, are determined by the regulator.
In addition to these investments, the e-Sri Lanka initiative is deined as a
holistic approach to support ICT development in the country, including broadband. The major components of the e-Sri Lanka initiative include the following:
i.
Infrastructure for Internet or broadband connectivity by way of backbone
networks, roll out of a government-wide broadband network, and installation of a network of telecenters to enable access in rural areas
ii. Promotion of ICT within government and application of e-government
into key government processes
iii. Introduction of ICT into all levels of education and sectors to increase
human capacity
iv. Development of an IT and IT-enabled service industry
v. ICT access (and promotion of usage) in rural areas and by disadvantaged
groups
Governance
The Information and Communication Technology Agency (ICTA) was established in 2003 to lead the country’s ICT policy. The ICTA manages the USF
65
66
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
MAP 2.2: Population Density in Sri Lanka as of 2012
Sri Lanka
323 persons per square km
N
Jaffna
620
37–414
415–497
498–771
772–1,714
1,715–3,439
Not available
Kilinochchi
94
Mullaitivu
38
Vavuniya
Mannar
93
53
Trincomalee
Anuradhapura
128
149
Puttalam
264
Polonnaruwa
131
Batticaloa
201
Kurunegala
348
Matale
247
Kandy
714
Kegalle
Gampaha 497
1,714
Colombo
Ampara
153
Nuwara Eliya
414
3,438
Badulla Moneragala
287
Kalutara
771
334
Galle
655
81
Ratnapura
Matara
Hambantota
239
638
Department of Census
and Statistics
Sri Lanka
Source: Department of Census and Statistics, Sri Lanka (2012).
through the e-Sri Lanka initiative (until 2010, it was administered by the regulating agency, the Telecom Regulatory Commission of Sri Lanka, or TRCSL).
The ICTA functions under the Ministry of Telecommunication and Information
Technology and is required to take all necessary measures to implement the
government’s Policy and Action Plan in relation to ICT. The e-Sri Lanka initiative is thus implemented by the ICTA, but is administered by the Presidential
Secretariat.
The ICTA works closely with other entities on UAS issues. The Ministry of
Telecommunication and Information Technology formulates general policy
guidelines relating to the telecom sector and TRCSL (created by The Telecom
Act of 1991) acts as the national regulator. It is responsible for fair and sustainable competition, price regulation, spectrum management, numbering,
overall quality of telecom services, and consumer protection.
Regulatory Framework
The e-Sri Lanka roadmap called for the implementation of the Information
and Communication Technology Act, No. 27 of 2003, which established the
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
Information and Communication Technology Agency (ICTA) as the main ICT
policymaking entity in Sri Lanka. The act deined the ICTA’s duties as primarily
those related to UAS—to bridge the digital divide and promote ICT to rural regions. The Policy and Procedures for ICT Usage in Government (e-Government
Policy) was approved on December 2009. Lastly, the TRCSL is due to submit
its advice to the government regarding a next-generation network policy and
regulatory framework. The policy, planned for the last quarter of 2012, includes
considerations relating to USO programs (Jayasekera, 2012).
Investments
Planning: The e-Sri Lanka initiative was designed as a national cross-sectoral
ICT development program. It includes an extensive list of supply and demand
stimulus projects and ICT knowledge development initiatives that cover multiple sectors (private, public, and education) in urban and rural areas. The projects are categorized into six interdependent programs: ICT policy, leadership
and institutional development; information infrastructure; re-engineering of
government; capacity building of ICT human resources; ICT investment and
development of the private sector; and e-society.
Funding: According to the ITU, the TRCSL disbursed LKR3.46 billion (US$31
million) between March 2003 and March 2008 (Jayasekera, 2012). The funding
for the USF originates from various sources, including from a levy on operator revenues, direct contributions from the government, international institutions (e.g., World Bank), and other organizations (e.g., Export-Import Bank
of Korea). The levy collected from operators comes from a charge imposed
on incoming international calls to Sri Lanka. A portion of this levy is then set
aside as a Telecom Development Charge to fund the USF. Operators can then
claim back up to two-thirds of these funds within three years to inance network development in unserved and underserved areas, as determined by the
regulator. International institutions also participate in the efort, an example of
which is Nenasala, a knowledge center, described below.
Implementation: Several projects have been established as part of the e-Sri
Lanka initiative. The Nenasala Center has implemented a project to establish
1,000 knowledge centers in Sri Lanka. These facilities include rural knowledge
centers, e-libraries, distance and e-learning centers, and computer kiosks, of
which 600 will be funded jointly by the World Bank and the government of
67
68
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
India and the remainder by other sources, including the government of Sri
Lanka (ICTA, 2010). At the time of writing, 698 centers have been set up around
the country.9
The Lanka government Network Project is related to e-government initiatives, and provides the necessary infrastructure to connect government organizations and local bodies. A total of 325 locations are to be connected to a
backbone network in a cost-efective and secure way. The Lanka Gate Project
is another e-government project, which intends to ensure the interoperability
of the diferent e-services to citizens.
The USF has also provided subsidy support to operators. A recent ITU
study reports that the USF has assisted in the construction of 909 telecom
towers in 23 districts, spread over 9 provinces, to provide mobile and ixed
wireless services in rural and remote areas (Jayasekera, 2012).
In 2010, an InfoDev study10 reported the results of the e-Sri Lanka initiative, which included (in addition to the knowledge centers, themselves) an estimated 33,000 users at these facilities, 112 on-line e-government services for
the private sector, approximately 35,000 people trained in ICT, and the creation of chief information oicers in almost 600 government agencies.
The progress of the projects is disclosed within detailed annual reports of
the ICTA, which undertakes evaluation surveys and ield visits. The ICTA also
makes a comparison analysis of national statistics with international indices
and participates in exhibitions to present its results and best practices.
Projects: Other programs relating to the development of broadband are initiated on an ad hoc basis. For instance, the TRCSL implemented the eNable
project in 2005 to provide ICT facilities for the empowerment and development of disabled and marginalized groups in Sri Lanka. Most of the funding
came from the TRCSL and the telecom operators, and consisted of free packages for a limited time period, which included dongles and connectivity. The
ofers came under the license conditions of operators and their commitment
toward social responsibility. The eNable project has also received considerable support from the ITU in the form of equipment. In addition, through this
project, the TRCSL has introduced or developed ICT in 98 schools, 38 vocational
See http://www.nenasala.lk/.
See http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/
SAR/2010/12/25/0D9887F3F94C315385257804003D75E0/1_0/Rendered/PDF/
P0817710ISR0Di022520101293275514930.pdf.
9
10
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
MAP 2.3: Coverage Plans for the Lanka Government Network Project
Sri Lanka
Kankesanturai
Point Pedro
Jaffna
Jaffna
PALK STRAIT
Political Map
Delft
Island
INDIA
Elephant Pass
Kilinochchi
PALK STRAIT
Mullaitivu
Mankulam
Mannar
Island
ADAM’S
BRIDGE
N
Peninsula
Mannar
Pulmoddal
BAY
OF
BENGAL
Vavuniya
Trincomalee
Mutur
Hammillewa
Anuradhapura
Kalpitiya
Habarane
Puttalam
GULF
OF
MANNAR
Polonnaruwa
Maho
Batticaloa
Kattankudi
Chilaw
Kurunegala
LGN Stage II
• 5 provinces,
13 districts
• 325 sites
Matale
Kandy
Negombo
LGN Stage II
• 3 provinces,
5 districts (120 sites)
• 5 provinces (30 sites)
International Boundary
Province Boundary
National Capital
Province Capital
Other Cities
Ampara
Kegalle
Colombo
Sri Jayawardenepura Kotte
Mount Lavinia
Moratuwa
Kalutara
Nuwara Eliya
Badulla
Moneragala
Pottuvil
Ratnapura
Kumana
Ambalangoda
Galle Matara
Hambantota
0
20
40 Km
Dondra Head
INDIAN OCEAN
Source: http://www.icta.lk/en/programmes/i-infrastructure/75-projects/programmes/re-engineeringgovernment/131mainprojects/240-lanka-government-network-project-lgn.html.
training institutes and universities for disabled persons, and 40 Ranaviru villages (communities for disabled soldiers) (Jayasekera, 2012).
In May 2011, the TRCSL and the ITU inaugurated a project, “Connect a
School, Connect a Community.” The objective is to connect 25 schools in the
Southern Province of Sri Lanka.11
Pakistan
Internet broadband in Pakistan is still in the early stages of development.
Based on data from TeleGeography, Pakistan is one of the last countries in the
world to adopt broadband since it introduced DSL services on the ixed incumbent’s network through its partner ISPs in 2002. Internet penetration has
increased signiicantly since 2008, mostly through the enthusiastic uptake of
WiMAx by subscribers. Pakistan has one of the largest WiMAx networks in
11
See https://itunews.itu.int/En/1979-Connect-a-School-Connect-a-Community.note.aspx.
69
70
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
the world, accounting for an estimated 50 percent of urban broadband connection as of April 2012. Overall, DSL represents around 50 percent of connections, WiMAx approximately 25 percent, and the rest are provided using other
broadband access technologies. In total, at the end of April 2012, there were
nearly 2 million broadband subscribers, representing nearly 1.1 percent of the
population (Table 2.6).12
Pakistan faces several challenges to development of its broadband network. These include low income levels, limited literacy and ICT knowledge,
and a lack of local content. The government, nevertheless, has taken actions to
promote development, in particular, the Ministry of Information Technology,
which adopted a Broadband Policy in 2004 (TeleGeography). A USF was established in 2006.
Overview of UAS Programs
The USF is operated by an independent company, Universal Service Fund. It is
managed by a board that includes public and private stakeholders. Since its
formation in 2006, the USF has run several programs.13
i.
Rural Telecom Program: Provide telecom services in unserved areas
through contracts with major telecom service providers.
TABLE 2.6: Macroeconomic and Broadband Indicators for Pakistan
Indicator
Unit
Year
Value
Population
Million
2012
179
Land area
Million hectares
—
77
%
2012
37
2,741
Urbanization rate
GDP per capita at PPP
USD
2012
Fixed broadband penetration per capita
%
2012
0.5
Mobile (active) broadband subscribers per
capita
%
2012
0.3
Percent of individuals using Internet
%
2012
10
ITU ICT development rank
#
2012
129 (/ 157)
Sources: Databases of the ITU, Pakistan Telecommunication Authority (PTA), and World Bank.
Pakistan Telecommunication Authority’s Telecom Indicators. See http://www.pta.gov.pk/
index.php?option=com_content&view=article&id=269&Itemid=599.
13 See http://www.usf.org.pk/Company.aspx.
12
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
ii.
Broadband Program: Improve broadband penetration, especially in small
towns where there is a large proportion of unserved citizens.
iii. Optical Fiber Program: Introduce iber optic networks to districts that do
not have iber optic connectivity (approximately 30 percent of a total of
400 districts).
The USF has also launched four special projects, which aim to enable
people with disabilities to use telecom services; convert computer centers into
multipurpose community telecenters; build telemedicine networks and services; and build telecenters.
Governance
The Universal Service Fund is an independent, but wholly state-owned, company that is responsible for the USF. It prepares project plans to identify the districts that are to be funded and establishes the telecom systems and services to
be introduced. The entity also determines the reserve price (i.e., the maximum
subsidy value), which is calculated based on expected revenues, capital, and operating costs incurred in fulilling the project. The USF entity is also responsible
for the management of the auction process, as well as overseeing the projects.
The USF is directed by a board of directors that includes equal representation from public sector organizations (i.e., the Ministry of Information
Technology and the Pakistan Telecommunication Authority [PTA]) and from
the private sector (i.e., representatives of consumer groups and telecom operators), plus an independent chief executive oicer. The board sets goals for
the USF, allocates budgets and reviews projects, and proposes changes in the
USF policy to the Ministry of Information Technology. Other entities involved
in UAS include the following:
i.
Ministry for Information Technology: Responsible for the enactment of
USF-related laws and policies. It is also responsible for the constitution of
the USF board and monitors the activities of the company
ii. Pakistan Telecommunication Authority: The national regulator for the
telecom sector, responsible for the establishment, operations, and maintenance of telecom infrastructures and systems, as well as for the provision of telecom services. It also ensures that licensees meet their USF
obligations and utilize the funds appropriately.
iii. Auditor General of Pakistan: Responsible for the annual audit of USF
accounts.
71
72
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
Regulatory Framework
In 2004, the Ministry for Information Technology drafted the Broadband
Policy,14 which was designed to encourage the following:
i.
Afordable and constant high-speed broadband Internet services to business and residential areas.
ii. Entry and growth of new service providers, at the same time motivating
the growth of existing ones.
iii. Private sector investment in local content generation and broadband
services.
The Broadband Policy identiies the following three challenges to broadband growth in Pakistan:
i.
Content: There is a signiicant lack of local content in local languages (e.g.,
online stock market, online education, e-government, e-commerce, and
home shopping).
ii. Last-mile access: The low quality and small scale of ixed networks is a
major concern. There are quality issues with copper beyond 1.5 kilometers from the exchange and very limited availability of spectrum for wireless broadband access.
iii. Price: The price for broadband in Pakistan is signiicant. At the time that
the Broadband Policy was drafted, the price was 60 times higher than in
the Republic of Korea, (in comparison to the lowest priced, unlimited plans
available).
To overcome these barriers, the policy included an action plan to address
four components of the broadband value chain:
i.
ii.
Content facilitation: Increase local content and translate it into local
languages.
Backhaul facilitation: Facilitate international and domestic backhaul links
to enable service providers to ofer afordable broadband services.
14 See http://www.usf.org.pk/FCKeditor/editor/filemanager/connectors/aspx/UserFiles/Broad%20Band%20Policy.pdf.
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
iii. Broadband delivery facilitation: Encourage the roll out of various broadband delivery technologies to ensure cost-efective broadband delivery
to diferent areas in Pakistan.
iv. User terminal equipment facilitation: Increase the availability and uptake
of low-cost devices.
The Broadband Policy, in late 2005, achieved its target of 100,000 DSLs. It
remains unclear whether there were any other targets to be met.
The Ministry for Information Technology established the USF Policy15
through the Pakistan Telecommunication (Amendment) Act of 2006.16 The
policy is supported by the USF Rules of 2006,17 which specify how the USF is to
be managed and administered. The USF Policy covers the objectives of broadband, as well as ixed and mobile telecommunications. The USF’s main objectives are to: (i) make available afordable voice telephony and data services to
85 percent of the population by 2010 and up to 95 percent by 2015; (ii) provide attractive subscriptions to achieve 5 percent teledensity in rural areas by
2010; and (iii) kick-start the broadband and ICT markets to achieve a 1 percent
nationwide broadband penetration by 2010, with at least one telecenter for
every 10,000 people in USF contract areas.
The USF Policy is technology-neutral in order to encourage the use of
the most cost-efective technologies, depending on particular local conditions and contract requirements. Additionally, infrastructure sharing is mandatory, in order to support multiple operators in the same area and thus promote
competition.
Investments
Planning: All USF projects are approved by the board of directors and are
advertised subsequently for open reverse auction. The auction amount is
capped, based on the project’s estimated capital costs and market conditions.
Priority is given to rural, remote, and small towns with the highest number of
unserved or underserved inhabitants. Only companies with valid licenses to
provide telecom services for relevant regions are eligible to participate in the
15 See http://www.usf.org.pk/FCKeditor/editor/ilemanager/connectors/aspx/UserFiles/USFPolicy.pdf.
16 See http://www.pta.gov.pk/media/telecom_act_170510.pdf.
17 See http://www.usf.org.pk/fckeditor/editor/ilemanager/connectors/aspx/UserFiles/2006.pdf.
73
74
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
auction.18 The USF company also performs regular monitoring of projects and
imposes penalties for nonperformance.
Funding: Since its establishment, the USF has collected PKR58 billion (US$600
million).19 According to the USF website, only PKR22 billion (US$227 million)
had been awarded in subsidies as of October 2012. The USF is mainly funded
by revenues collected from telecom licensees, but also from a levy on international calls and through dedicated grants. The USF contribution from operators is set at 1.5 percent of annual gross revenue, minus interoperator
payments and other regulatory costs. It is usual for the Ministry for Information
Technology to require licensees to deposit their USF contribution on a quarterly basis, based on estimated annual gross revenues and subject to adjustments at the end of the inancial year.
Fees on international calls—Access Promotion Contribution—are also
used to inance the USF. Long-distance and international operators are allowed to retain a ixed share of the termination charge (up to a limit of US$0.06
per minute) paid by international carriers for international incoming calls.
The remaining amount of the termination charge is the Access Promotion
Contribution, which has to be paid to the USF.20 Lastly, the USF receives inancing through (i) grants made by the Ministry for Information Technology
and the provincial governments; (ii) proceeds from the auction of spectrum; (iii) loans obtained from the Ministry for Information Technology; and
(iv) grants received from international or bilateral development agencies.
In terms of subsidy awards, the incumbent (Pakistan Telecommunication
Company Ltd.), has been the successful bidder for 56 percent of the total subsidy amount, followed by Wateen with 23 percent.21 Recently, however, there
have been a few issues with funding that were highlighted by the media.
i.
Nonpayment by operators: In November 2012, the USF Company announced that telecom operators owed PKR26 billion (US$268 million) related to the Access Promotion Contribution. A number of operators (e.g.,
See USF Rules 2006 Chapter V, http://www.usf.org.pk/fckeditor/editor/ilemanager/
connectors/aspx/UserFiles/2006.pdf.
19 See http://tribune.com.pk/story/446607/universal-service-fund-cellular-operators-contribute-rs58b/.
20 See http://www.usf.org.pk/FCKeditor/editor/ilemanager/connectors/aspx/UserFiles/
USF-Policy.pdf.
21 See http://www.usf.org.pk/projectpicture.aspx?pname=updatestate12.jpg.
18
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
Pakistan Telecommunication Company Limited [PTCL], WorldCall, Wateen,
and Telenor) have gone to court regarding these contributions against the
regulator, which is responsible for the enforcement of the payments.22
ii. Misuse of funds: In June 2012, the Ministry for Information Technology
allegedly bypassed the USF Executive Board and used PKR120 million
(US$1.2 million) from the fund to hire an advertising agency to run a media
campaign to highlight the achievements of the ruling political party.23
iii. Delay of projects: In 2011, six projects (three of which are under the
Broadband Program), worth PKR5 billion (US$52 million), were suspended
due to the nonapproval of their USF budget. This was reportedly due to
the removal of the Minister for Information Technology in 2010.24
Implementation: As explained earlier, the USF Company has launched four
main types of programs: the Rural Telecom Program, the Broadband Program,
the Optical Fiber Program, and various special projects. The irst three programs are detailed below, while the special projects are discussed in the next
section.
The Rural Telecom Program: This program aims to provide basic telephony
and data services to 12,000 remote rural areas. Up to October 2012, 3,500 areas
have been provided with the services, and a total of PKR7.4 billion (US$76 million) has been awarded. The incumbent ixed-line operator, PTCL, has won the
majority of the projects, worth a total of PKR4.1 billion (US$42 million). Telenor,
one of the mobile operators, follows in second place with a subsidy of PKR1.5
billion (US$15 million). The rest of the projects have been undertaken by other
telecom service providers (e.g., China Mobile Pakistan, Mobilink, and Warid).25
Interestingly, under this program, operators are required to power their infrastructure through renewable energy sources.
The Broadband Program: With regard to enhancing broadband access, there
have been projects worth PKR7.6 billion (US$79 million) in subsidies that have
been awarded up to June 2012. Pakistan Telecommunication Company Limited
See http://propakistani.pk/2012/11/02/telecom-operators-owe-rs-26-billion-to-usf-ceo/.
See http://tribune.com.pk/story/394307/misuse-of-usf-disgruntled-board-membersseek-nab-investigation/.
24 See http://www.pakistantoday.com.pk/2011/08/30/news/proit/non-approval-of-fundsdelaying-usf-projects/.
25 See http://www.usf.org.pk/Rural-Telecom-Programme.aspx.
22
23
75
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
won the majority, worth PKR5.2 billion (US$55 million), while the rest of the
projects haved been split almost equally between WorldCall, a telecom and
multimedia service provider, and Wateen, Pakistan’s leading wireless broadband service provider.26
This program especially addresses the unserved urban areas of Punjab,
Sindh, Balochistan, and Khyber Pakhtunkhwa. Special emphasis is given to educational institutions, where those awarded subsidies are required to set up
broadband labs in schools and community centers.
Due to the signiicant eforts made, the number of broadband subscribers
in the country grew from 9,000 at the end of 2004 to approximately 1.1 million
by the end of 2010 (PTA, 2010). These igures indicate a population penetration
of 0.006 percent and 0.66 percent, respectively. Comparing this with the target
of 1 percent by the end of 2010, set in USF Policy, broadband penetration was
a little behind target. By April 2012, however, the number of broadband subscribers had increased to approximately 2 million,27 indicating a broadband
penetration of 1.1 percent.28
The Optical Fiber Program: This project aims to lay approximately 8,300 kilometers of iber optic cable to extend connectivity to underserved districts
in Pakistan. To date, contracts worth PKR6.5 billion (US$68 million) have been
awarded for approximately 6,700 kilometers of cable; as of October 2012, approximately 4,200 kilometers had been completed. Wateen won the majority
of these contracts, worth PKR3.8 billion (US$40 million), while PTCL won the remaining projects.29
Projects: In addition to the programs described above, several special projects relating to UAS objectives have been developed on an ad hoc basic; these
include the following:
i.
Enabling people with disabilities to use telecom services: Two programs
have been completed under this special project. In collaboration with the
Pakistan Foundation Fighting Blindness, a digitalized library and an Internet
See http://www.usf.org.pk/projectpicture.aspx?pname=updatestate12.jpg.
PTA Telecom Indicators: see http://www.pta.gov.pk/index.php?option=com_content
&view=article&id=269&Itemid=599.
28 Based on population estimate by Euromonitor.
29 See http://www.usf.org.pk/project.aspx?pid=6.
26
27
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
café—accessible by visually impaired people—were built in Islamabad.30 In
addition, in collaboration with the Al-Shifa Eye Trust, modern computerized
low-vision centers and equipment were provided in several districts.31
ii. Converting computer centers into multipurpose community telecenters: In 2009, 11 sites were identiied for this purpose. PTCL won most
of the contracts, worth PKR34.9 million (US$360,000). As of January 2012,
most of the telecenters had been completed.32
iii. Building telemedicine network and services: In collaboration with the
Ministry of Health, telemedicine networks were set up at three hospitals,
with each hospital being connected to four remote health centers. Oratier
Technologies, a Pakistan-based IT service provider, won a contract worth
PRK59 million (US$61,000).33
iv. Building universal telecenters. This project aims to build 24 universal
telecenters, each equipped with 2Mbit/s broadband Internet, in four provinces in Pakistan. The project, however, appears to have been suspended
and soon will be re-advertised for auction.34
Vietnam
The table below summarizes the main macroeconomic and broadband indicators for Vietnam. The igure that follows illustrates that most areas in Vietnam
have less than 300 people per square kilometer, and around 70 percent of
Vietnamese live in rural areas.35
As of June 2012, broadband penetration in Vietnam stood at around
17 percent of households, according to TeleGeography. The number of broadband subscriptions has been growing rapidly, principally due to the reduction in some tarifs and improvements in the country’s infrastructure by the
state-owned national operator, VNPT, and other operators. Despite the rapid
See http://www.usf.org.pk/Publicphase.aspx?phaseid=51&pgid=12&phasename=
Project percent20with percent20 percent20Pakistan percent20Foundation percent20Fighting percent20Blindness.
31 See http://www.usf.org.pk/Publicphase.aspx?phaseid=50&pgid=12&phasename=
Project percent20with percent20Al-Shifa percent20Eye percent20Trust.
32 See http://www.usf.org.pk/project.aspx?pid=13.
33 See http://www.usf.org.pk/project.aspx?pid=14.
34 See http://www.usf.org.pk/project.aspx?pid=16.
35 See www.infodev.org/en/Document.1127.pdf.
30
77
78
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
TABLE 2.7: Macroeconomic and Broadband Indicators for Vietnam
Indicator
Unit
Year
Value
Population
Million
2012
89
Land area
Million hectares
—
31
Urbanization rate
%
2012
32
USD
2012
3,787
Fixed broadband penetration per capita
%
2012
4.9
Mobile (active) broadband subscribers per
capita
%
2012
19.0
Percent of individuals using Internet
%
2012
39
ITU ICT development rank
#
2012
88 (/157)
GDP per capita at PPP
Sources: Databases of the FCC, ITU, and World Bank.
MAP 2.4: Population Density in Vietnam
Source: Bangladesh Population and Housing Census (2011); see http://bangladeshcensus.blogspot.com.
growth in broadband subscriptions, however, broadband coverage is only reliable in the major cities (e.g., Ho Chi Minh, Da Nang, and Hanoi). In 2008, less
than 1 percent of households in rural areas had Internet access.
There have been signiicant eforts by the government of Vietnam to modernize and expand the country’s telecom system and to stimulate the adoption and usage of broadband. While there is no speciic policy for broadband
development, the ICT development directives, published by the Government
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
since 2001, deine a set of objectives in the context of broadband; for example,
Decision No. 1755/QD-TTg of September 2010. This sets speciic objectives for
broadband telecom infrastructure by 2020, as discussed later in this section.36
To achieve these objectives, the Vietnamese government has implemented
several investment and inancial schemes, such as the incentives to operators
to install telecom infrastructure in rural or remote areas.
Overview of UAS Programs
The Vietnam Public-Utility Telecommunication Service Fund (VTF), the USF, was
established in 2004. It aims to expand UAS to rural areas across Vietnam37 and
reduce the digital divide. This is expected to boost Vietnam’s socioeconomic
development and strengthen the country’s national security and defense.
Between 2005 and 2010, the USF enjoyed only relative success. Although it exceeded its targets for basic ICT services in rural areas with favorable socio-economic conditions, this was not the case for areas with unfavorable conditions.
In such areas, infrastructure development has been slow and the provision of
services generally has been of low quality. Moreover, while the targets related
to basic services (i.e., voice and narrowband Internet) generally have been
met, there has been limited efort to develop broadband Internet. As a result,
only 55 percent of communes (there are approximately 12,000 communes in
Vietnam) had public Internet access service in 2010, which is below the 70 percent target set for that year. The government of Vietnam is setting new goals
for the next ive years, taking into consideration the lessons learned during the
irst ive years of the USF’s operation.
Governance
The VTF is managed by a nonproit inancial institution that is owned by the government of Vietnam under the Ministry of Information and Communications.
It is responsible for mobilizing inancial resources for projects, as well as selecting and reviewing UAS-funded projects. The fund’s organizational structure consists of a Management Board, Control Board, and Executive Board:
See http://www.moj.gov.vn/vbpq/en/Lists/Vn%20bn%20php%20lut/View_Detail.
aspx?ItemID=10749.
37 Decision No. 191/2004/QD-TTg, dated November 8, 2004, of Prime Minister on Establishment, Organization and Operation of Vietnam Public-Utility Telecommunication
Service Fund.
36
79
80
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
i.
Management Board: Composed of ive members, appointed by the
Ministry of Information and Communications. The Chairperson of the
Management Board is also Chairperson of the Ministry, and one member
of the Management Board acts as the Director of the VTF.
ii. Control Board: Composed of three to ive members, appointed by the
Ministry of Information and Communications. The Control Board monitors
the activities of the Management and Executive Boards.
iii. Executive Board: Composed of the Director of the VTF, the deputy directors, and the heads of department.
The following entities are also involved in the management and control of
the UAS program:38
i.
Ministry of Information and Communications: Sets the areas to be provided with public telecom utility services on an annual basis and over a
ive-year period. It is also responsible for coordinating the provision of services and directing the VTF in its funding activities.
ii. Ministry of Finance: Coordinates with the Ministry of Information and
Communications regarding the inancial management of the VTF. It provides guidance in relation to the inancial assistance given to operators
(e.g., preferential loans and VAT exemptions), as well as the charges for
public-utility telecom services.
iii. Ministry of Planning and Investment: Supports the Ministry of
Information and Communications in managing the provision of public
utility telecom services, as well as monitors and reports progress, especially with regard to socio-economic objectives.
The approach to governance is extensively collaborative, and the same
principle is applied to the implementation of the National Broadband Plan:
iv. Ministry of Information and Communications: Draws up the implementation plans; annually reviews achievements and reports to the prime
minister; proposes adjustment measures; and formulates mechanisms
and policies.
Decision No. 191/2004/QD-TTg, dated November 8, 2004, of Prime Minister on Establishment, Organization and Operation of Vietnam Public-Utility Telecommunication
Service Fund.
38
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
v.
vi.
vii.
viii.
ix.
x.
Ministry of Planning and Investment: Coordinates with the Ministry of
Finance and the Ministry of Information and Communications to budget
the plans.
Ministry of Finance: Manages expenditures from the state budget for
ICT.
Ministry of Education and Training: Coordinates with the Ministry of
Information and Communications and other ministries and sectors in performing ICT training projects.
Ministry of Science and Technology: Coordinates with the Ministry of
Information and Communications in performing ICT usage development
projects.
Ministry of Industry and Trade: Coordinates with the Ministry of
Information and Communications in performing ICT industry development projects.
Ministry of Defense and the Ministry of Public Security: In charge of
security-related projects.
In addition, other ministries, ministerial-level agencies, government
agencies, province-level People’s Committees, ICT enterprises and ICT associations, together formulate plans for the ICT sector. The advantage of this
approach is that all stakeholders are implicated in the deinition and the implementation of the projects. The obvious drawback is the diiculty in adhering to implementation timelines and the administrative burden of the
process.
Regulatory Framework
The Vietnam Public-Utility Telecommunication Service Fund was established
in 200439 by Decision 191/2004/QD-TTg. This decision set the following speciic
targets to be met by 2010:
i.
ii.
The telephone density in areas provided with public telecom services
shall be over 5 telephone sets per 100 people.
100 percent of communes nationwide shall have public telephone service
access points.
Decision No. 191/2004/QD-TTg, dated November 8, 2004, of Prime Minister on Establishment, Organization and Operation of Vietnam Public-Utility Telecommunication
Service Fund.
39
81
82
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
iii. 70 percent of communes nationwide shall have public Internet access
points.
iv. Every person shall have free access to telecom services.
Decision No. 74/2006/QD-TTg of April 2006, also known as Project 74, set
a roadmap for the provision of public-utility telecom services (PUT services) up
to 2010, including the following:
i.
ii.
Universal telecom services (standard telephone and Internet access
services).
Compulsory telecom services (emergency communication service; for example, irst aid, ireighting, and public security; plus Internet and telecom
services to facilitate communication needs during natural disasters or
other emergencies).
The government is in the process of inalizing its strategic objectives for
broadband up to 2015, but provisional targets include:40
i.
100 percent of communes shall have access to telecom services over
broadband infrastructure.
ii. The number of Internet subscribers (in terms of households) in communes
within districts with less than 2 percent of Internet subscribers shall increase to at least 5 percent.
iii. 50 percent of communes in poor districts shall have public Internet service access points.
iv. Citizens shall have free access to compulsory telecom services.
In parallel, Decision No. 1755/QD-TTg of September 2010 set the government’s national broadband goals for (a) 2015 and (b) 2020:41
i.
By 2015:
• Broadband network to be completed in all communes.
• Mobile broadband signal to cover 85 percent of population.
• 20–30 percent of households to have computer and broadband
Internet access.
40 See http://aseanruralconnectivityconference2011.iles.wordpress.com/2011/09/5nguyen-thi-lan-anh-mic-vietnam.pdf.
41 See http://www.moj.gov.vn/vbpq/en/Lists/Vn%20bn%20php%20lut/View_Detail.
aspx?ItemID=10749.
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
• Basic online public services to be provided to citizens and enterprises
ii.
(e.g., downloading forms, exchanging information, and sending/receiving iles using an online network).
By 2020:
• Broadband network to be completed in most villages.
• Mobile broadband signal to cover 95 percent of population.
• 50–60 percent of households to have computer and broadband
Internet access (25–30 percent using iber optic cable).
• Most online public services to be provided to citizens and enterprises
(e.g., service fee payment, announcement of service results).
To achieve these goals, the National Broadband Plan encompasses six inputs, as follows:
i.
ii.
iii.
iv.
v.
vi.
Develop IT human resources.
Develop the IT industry.
Further develop and improve telecom and IT infrastructure.
Develop and apply appropriate support for UAS to households.
Apply IT in state agencies, enterprises, and society.
Enhance research in ICT for innovative technologies.42
Investment
Planning: The Ministry of Information and Communications applies two criteria
to identify the regions in which public-utility telecom services must be established: a comparison of a region’s ixed teledensity with that of the nation; and
a region’s socio-economic status (assessed in terms of its GDP per capita). The
Ministry announces the selected regions annually.43 The objective is also to include the communes that surround these regions, which lack public Internet
and telephone access points, but for which the USF can support investment to
develop the public access points. Responsibility for project planning lies with
various entities, including the Ministry of Finance, the Ministry of Planning and
Investment, and the Ministry of Posts and Telematics, as well as sector and local
authorities (e.g., People’s Committee of provinces and cities and ICT companies).
42 See http://www.digitaldivide.org/wp-content/uploads/2011/08/Vietnam-BroadbandPolicy.pdf.
43 Decision No. 191/2004/QD-TTg dated November 8, 2004 of the Prime Minister on the
establishment, organization and operation of the Vietnam Public-utility Telecommunication service Fund.
83
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
Funding: The VTF has three main sources of funding: charter capital, contribution from telecom service providers, and other aids, such as inancial support and voluntary contribution. At the time it was created, the fund’s charter
capital was estimated at VND500 billion (US$34 million). The government of
Vietnam contributed VND200 billion (US$13 million), while the rest was made
up of the contributions of telecom service providers for the irst three years
after the creation of the USF.
Telecom service providers must contribute a proportion of their revenue
to the USF. For mobile telecom operators, this is 3–5 percent of their revenue;
for international long-distance operators, it is 24 percent; and for domestic
long-distance operators it is 1–3 percent. Service providers also must pay connection surcharges (if applicable), as set by the Ministry of Information and
Communications.
It is estimated that the USF collects approximately US$55 million annually and the capital accumulated over the period 2005–10 is estimated to
total approximately US$325 million,44 although no details are publicly available. Data from Intelecon Research shows that the USF collected US$101
million in 2007 and that it disbursed US$69 million in subsidies and US$20
million in soft loans.45
The UAS programs are currently being evaluated and summarized, although indicators are not yet available. The diiculty in obtaining accurate inancial indicators appears to be a concern in terms of adequate administration
of the fund.
Implementation: The USF provides funding for the following public telecom
service components (Intelecon Research, 2009):46
i.
Investment in new access points, especially in locations where basic
telecom services are not yet available.
ii. Maintenance costs of telecom services.
iii. Promotion of services to potential subscribers (e.g., subsidies for terminal
equipment or monthly access charges).
See http://aseanruralconnectivityconference2011.iles.wordpress.com/2011/09/5nguyen-thi-lan-anh-mic-vietnam.pdf.
45 See http://www.inteleconresearch.com/pages/documents/UASFFunds2009updateOct2009.pdf.
46 See http://aseanruralconnectivityconference2011.iles.wordpress.com/2011/09/5nguyen-thi-lan-anh-mic-vietnam.pdf.
44
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
The USF provides various types of inancial assistance. Direct funding
is provided for operators to support the development of infrastructure and
maintenance of services in the selected regions. In some cases, however, operators—instead—are ofered soft inancing (i.e., preferential loans). Operators
are obliged to comply with the requirements deined by the Ministry of
Information and Communications, and they receive inance that covers most,
if not all, of the associated costs. The USF also provides inancial support to encourage the uptake of telecom services (e.g., ofers of terminal equipment).47
From 2005 to 2010, the USF achieved some success:48
i.
Approximately 21 million people in the poorest districts of Vietnam now
have access to telecom services.
ii. Fixed teledensity in the selected areas reached an average of 16 sets per
100 inhabitants, surpassing by far the goal of 5 sets per 100 inhabitants.
iii. 97 percent of communes had public telephone access points, 3 percent
short of the target.
iv. 55 percent of communes had a public Internet access point, 15 percent
short of the goal.
v. Internet subscribers rose by over 75,000 in the selected regions, increasing
from 1.8 per 10,000 inhabitants in 2004 to 32 in 2009.
There were some shortcomings, nevertheless. There was an imbalance
in infrastructure development: the target was exceeded in communes in the
regions with more favorable socio-economic conditions, while targets often
were not met in those with limited economic development. For instance, despite achieving a high ixed teledensity in selected areas, 32 communes remained without ixed lines and communes in four districts had a teledensity of
less than 5 telephones per 100 inhabitants.49
With regard to broadband, only 55 percent of communes had access to
the Internet in 2010, which is low compared to the objective of 70 percent. In
addition, while the number of Internet subscribers increased by ten-fold to
0.32 per 100 inhabitants, it pales in comparison with Hanoi’s 13.9 per 100 and
See http://aseanruralconnectivityconference2011.iles.wordpress.com/2011/09/5nguyen-thi-lan-anh-mic-vietnam.pdf.
48 See http://aseanruralconnectivityconference2011.iles.wordpress.com/2011/09/5nguyen-thi-lan-anh-mic-vietnam.pdf.
49 See http://aseanruralconnectivityconference2011.iles.wordpress.com/2011/09/5nguyen-thi-lan-anh-mic-vietnam.pdf.
47
85
86
UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
Ho Chi Minh’s 10.5 per 100.50 The diference could be attributed to the large investment required to develop network infrastructure, coupled with the fact
that in rural areas—especially in the wealthier ones—the demand for telecom
services often is too low for operators to recover their investment. In response,
the Ministry of Information and Communications increased the amount of
funding to develop ICT skills in certain areas.51 It also ensured the commercial
sustainability of telephone/Internet access points. Currently, the USF provides
funding for the maintenance of access points, but this will cease when they become sustainable. Sustainability of services will be an issue once the programs
reach completion, and this has yet to be resolved. The Ministry of Information
and Communications intends to collaborate further with key stakeholders to
identify ways in which to address this.52
The key challenges that have been identiied in terms of increasing uptake
of ICT in rural regions and the sustainability of programs include:
i.
Limited economic development in these regions, making ICT services unafordable to many households in the absence of subsidies.
ii. Lack of ICT skills.
iii. Lack of awareness concerning available UAS programs.
iv. Slow uptake that makes it diicult to recover investment.
Projects: There is no indication that there are speciic projects that fall outside
the scope of the National Broadband Plan. This also applies to the USF.
Bangladesh
Table 2.8 summarizes the main macroeconomic and broadband indicators
for Bangladesh, which has a population of 167 million people. It is one of the
world’s most densely populated countries and almost half of the population
lives below the poverty line.
Internet access has been available in Bangladesh since 1996 from the
state-owned wire-line network operator, Bangladesh Telecommunications
Company Ltd. As of May 2014, Bangladesh had approximately 38.9 million
See www.infodev.org/en/Document.1127.pdf.
See http://aseanruralconnectivityconference2011.iles.wordpress.com/2011/09/5nguyen-thi-lan-anh-mic-vietnam.pdf.
52 See http://aseanruralconnectivityconference2011.iles.wordpress.com/2011/09/5nguyen-thi-lan-anh-mic-vietnam.pdf.
50
51
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
TABLE 2.8: Macroeconomic and Broadband Indicators for Bangladesh
Indicator
Unit
Year
Value
Population
Million
2012
155
Land area
Million hectares
—
13
Urbanization rate
GDP per capita at PPP
Fixed broadband penetration per capita
%
2012
29
USD
2012
1,851
%
2012
0.4
Mobile (active) broadband subscribers per capita
%
2012
0.2
Percent of individuals using the Internet
%
2012
6
ITU ICT development rank
#
2012
135(/157)
Sources: Databases of the ITU and World Bank.
Internet subscribers,53 of which 96 percent used a mobile phone to access
Internet. Accessibility to broadband services in Bangladesh is extremely low,
which hinders growth in multiple sectors such as education, governance, and
healthcare. As of June 2012, there were only 470,000 broadband subscriptions,
which represent a household penetration of 1.5 percent and a population penetration of only 0.3 percent (TeleGeogrpahy).
Overview of UAS Programs
Instead of establishing a dedicated UAS program for broadband, the
Bangladeshi government decided to develop a comprehensive National
Broadband Plan. In 2009, the government published its National Broadband
Policy,54 followed—in 2010—by its Perspective Plan for 2010–21(Government
of the People’s Republic of Bangladesh, 2010). These policy documents set the
following broadband goals:
i.
Ensure the availability of afordable, advanced, and secure broadband services to consumers.
ii. Facilitate the development of access infrastructure and interconnection
between networks.
iii. Introduce technology—and service-neutral broadband technologies to
encourage private sector investment and the development of PPPs.
Bangladesh Telecommunication Regulatory Commission. See http://www.btrc.gov.
bd/content/internet-subscribers-bangladesh-may-2014.
54 See http://www.btrc.gov.bd/sites/default/iles/national_broadband_policy_2009_0.pdf.
53
87
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
MAP 2.5: Population Density in Bangladesh
Total
Panchagarth
696
Thakurgaon
762 Nilphamari
1152
Dinajpur
864
<500
500–749
750–999
1,000–1,249
1,250–2,999
3,000 + missing value
Lalmonirhat
1005
Kurigram
Rangpur
893
1210
Gaibandha
1078
Nawabganj
Jaipurhat
Naogaon 942
Bogra
750
1154
Sheripur
960
Rajshahl
1069
Sunamgarj
978
Jamalpur
1156
Natore Sirajganj
1230
Pabna
Tangail
1046
1207
1051
Gazipur
Hablganj
679
781
Brahmanbaria
1852 Narsingdi 1457
Manlkganj
Dhaka 1930
Rajbari 1000 8111 Narayanganj
929
954
975
Moulvibazar
Kishoreganj
1053
Kushtla
910
Chuadanga
Sylhet
1156
Mymensingh
894
Meherpur
665
Netrokona
1115
Jhenaidah Magura Faridpur
4139
Munshiganj
1457
Comilla
1719
Sahriatpur
Madarlpur 970
Khagrachari
Chandpur
Jessore Narail
1004
225
Feni
1404
1068 722 Gopalganj
Lakshmirpur 1530
771 Barisal
1175
823
Noakhali
Khulna
Plrojpur
853
Satkhlra 522
844 Jhalakathi
611
Bagerha
795
Bhola
369
Patuakhali 517
Chittagong
471
Barguna
1421
895
871
901
Rangamati
97
481
Bandarban
86
Cox’s Bazar
913
Source: Bangladesh Population and Housing Census (2011); see http://bangladeshcensus.blogspot.com.
iv. Encourage investment in local content and value-added services.
v. Increase the penetration rate of broadband to 30 percent by 2015 and to
40 percent by 2021.
vi. Provide WiMAx across the country by 2015.
This strategy has been deined. There is no indication, however, that it has
yet been implemented.
Governance
With regard to the National Broadband Policy, the Ministry of Posts and
Telecommunications has been designated as the coordinating ministry, directing the eforts of the regulator and relevant ministries, including the
Ministry of Science and Information and Communication Technology, the
Ministry of Education, and the Ministry of Commerce.
The Bangladesh Telecommunication Regulatory Commission, the national
regulator, was established in 2002 by the Bangladesh Telecommunication Act,
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
2001. The commission is in charge of implementing UAS-related projects, with
the following goals:
i.
Support the development of a telecom system to enhance and strengthen
social and economic development in Bangladesh.
ii. Provide access to reliable, reasonably priced, and modern telecom and
Internet services as much as possible for all, taking into account the prevalent social and economic conditions.
iii. Establish an eicient national telecom system with the ability to compete
locally and internationally.
iv. Abolish discrimination in providing telecom services to enable a competitive telecom market under the control of the commission.
v. Incentivize new services and create an enabling environment for local and
foreign investment in the telecom sector.55
Regulatory Framework
The National Telecommunications Policy of 1998 established the government’s policies for promoting UAS to basic voice services in Bangladesh. Other
services, such as data services and access to the Internet, are to be provided
only in areas where there is demand.56
The Telecommunication Act of 2001 provides the telecom regulator
with the discretion to compel licensed operators to provide UAS to rural and
sparsely populated areas without exceeding 10 percent of their network capacity.57 Until 2010, there had been no USF in Bangladesh, nor was there any
funding mechanism. In 2010, amendments to the Telecommunication Act included a social obligation fund, although how the fund was to operate is unclear. For instance, while the act speciies the funding arrangements for UAS,
information on how the regulator is to disburse resources is not available. In
addition, the regulator has yet to identify the rural and urban areas that need
to be provided with UAS.
See http://www.btrc.gov.bd/history-and-vision.
See http://www.itu.int/ITU-D/projects/ITU_EC_ACP/hipcar/in-country_assistance/Saint_
Lucia/S-Maddens-Toscano_HIPCAR-St-Lucia_UAS_Training_July-2011.pdf.
57 See http://www.btrc.gov.bd/jdownloads/Acts/telecommunication_act_english_2001.
pdf.
55
56
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
In Bangladesh, broadband is deined as a data connection with a bandwidth of 128kbit/s—lower than the standard deined by the ITU. This deinition, however, is subject to revision on a regular basis.
Investments
Planning: The Telecommunication Act of 2001 only stipulates an upper limit
for the extent of UAS obligations—licensed operators must provide UAS to
rural and sparsely populated areas, without exceeding 10 percent of their network capacity. Most operators (ixed and mobile) generally fulill their UAS obligations by providing only around 5 percent.58 As a result, the government
does not provide telecom services to most rural areas; rather, they are distributed primarily through the Grameenphone’s Village Phone Program (described later in this report).59 As for the newly established USF, it appears that
funds have not been dispersed yet.
Funding: The amendments in 2010 to the Telecommunication Act of 2001 established that all mobile operators must contribute 1 percent of their revenue
to the social obligation fund.60 There is no further documentation available regarding UAS funding in Bangladesh.
Implementation: While there are no details on speciic UAS broadband implementation plans, adoption of the following initiatives is expected:
i.
ii.
Ensure fair access to broadband networks.
Develop a number of government initiatives to promote broadband (e.g.,
promote broadband usage; create an enabling environment for private investment; improve coordination among the relevant stakeholders).
iii. Ensure that existing facilities are fully utilized (e.g., share infrastructure).
iv. Improve ICT skills through training by universities and research institutes.
v. Save international bandwidth (e.g., establish Internet Exchange Points to
avoid “tromboning” of local traic via other countries).
vi. Develop local content.
See http://www.itu.int/ITU-D/projects/ITU_EC_ACP/hipcar/in-country_assistance/Saint_
Lucia/S-Maddens-Toscano_HIPCAR-St-Lucia_UAS_Training_July-2011.pdf.
59 See www.grade.org.pe/infraestructura/doc4BestPractice.pdf.
60 See http://www.mopt.gov.bd/all percent20backup/Draft_3G_4G_LTE_Guideline.
pdf.
58
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
vii. Manage IP addresses.
viii. Review spectrum allocations.
ix. Provide iscal incentives for the private sector to extend broadband
installation.
x. Raise awareness of the beneits of broadband (e.g., through media
campaigns).
Projects: In 1997, Grameen Bank, a nonproit organization with an extensive
rural banking network in Bangladesh, created a subsidiary, Grameen Telecom
Company (GTC). In partnership with Gonofone and Telenor, GTC established
a private company, Grameenphone to fund the Village Phone Program in
Bangladesh with the proits it earns as a nationwide cellular telephone provider.
The Village Phone Program, launched in 1997, aimed to install 40,000 village
phones by 2004. The program provides loans to Grameen Bank members (often
women) in selected villages to purchase a mobile phone; these individuals then
become village phone (VP) operators. Grameen Telecom Company purchases a
mobile phone subscription and the necessary hardware from Grameenphone,
on behalf of the VP operator, which it then provides to the individual under a
lease-inance program (a loan of approximately US$350). Unit oicers from GTC
provide training to VP operators on how to operate their mobile phones.
Village phone operators are responsible for providing telephone services
to other people in the village (each operator, on average, covers around 2,500
people), collecting call charges, remitting payments to Grameen Bank according
to the rates set by GTC, and ensuring the mobile phones are properly maintained.
The income earned by VP operators is the diference between the charges paid
by customers and the airtime charges billed by GTC to Grameenphone.
VP operators repay the initial loan of US$350 in weekly installments of approximately US$4.5 over two or three years. In addition, the operators pay a
monthly fee of approximately US$3.20. Grameen Telecom Company buys airtime in bulk at a discounted rate from Grameenphone, and so GTC’s head ofice receives the total monthly charges for airtime used by all VP operators. The
bill is then split among individual VP operators and sent to the corresponding
Grameen Bank branches. Branch managers are then responsible for the collection of these monthly fees.
By the end of 2011, there were over 670,000 VP operators providing telecom
services in more than 83,000 villages in Bangladesh.61 The sustainability of
See http://investor-relations.grameenphone.com/IRPortal/annualreport/2011/
Directors%E2%80%99%20Report.pdf.
61
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
the program, however, has been often questioned. Global System for Mobile
Communications technology is a relatively costly solution to provide UAS in
rural areas, especially if, in the future, it will be used to provide UAS. Going forward, it is likely that GSM will need to be replaced by a more cost-efective
technology to ensure the sustainability of the program.
Lessons Learned
Regional Trends: The approaches of the Asian and Latin American countries
under evaluation difer in various ways, although much relates to their overall
socio-economic and demographic characteristics. To compare, the three Asian
countries with the lowest GDP per capita (Bangladesh, Pakistan, and Vietnam)
have only 14–30 percent of GDP against the third lowest of the four Latin
American countries (Costa Rica), and only 9–19 percent of GDP against the
country with the highest GDP (Chile). For Latin America, Bolivia’s GDP per capital (US$5,100), the lowest in the region, compares to Sri Lanka’s (US$5,660), the
Asian country with the highest GDP per capita. These two latter countries are
very diferent in terms of population, population density, terrain, geographic
position in terms of access to the sea, among other factors. The following includes a discussion on the approaches of these two groups of countries.
UAS programs and policies are generally more nascent and less developed in Asia than in Latin America. The stage at which each region inds itself depends on the levels of resources that are available, the objectives, and
the various strategies followed. Emerging programs, for instance, will typically
concentrate on access (e.g., rolling out required infrastructure) rather than the
usage of services (e.g., developing local content).
In the Asian countries, landline infrastructure tends to be less developed,
which makes a wireless delivery platform an easier and more compelling
choice. In Latin America, however, especially in Peru—which is economically
more prosperous—a national iber optic backbone is yet to be introduced or is
incomplete. This is a necessary step towards the development of UAS.
Latin American countries, including small ones such as the Dominican
Republic and Costa Rica, have engaged in relatively comprehensive UAS programs. On the other hand—with the exception of Pakistan, which faces the
challenge of transferring voice and low-speed data services to broadband services—the Asian countries under reference have not done so. The Asian countries have had to cope with a signiicantly wide digital divide in some areas
where population density—as well as economic and social development—
falls very much behind urban areas. Achieving the basic UAS objectives in
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
those remote areas should be considered a high priority, despite the fact that
it will require a very large proportion of inancial resources.
Approaches and Models for UAS
As with the reference countries of India, the Republic of Korea, the United
Kingdom, and the United States, the Asian and Latin American countries
under review have taken diferent approaches to achieve broadband UAS,
which have depended on factors such as economic development, geographic and demographic constraints, political objectives, and the state of
their ICT market. The approaches can be classiied into ive diferent UAS
models (Table 2.9).
Depending on the type of UAS model adopted, there are various issues
that countries must face to achieve broadband UAS. These vary in terms of optimal strategies to follow. Table 2.10 below summarizes some of the main characteristics of each model:
The following subsections list the problems and challenges that are most
common to UAS programs. A set of best practices and recommendations, depending on the UAS model, are included.
TABLE 2.9: Characteristics of UAS Policies
Model
Description
Examples
1
Very recent and immature (or possibly nonexistent) UAS
policies, facing signiicant obstacles in implementing
broadband UAS.
Bolivia, Bangladesh,
Vietnam
2
Recently established UAS policies that are well designed
and follow good practices, but are still at an early stage
of development and face diiculties in implementing
broadband UAS.
Costa Rica, Dominican
Republic, Sri Lanka
3
Relatively established UAS policies in middle-income or
emerging countries, with a strong focus on broadband.
India, Chile, Pakistan
4
Mature and long-established UAS policies in wealthy
countries that rely heavily on the private sector to
achieve UAS targets and make the transition from
voice to broadband. These countries are creating new
regulatory frameworks but also need to decommission
the old ones.
United Kingdom,
United States
5
Advanced UAS policies in wealthy countries that
have made extensive and early investment in ICT and
broadband in a highly centralized way.
Republic of Korea
Source: Authors’ elaboration.
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
Key Challenges
Developing countries usually encounter a number of challenges when attempting to increase broadband usage. These are exempliied in Table 2.11.
These barriers are not consistent between the various UAS models. In particular, very new UAS policies that are not fully developed usually face most— if not
all—of the challenges listed above. Due to the lack of resources, relatively new
UAS policies are usually signiicantly constrained with regard to installing broadband (as opposed to other services), and priorities are diicult to undertake.
Countries with this experience should, therefore, focus primarily on supply-side
constraints (e.g., available infrastructure in remote areas, and limited economic
growth prospects in certain areas that discourage private sector investment).
The UAS policies that are relatively solid in middle-income or emerging
countries will attract signiicant inancial resources to manage the high cost
that relates to new infrastructure in rural areas. Depending on the country’s
topography, however, the possibilities may be limited and result in signiicant costs (e.g., the mountain regions of Chile). This also applies to the demographics of a country (e.g., the large population of India). If the supply side is
adequately encompassed by UAS initiatives, there may be other issues in terms
of demand, such the lack of local content or the limitation of ICT skills that will
need to be addressed.
On the other hand, UAS policies that are considered advanced or have
been long established and can rely considerably on the private sector will
need to address the disbanding of old frameworks. This can be a complex process, which could include issues relating to spectrum availability, given that
other services may be using the spectrum (although the digital dividend that is
released from the analogue TV switch-of could be a potential solution). In addition, countries that fall within this category need to overcome the high cost
relating to new infrastructure in rural areas.
The UAS policies that have a signiicant centralized approach usually are
not inancially constrained, thus allowing for broadband installation to be a
priority (as opposed to voice telephony and other basic facilities). It is unusual
to encounter the other aforementioned barriers.
Despite the geographic and socioeconomic variances between the reference countries and those developing countries in this review, the policies
and regulatory frameworks of both can be compared. All the countries are
undertaking measures to improve access to and afordability of broadband.
In addition, they are seeking ways in which to develop UAS policies more eficiently with existing inancial resources. The examples in this study are
TABLE 2.10: Approaches Toward UAS
USO
focuses on
broadband
US
Yes
Yes
UK
Yes
Korea
Yes
No
India
Yes
Yes
Country
Source: Authors' elaboration.
Broadband
National
Policy/Plan
Speciic
targets
related to
rural areas
Incentives to
the private
sector (iscal,
matching,
grants, etc.)
Yes
Yes
Yes
Intervention is mostly made through the private
sector. The private sector is involved in most
strategies, either through PPPs, auctions, or
compensations for investments from the private
sector.
Yes
Yes
Intervention is mostly made through the private
sector. The private sector is involved in most
strategies. The private sector bids for funds.
Yes
Yes
Yes
Intervention is mostly made through the private
sector. The private sector is involved in most
strategies. The private sector bids for funds. However,
the government has also made direct investments
and provided subsidies and loans.
Yes
Yes
Yes
Intervention is made through the public and
private sectors. The government is undertaking the
establishment, management, and operation of a
national optical iber network. Besides that, there are
also diferent types of incentives to the private sector.
No
Yes
(commitments
are not legally
binding)
Type of Intervention
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
USF Fund /
Program
exists and is
used
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
TABLE 2.11: The Challenges of Broadband UAS: Examples
Challenges
Description and Selected Examples
Low level of purchasing power The low level of purchasing power, combined with the
in certain rural and suburban relatively high price of retail broadband services, makes
areas
broadband unafordable to a proportion of the population
(e.g., in Pakistan, the price for broadband in 2004 was 60 times
higher than in the Republic of South Korea, comparing the
lowest unlimited plans available).
Limited amount of available
inancial resources through
the USF
The inancial resources are not suicient to support UAS plans;
(e.g., in Bolivia, there was no telecom-speciic USF until 2011
prior to that, a nonsector-speciic national fund was used
to fund otherwise unproitable projects with no priority for
broadband development).
Low levels of ICT skills in a
A proportion of the population has a low level of education,
proportion of the population particularly with regard to ICT skills (e.g., many schools in Sri
Lanka lack ICT connectivity and awareness of ICT is limited).
Lack of basic commodities
(water, electricity, etc.)
This is relevant in two ways: irst, broadband services are
dependent on the availability of utilities, such as a reliable
power supply; secondly, broadband will naturally be given
lower priority than more critical needs, such as access to water
(e.g., a large percent of households in Bangladesh do not
have access to basic commodities; thus broadband access is
perceived by the government as a nonpriority).
Limited availability to the
consumer of electronic
equipment
The availability of electronic equipment (PCs, tablets, and
smartphones) required by consumers to use broadband
services is limited (e.g., ICT uptake has been slow and limited in
Bolivia, partially due to limited access to electronic equipment
by the consumer).
High tax rates on telecom
services or electronic
equipment
High tax rates have an indirect impact on the retail price of
broadband services and cannot be directly tackled within a
UAS policy (e.g., the tax rate applicable to telecom services
in the Dominical Republic is relatively high, estimated at 30
percent in 2013, indicating that broadband is not a priority
within the government’s development agenda).
Lack of telecom infrastructure, There is a lack of critical infrastructure, such as a national iber
especially that which is critical optic backbone, resulting in unserved areas or areas in which
the cost of bandwidth is high (e.g., the fact that Bolivia is
landlocked prevents direct access to international capacity via
submarine cable, and results in a high cost for international
telecommunications).
High cost of installing new
infrastructure in rural areas
The cost is high due to geographic constraints and low
population density levels; e.g., Chile’s mountainous topography
in remote rural areas makes installation excessively expensive.
Diiculty of obtaining
administrative authorization
to install new infrastructure
The process of obtaining new infrastructure permits is
complex and time-consuming (e.g., in the Dominican
Republic, various projects encountered diiculties in obtaining
environmental and local permits).
(continued on next page)
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
TABLE 2.11: The Challenges of Broadband UAS: Examples (continued)
Challenges
Description and Selected Examples
Limited amount of suitable
spectrum
There is a limited amount of spectrum that is available for
wireless broadband solutions in some countries (e.g., the
spectrum available in the Dominican Republic for wireless
broadband was limited prior to the recent spectrum refarming and re-allocation).
Limited availability of relevant The limited availability of relevant local content makes
local content
broadband services less accessible or less relevant to a
proportion of the population, usually due to a language barrier
(e.g., in Pakistan, there is a chronic lack of local content in the
various local languages, such as in terms of an online stock
market, online education, e-government, e-commerce, home
shopping, among others).
Source: Authors' elaboration.
intended to be used as guidelines and best practices by other countries
seeking to develop UAS. The comparative analysis can assist policymakers to
assess the challenges they may face when they develop or improve their UAS
policies. Some of the developing countries in this study have implemented a
range of strategies to overcome these challenges. Table 2.12 summarizes the
key ones.
Key Terms
1.
2.
3.
4.
ADSL (Asymmetric Digital Subscriber Line): Is one form of the Digital
Subscriber Line technology, a data communications technology that enables faster data transmission over copper telephone lines than a conventional voice-band modem can provide. It does this by utilizing frequencies
that are not used by a voice telephone call.
Backbone: A local backbone refers to the main network lines that connect
several local area networks (LANs) together. The result is a wide area network (WAN) linked by a backbone connection. Internet backbones are huge
data pipes (routes) that connect networks, countries, and even continents.
Bandwidth: The range of frequencies available to be occupied by signals.
In analogue systems it is measured in terms of Hertz (Hz) and in digital systems in bits per second (bit/s). The higher the bandwidth, the greater the
amount of information that can be transmitted in a given time.
Digital dividend: The spectrum eiciency gain due to the switchover
from analogue to digital in the frequency bands currently allocated to
broadcasting.
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
TABLE 2.12: Examples of Strategies in Developing Countries to Overcome
the Challenges to Broadband UAS
Challenge
Examples of Strategies to Overcome Challenges
Low level of purchasing
power in certain rural and
suburban areas
Provide direct subsidies to end users to ensure adoption of
broadband, once access is secured.
Require operators to ofer discounts to certain end users (e.g.,
operators in the Dominican Republic: operators ofer discounts in
exchange for frequency assignments).
Establish public telecenters that provide shared access to kickstart the broadband and ICT markets (e.g., Pakistan).
Limited amount of USF
resources
Increase the levy imposed on operators, depending on the
magnitude of local needs and the amount of direct additional
funding that is available from the government budget (e.g.,
operators’ contributions to the USF in Costa Rica are set annually
and can vary between 1.5 percent and 3 percent of gross
revenues).
Obtain additional funding (e.g., international institutions) for
speciic ad hoc projects (e.g., Sri Lanka has received support from
the World Bank and the Export-Import Bank of Korea).
Prioritize UAS projects, based on strict criteria; (e.g., the First
FONATEL Program in Costa Rica identiies priority locations that
are based on the human development index at the community
level, as well as the population density).
Low levels of ICT skills in
some of the population
Provide ICT training (e.g., the eNABLE project in Sri Lanka has
introduced ICT into schools, training institutes, and universities
for disabled persons).
Provide mandatory ICT lessons in schools and universities
and make ICT equipment available at low or no cost (e.g., the
Dominican Republic has created several projects for ICT training,
such as the Virtual Technology Higher Education, Computers for
Outstanding Young, and Fund for Academic Excellence).
Lack of basic facilities
(water, electricity, etc.)
Establish public telecenters (e.g., Chile, Sri Lanka, and Pakistan).
Roll out WiFi access in public spaces (e.g., the Dominican
Republic’s Universal Access Project provides WiFi Internet access
and terminals in metro stations in Santo Domingo, public spaces,
and educational institutions).
Limited availability to
consumers of electronic
equipment
Distribute equipment directly or provide subsidies to poor
consumers for the purchase of electronic equipment.
High tax rates on telecom
services or electronic
equipment
Reduce taxes on these services and equipment (e.g., this is
considered in the forthcoming broadband UAS policy of Sri
Lanka).
Lack of telecom
infrastructure, especially
critical infrastructure
Develop a National Broadband Plan, including the roll out of a
national backbone.
Ofer grants to operators to build infrastructure.
Demand the sharing of infrastructure with regard to installing
further infrastructure (e.g., in the Dominican Republic, a new
policy will require the sharing of infrastructure, in order speed up
the installation of new infrastructure and reduce costs).
(continued on next page)
ANALYSIS OF ASIAN AND LATIN AMERICAN COUNTRIES
TABLE 2.12: Examples of Strategies in Developing Countries to Overcome
the Challenges to Broadband UAS (continued)
Challenge
Examples of Strategies to Overcome Challenges
High cost of installing new Same as above.
infrastructure in rural areas
Diiculty in obtaining
Involve relevant agencies and ministries early in the policy
authorization to install new development process in order to design comprehensive
infrastructure
implementation strategies and avoid such problems.
Limited amount of suitable Re-farm spectrum (e.g., the National Frequency Allocation Plan in
spectrum
the Dominican Republic was modiied to increase the amount of
spectrum allocated to wireless broadband services).
Re-allocate some of the digital dividend spectrum (when this
becomes available) to wireless broadband services.
Limited local content
Provide subsidies for the creation of local content (e.g., Pakistan’s
incentives will enhance local creation of content in local
languages).
Develop e-government services (e.g., in the Dominican Republic,
an integrated platform of services was developed for the Ministry
of Labor and a management system was introduced for hospitals
and maternity services).
Source: Authors’ elaboration.
5.
Last mile: The “last mile” is the inal leg of delivering connectivity from a
communications provider to a customer.
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CHAPTER 3
Conclusions and Recommendations
Some key lessons have been drawn from the analysis of the reference countries,
India, the Republic of Korea, the United Kingdom, and the United States. In relation to the comparisons made of Costa Rica, Dominican Republic, Chile, Bolivia,
Sri Lanka, Pakistan, Vietnam, and Bangladesh, 15 recommendations that can be
useful for governments in their eforts to promote Universal Access and Service
(UAS) broadband and social inclusion are outlined below. In contrast to the lessons learned, these recommendations cover the activities that are necessary
from the development of UAS policies to their implementation. The objective is
to assist national authorities to bridge the gaps between their own countries and
those that have achieved UAS. The recommendations are discussed below and
include proposed steps to take in support of these guidelines. They are applicable to developed countries and developing countries, but should be adapted
to the speciic characteristics of each country. In particular, care should be taken
with regard to the type of UAS model applicable (as discussed previously).
Policy and Regulatory Issues
A.1 – Recognize the beneits of broadband
As described earlier, broadband can provide signiicant beneits to a country
from an economic and societal perspective. In terms of the economics, broadband is increasingly used in all sectors of the economy and contributes significantly to growth and eiciency. Many sectors can beneit, such as agriculture
(e.g., weather forecasts and online market distribution), industry and, in particular, the booming services sector. Furthermore, the information economy
represents a tangible opportunity for many developing countries. India, for
example, has made ICT a key pillar of its overall development strategy and has
had considerable success.
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TABLE 3.1: Recommendations
A – Policy and Regulatory Issues
A.1 – Recognize the beneits of The full beneits of broadband from an economic and
broadband
societal perspective should be recognized by relevant
authorities.
A.2 – Adopt a holistic
approach to broadband
development
A holistic approach toward the development of
broadband should be made to include spectrum policy,
and rollout of national backbone, etc.
A.3 – Recognize the role of the The USF, in relation to UAS broadband, serves as an
USF
economic development mechanism and a catalyst for
social inclusion (e.g., healthcare and education). This must
be fully acknowledged.
A.4 – Collaborate with relevant UAS policies should be drafted in collaboration with
stakeholders in designing relevant stakeholders (e.g., ministries, regulators, agencies,
UAS policies
and industry associations) and, in particular, the private
sector.
A.5 – Deine a clear vision and UAS policies should represent a clear vision and include
set ambitious objectives ambitious objectives that can be achieved.
A.6 – Use alternatives to USOs USOs that are imposed on incumbent operators are
generally not an efective means of achieving objectives of
UAS broadband policies.
B – Planning
B.1 – Perform a thorough gap
analysis
A thorough gap analysis is required to understand the
focus of UAS broadband programs (e.g., poor, rural and
remote, or other special groups).
B.2 – Deine an appropriate
The governance structure of the USF should be adapted
governance structure for to the local context and should ensure full integration,
the USF
coordination, viability, and provide a system for checks
and balances.
B.3 – Focus on UAS projects
that are sustainable
The long-term sustainability of UAS projects is important.
C – Funding
C.1 – Diversify the funding
sources
Funding sources should relect the strategic vision of the
UAS policy and the local economic environment.
C.2 – Maximize the level of
funding
The level of spending needs to be signiicant to bring the
desired results.
C.3 – Deine clear rules for
USF disbursements
The rules for USF disbursements should be fair and
transparent.
D – Implementation
D.1 – Ensure cooperation
between public and
private sectors
Implementation of UAS policies requires cooperation
between public and private sectors, for example, through
the establishment of PPPs.
D.2 – Focus on supply and
demand
UAS programs should focus on carefully selected projects
that address supply and demand, with some degree of
lexibility (e.g., choice of technology).
D.3 – Ensure strict supervision Implemented UAS programs need strict supervision.
CONCLUSIONS AND RECOMMENDATIONS
TABLE 3.2: Proposed Actions to Support Broadband Beneits
Communicate results of recent and comprehensive analyses relevant to UAS broadband and
services, such as the 2012 study undertaken by the IDB, Socioeconomic Impact of Broadband
in Latin American and Caribbean Countries. Knowledge sharing can take place through
(i) workshops that are organized by relevant ministries and (ii) the presentation of case studies
of comparable countries.
Undertake an impact evaluation of broadband in the country, including a high-proile
assessment of the impact of increased broadband penetration on the economy and on
services to citizens. A simple cost-beneit analysis is usually suicient to make the case that
investing in broadband should be considered as a strategic priority.
From a societal standpoint, people and businesses are increasingly dependent on broadband services; the more there is UAS, the more dependent
they become. Broadband also enhances the eiciency (as it does for the private sector) of government services to provide services that are useful to citizens (healthcare, and e-learning).
Governments and agencies should recognize the beneits of UAS broadband and, therefore, support such programs so that the digital divide is narrowed and access to broadband is possible in unserved and underserved
areas. It is crucial to ensure that broadband is included in UAS policies and that
these policies accept and understand the need to transition from voice telephony programs to UAS programs that include broadband. The various measures that can be applied to ensure that these beneits are fully acknowledged
by all relevant stakeholders are presented below.
A.2 – Adopt a holistic approach to broadband development
Once the beneits of broadband have been fully established, care should be
taken to explain that the policy environment should be favorable in order for
broadband uptake to occur. This, in part, is the purpose of national broadband
policies, rather than that of UAS programs. A UAS policy, therefore, should be
designed to complement a national broadband plan and not to replace it since
UAS programs, alone—while necessary—are not suicient.
The national broadband plan should aim to create an environment where
regulatory and commercial obstacles to the development of broadband are
addressed at the national level. The policy should include comprehensive measures that will generate supply (e.g., reduce costs and prices; increase market
access) and stimulate the demand for broadband services (e.g., facilitate the
creation of local content and the development of services in areas such as education, healthcare, and businesses).
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While UAS policies are critical for the success of UAS programs, they are
not meant to address the regulatory issues that relate to spectrum allocation,
licensing, or interconnection rules. Nevertheless, UAS programs and national
broadband policies are interconnected; UAS policies will promote broadband
uptake in some cases which, in turn, can increase overall demand. On the other
hand, national broadband policies can ensure that there is a regulatory agency
in place for UAS policy to be efective.
In general, the success of UAS programs requires a favorable ICT environment that will usually include:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
A liberalized telecom sector: Liberalization ensures increased participation by the private sector in developing a competitive broadband market
to attract investment. For instance, international gateway liberalization
usually reduces the cost of international bandwidth and, ultimately, the
price of Internet service for the end user.
An investment-friendly industry policy: This will allow for fair competition in the private sector; there will be insuicient incentive for the private
sector to invest in large projects if there is the risk of unfair competition.
Programs and incentives to promote rollout: This is necessary for the
rollout of telecom infrastructure.
Dedicated programs: These are required to stimulate demand for broadband at the national level.
Technology-neutral and uniied licensing programs: In particular, operators that are restricted to ixed services can be an obstacle to the provision of UAS, since wireless technologies are a more cost-efective way in
which to bring UAS broadband to under served and unserved areas.
Available spectrum for broadband wireless technologies: The allocation of spectrum in large countries may vary from region to region, based
on conditions and the ease in which the installation of mobile broadband
technologies can be made in rural areas. In addition, the switch-of of analogue TV will release spectrum that can be reallocated to wireless broadband services.
Appropriate policies for Internet-based services: Examples are VoIP
and related regulatory aspects, such as rules for Internet traic over
Internet protocol networks.
Available national and regional iber optic backbone: Should be supported by regulations that ensure open access and the sharing of infrastructure—a critical factor for UAS programs—since the high cost of a
national bandwidth (resulting from a monopoly of national backbone
CONCLUSIONS AND RECOMMENDATIONS
facilities) can signiicantly prevent broadband uptake in rural areas or in
those areas that are too far from international connectivity points, such as
submarine cable landing stations. Furthermore, a monopoly on the iber
optic backbone can restrict the ability of small business or local stakeholders (who lack such infrastructure or access to it) to participate efectively in UAS programs.
ix. Tax relief in selected areas: This should be applied to select services or
for select customers. Taxes may include import duty on electronic equipment, levies on communications services or user equipment, and corporate taxes.
UAS policies are usually considered in the context of national broadband
plans and should be designed as such, in coordination with national policies,
so as to address the areas and population groups that require special interventions for their access to broadband services.
A.3 – Recognize the role of the USF
The increase in the supply of broadband accessibility and in the need (demand) for its services is a result of increased usage. There are various options
to support and sustain supply and demand that relate to the acknowledgement by governments and their agencies that USF programs are, in fact, a
TABLE 3.3: Proposed Actions for a Holistic Approach to UAS Broadband
Ensure that liberalization of the market includes key components of broadband service
delivery: international gateway, national and regional backbone, and Internet access.
Ensure that technology-neutral and uniied licensing programs are in place, so that operators
are equal in implementing UAS programs, and the incumbent ixed operators are not
disadvantaged.
Promote rollout of broadband infrastructure through suitable instruments, such as tax
incentives for infrastructure investments; apply government funds as direct investment
through PPPs; develop national backbone plans with an enforced open-access policy; and
allow or mandate infrastructure-sharing agreements.
Ensure that spectrum policy is in line with UAS goals. For instance, some frequencies allocated
to GSM may be underused in rural areas—even though they are fully used in urban areas—
because of diferences in population density. These frequencies could be reallocated to mobile
broadband services in rural areas. Another option is to reduce or even eliminate spectrum
licensing fees for unserved areas for providers of UAS, as this could reduce UAS costs. Finally,
spectrum may be allocated in exchange for UAS commitments.
Increase public awareness and the ability to use broadband services through dedicated
training, the development of e-learning or e-government services, the development of local
content, or subsidies on broadband-related equipment in schools, universities, and telecenters.
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
key component of any broadband development policy. As mentioned above,
major reforms, such as those carried out in the regulatory environment of the
telecom sector, are necessary to ensure greater broadband uptake; a simple
regulatory measure that allows for more competition will also be helpful. These
could be in the form of iscal measures such as lowering the tax on ICT equipment or services, or enabling measures such as ICT training and education.
USF programs are a necessity in most developing countries (unlike in some
of the emerging and advanced countries). They are the policy mechanisms that
are best placed to reduce the digital divide that prevents segments of the population from beneiting from broadband. USF programs have signiicant advantages in terms of supporting the development of UAS broadband.
i.
USFs provide a transparent means to distribute subsidies to achieve
UAS: By deining speciic objectives and targets and implementing an
open process for consultation, USFs can ensure—for the public good—
that all stakeholders are involved in UAS programs.
ii. USFs are eicient when funding is awarded competitively: Tendering
should be competitive. While USFs require all industry players to participate in the inancing, only operators that are in the best position to implement the UAS programs should be selected. This contrasts with a USO
obligation that is imposed on incumbent operators with no reference to
what the real costs are likely to be.
iii. USFs allow governments and other donors to contribute inancially
to UAS: This applies in a liberalized market and avoids direct involvement
in less eicient or more complicated forms of project implementation
(e.g., direct subsidies).
iv. UAS programs can ill market gaps: In most developing countries, this is
the only way to narrow the gaps. These gaps remain due to the following
reasons:
• Geographic: some countries have challenging geographic constraints,
such as large areas with low population density that cannot be covered
with telecom infrastructure in an economically viable way;
• Economic: disadvantaged people will be denied access to broadband
because it is unafordable.
• Social: some segments of the population, such as the disabled and elderly, will not have access to broadband.
There are various ways that relevant authorities can ensure that UAS programs are considered a necessary economic development instrument and catalyst for social inclusion, as outlined below.
CONCLUSIONS AND RECOMMENDATIONS
A.4 – Collaborate with relevant stakeholders in designing UAS policies
Although developed countries have more substantial resources to invest in the
planning of UAS programs, developing countries can also obtain a signiicant
degree of efectiveness by ensuring that all stakeholders are closely involved
in planning the UAS programs. The UAS programs that have been most successful have been designed with cooperation from stakeholders. Several types
of stakeholder should be involved in the development of a UAS policy. This is
important to ensure that their needs are appropriately assessed, the goals are
mutual, and the means to achieve these goals are shared and understood, in
order to put in place a coordinated and informed policy. The potential stakeholders include the following:
i.
National and regional authorities: Bodies that should be involved in
UAS policy design, primarily, should include government ministries (e.g.,
ICT, economic afairs, and rural development), telecom regulators, and ICT
development agencies. UAS programs can include a variety of measures
that require the collaboration of various ministries; for example, tax concessions for electronic equipment (Ministry of Finance), support for national infrastructure (Ministry of ICT), and development of programs for
schools and universities (Ministry of Education).
ii. Participants in the UAS programs: These include national industry
players such as telecom operators and ISPs. These stakeholders have a key
role to play in contributing to and implementing UAS programs. For instance, industry players can provide vital information regarding market
gaps and achievable UAS targets, as well as the technologies that are available to bridge the gaps. They also form the crucial link between market
regulation and commercial reality.
iii. Beneiciaries of the UAS programs: The beneiciaries of UAS programs
are usually end users. They can be consulted through consumer associations, community representatives, local authorities, and organizations or
associations representing groups of citizens (e.g., associations for people
TABLE 3.4: Proposed Actions to Recognize the Role of UAS Broadband UAS
Policies
Communicate results of studies that highlight the ability of USFs to sustain broadband
development (such as this study). Communication can be made through speciic workshops
organized with relevant ministries at which theoretical results can be shared.
Undertake a well-designed study relating to the potential beneits of UAS programs in the
country by presenting case studies of comparable countries.
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
with disabilities). Their opinions and needs can also be assessed through
ield demand studies. In Chile, for example, UAS projects are not initiated
by the regulator; rather, they are initiated in response to requests from
telecom carriers, consultants and professionals, municipalities, neighborhood associations, and other community and social organizations. These
demands are then aggregated into a project portfolio, which is evaluated
by the regulator from a technical and a inancial perspective. In this way,
the locations for the Rural Internet Network program were selected based
on the demand expressed by local and regional authorities and civil society organizations, and also the development priorities in agriculture,
small and medium enterprises, and tourism.
A.5 – Deine a clear vision and set ambitious objectives
There are two dimensions to the challenge of achieving broadband UAS: highcost areas, where access infrastructure costs outweigh potential revenues; and
disadvantaged sections of the population, for which the service is unafordable (e.g., remote or poor households) or for which the services are not well
adapted (e.g., blind people). The vision and objectives of the UAS programs are
crucial to their success, given the following:
i.
A precise vision of the UAS programs can re-emphasize the beneits of
broadband, detail the concepts of UAS, and justify the need for UAS programs in the broadband market.
ii. A well-deined vision will ensure that the UAS programs are in line with
other national broadband policies in terms of goals and complementary
to them in terms of means.
iii. A vision shared with all key stakeholders, combined with a set of agreed
targets, will help to ensure that these stakeholders are on board and
TABLE 3.5: Proposed Actions to Involve Stakeholders in the Development of
UAS Policies
Put in place a public consultation on UAS. Consultations are a critical part of policy
development. This is also true for UAS.
Engage in a coordination process at an early stage of policy development to make the link
between the political goals (e.g., as set by Parliament), which are transposed into government
actions (e.g., through Ministry plans) and the UAS policies themselves.
In most (if not all) countries, a chief information oicer will be needed, with the necessary
mandate and resources to drive broadband adoption.
CONCLUSIONS AND RECOMMENDATIONS
committed to the fulillment of the objectives. Targets should be ambitious but achievable.
As a result, it is good practice to have a UAS policy that is clearly separated
from other policy documents. This UAS policy can be incorporated within a national broadband policy or be formulated as a stand-alone document. In any
case, it should be clearly identiied as a separate policy with speciic targets
and means (in particular, with a dedicated fund) integrated within broader national policies.
A.6 – Use alternatives to USOs
One way to enforce UAS policies is to mandate a broadband USO via license
obligations or speciic policies. The analysis in this study suggests that this approach is not favored by countries with advanced broadband markets, all of
which prefer to rely on provision of incentives for private investment.
While most countries do impose mandatory contributions to their USF, the
implementation part of the UAS policy is usually achieved through targeted subsidies awarded during public competitive tenders, instead of through a mandated USO. Such a process expressly extends what private enterprise can and
must do beyond what it would do without subsidies. Such a process asks the
question “What is the minimum subsidy that private enterprise will need to get
to goal x (e.g., coverage of an additional 10 percent of the population)?” Metrics
and milestones are set out, and then competitive bidding occurs for the minimum subsidy, and the eiciency of private enterprise provisioning is preserved.
TABLE 3.6: Actions to Deine a Clear Vision and Set Ambitious Targets
The objectives of the UAS programs should be plainly stated and justiied.
The vision of the UAS programs should be compliant with the resources that can be made
available.
The objectives of the UAS programs should be precise and clearly deined. The targets must be
ambitious, but they need to remain achievable. This digital agenda can be assessed through
workshops with stakeholders, which aim to reach general agreement on those targets. The
targets can be expressed in terms of population coverage, Internet usage, kilometers of
backbone, etc. Setting overly ambitious goals that the stakeholders perceive as not achievable
will immediately undermine the programs, and so each government has to be clear as to how
far it expects to go beyond what private enterprise will provide of its own accord.
The objectives should give priority to areas that will have a high impact and achieve rapid
results, whenever possible.
The objectives should be reviewed and adjusted regularly to ensure that the policy is relatively
future-proof and does not become obsolete too quickly as a result of market developments.
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
Another reason to take this approach is that competitive tendering helps
to limit potential market disruptions. Older USFs were usually designed in a
pre-liberalization world where an incumbent ixed operator received inancing
to provide ixed services in areas that would otherwise not be commercially viable. In today’s mostly liberalized world, operators are also competing at the
infrastructure level, and subsidizing an operator to rollout costly infrastructure
that might help it to make the transition from a PSTN to a next-generation network could represent an unfair subsidy. For instance, this is a major concern
in the EU, where member states are not allowed to require market players to
make contributions to inance measures which do not form part of USOs.
Lastly, USOs tend not to be future-proof, as they often focus on certain
technologies or solutions instead of leaving the market to decide which technology is the most appropriate because it is the most economically eicient.
The relevance of a USO difers from country to country, depending on
many factors, such as the current state of the broadband sector and the existing market gaps, the market position of the incumbent ixed operator and
the major mobile operators, and existing broadband policies.
TABLE 3.7: Summary of Recommendations in Terms of Regulatory
Environment
Recommendations
A.1 The full beneits of broadband from an
economic and societal perspective
should be recognized by the key authorities
Priority (Depending on UAS Model)
All UAS models: Some recommendations
come at virtually no cost, but are critical
for the achievement of UAS targets,
and should therefore be given high
A.2 A holistic approach to broadband
priority in any model. This is the case for
development should be pursued,
recommendations A.1 (Recognition of
encompassing spectrum policy, national
broadband beneits), A.3 (Recognition of
backbone rollout, etc.
the role of broadband UAS policies), and
A.3 The role of broadband USFs as an
A.4 (Involvement of all stakeholders). A.5
economic development instrument
(Clear vision and ambitious targets) is also
and catalyst for social inclusion (e.g.,
relatively simple to ensure but is less critical.
healthcare and education) should be fully
Mature UAS models: A.2 (Holistic
acknowledged
approach to broadband development)
A.4 UAS policies should be designed by
and A.6 (Use of alternatives to
involving all relevant stakeholders (e.g.,
broadband USOs) only become a
ministries, regulators, agencies, and industry priority for established UAS policies, as
associations)
these approaches are more complex to
A.5 UAS policies should contain a clear vision, as implement and are not required to yield
well as ambitious but achievable objectives results in countries with very recent UAS
plans.
USOs imposed on incumbent operators are
generally not an optimal way to achieve the
objectives of broadband UAS policies
CONCLUSIONS AND RECOMMENDATIONS
Planning
B.1 – Perform a thorough gap analysis
The general accepted vision of a market gap is that the private sector will
leave certain population segments (e.g., poor people, and people with disabilities) or geographic segments (e.g., rural areas) underserved or unserved, as
they would never become commercially proitable. This is a vision that was
established before wireless technologies had been developed. With the advent of cost-eicient, reliable, adaptive and good-quality broadband technologies, the extent of underserved and unserved areas or population segments
has shrunk somewhat. The use of advanced technologies, however, is expanding quite quickly and it is arguable that the gap (e.g., between technologies for rural areas and technologies for urban areas) is actually widening,
thus sustaining a digital divide among citizens. Because of the complexity of
this problem and the fact that the speciic characteristics of each country are
highly important, there is a need to conduct a thorough gap analysis to identify the areas where broadband UAS investment should be made.
Once the gaps have been identiied in detail, the needs for action should
be prioritized appropriately to ensure that the use of funds has optimal impact. The prioritization of projects to be included in the UAS programs can be
achieved through a combination of the following:
i.
ii.
Detailed cost-beneit analysis: In Chile, for instance, the regulator carries out a detailed cost-beneit analysis to ensure the viability of projects.
Similarly, in the Dominican Republic, the USF gives preference to programs with high social returns and takes into account the cost efectiveness and cost eiciency of the projects.
Detailed assessment of the socioeconomic context: In the Dominican
Republic, for example, the prioritization of projects is based on a comprehensive assessment of the socioeconomic context of the targeted
areas, such as income, population size, and existing infrastructure,
among others. Similarly, in Vietnam, the Ministry of Information and
Communications identiies the regions that require priority by using
two criteria: the local ixed teledensity and the socioeconomic status
(GDP per capita). In Pakistan, priority is typically given to rural, remote,
and small towns with the highest number of unserved or underserved
residents.
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TABLE 3.8: Characteristics of Broadband Gap Analysis
An extensive but detailed scope: For this, it is necessary to understand and compare the
current state of the broadband sector on the supply side (existing infrastructure, roll-out
plans, quality issues, competition levels, retail prices, etc.) and on the demand side (usage of
ICT tools, and broadband in particular, by the population). It is also important to analyze the
geographic, demographic, and socioeconomic components with a speciic focus on income
and expenditure data, and to review the current plans or policies being implemented through
other related programs (e.g., ad hoc broadband development projects).
A ine granularity: This can be achieved by conducting a geographic analysis at the local
level, and also an analysis of the various segments of the population (e.g., in terms of income
levels) in a signiicantly targeted way. The larger the area/segment, the smaller the impact of
the UAS programs (for a similar amount of funding). This approach was used successfully in
Costa Rica, where 80 locations were identiied and prioritized, down to the granularity of small
villages.
A forward-looking perspective: It is important to understand the current market trends
and how the market could evolve without public support—although subsidies may appear to
be required in the short term, this might not be the case in the medium term for some areas,
while in other areas subsidies may be essential as no uptake may be foreseeable even in the
longer term. Sri Lanka followed this approach and implemented a comprehensive 10-year
development plan that was broken up into shorter, focused projects.
A view on sustainability: Areas which require high-cost coverage and have a low-income
population may need UAS programs to provide access (e.g., by inancing access infrastructure)
and to sustain service (e.g., through discounted Internet subscriptions), as otherwise the UAS
programs might not be viable in the long term. A detailed understanding of afordability issues
is thus required to assess whether the gap only needs a temporary solution (as the service
will eventually become economically viable) or longer-term support. The resources needed
for ongoing support are sometimes more substantial than for one-of support only, and this
has to be incorporated into the long-term budget of the USF (as those resources will not be
available to meet one-of support needs in other areas). Some countries, such as Vietnam, have
experienced project sustainability issues of this type.
B.2 – Deine an appropriate governance structure for the USF
A multitude of options are possible for the governance of USFs. Governance
can be entrusted to three types of organizations:
i.
ICT or telecom ministries: Ministries have control over and responsibility
for national policies, which give them an extensive view of UAS programs.
In some countries, however, there are co-ownership issues (where the government obviously owns the ministry, but also retains some stake—however small—in the incumbent operator). When a government does still
have a residual stake in the incumbent operator, this can make participation by the private sector more complicated: government ministries must
CONCLUSIONS AND RECOMMENDATIONS
be especially careful that any and all subsidies are clearly and economically justiied.
ii. National regulatory authorities: Regulators have a broad and deep industry expertise, combined with available and skilled staf and established
relationships with all ICT players at the national level (which is useful when
implementing UAS programs), as well as other regulators or agencies at
the international level (which can help to ensure adoption of best practices). In addition, regulators are usually perceived as being independent
from industry and government, which is helpful in obtaining participation
by all stakeholders.
iii. Dedicated UAS agencies: These agencies are perceived by the industry
as having a higher degree of independence than regulators, but they
may need time to establish relationships that regulators already have.
Moreover, the addition of a new entity increases the number of participants in the coordination process—and, hence, its complexity—and can
also raise the administrative costs of UAS programs.
It appears from this analysis that regulators or dedicated agencies are
better adapted for managing UAS programs, mostly for reasons of eiciency
and independence. Whichever organization is selected, it is important to take
care to ensure that the governance follows certain principles, as summarized
below.
TABLE 3.9: Governance Principles for Entity Managing the USF
Eicient in its management, with streamlined and centralized processes: In some cases,
it can be more appropriate to create a dedicated entity to take charge of UAS programs, either
as a department within a regulator or as a separate body. This approach was followed in Costa
Rica, where FONATEL was created, separate from the regulator SUTEL.
Accountable to the government.
Independent and fair to the industry: This can be achieved by creating an entity in which
all key stakeholders have a seat on the board, and by ensuring that suitable checks and
balances are in place. For instance, the USF in Pakistan is managed by an independent but
wholly state-owned company, whose board of directors includes equal representation from the
public and private sectors; it also has an independent chief executive oicer.
Transparent to the citizens: The USF should have a distinct accounting system with
proper auditing and monitoring in place. Also, it is best practice for the entity to publish
regular monitoring reports on the funds collected and disbursed, as well as on the programs
implemented, for instance through a detailed annual report. In the Dominican Republic,
INDOTEL publishes a considerable amount of detail on the projects that have been
implemented (e.g., duration, costs, description, and progress status).
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B.3 – Focus on UAS projects that are sustainable
UAS projects can either be one-of investments, ongoing support, or a combination of both. It is important to understand which categories each project
falls into. One pitfall that needs to be avoided is setting up projects that make
ongoing losses and fail to have a prolonged efect. A typical example of such a
project might involve a subsidy to build broadband access infrastructure, but
then failing to provide support for low-income households to take broadband
services provided by it. The guidelines to ensure the sustainability of UAS projects are outlined below.
TABLE 3.10: Guidelines to Ensure the Sustainability of UAS Projects
Design detailed business models with collaboration of the entity in charge of project
implementation to ensure that long-term service usage assumptions are reasonable (e.g.,
afordability analysis). This is done in Chile, for instance, where the regulator carries out detailed
cost-beneit analyses to ensure the viability of projects, and makes careful cost estimates using
a detailed engineering model.
Ensure that retail service prices are within reach of the targeted population through detailed
market analysis.
If market prices are not afordable to the targeted population, mandate discounted prices to
the operators (at least for a certain period of time), or provide direct subsidies to the targeted
population, as is done in the Republic of Korea, the United Kingdom, and the United States
(through their programs for low-income households).
Set the targets for UAS projects in the form of usage metrics over time, rather than access
metrics immediately after completion of a project. Many recent UAS programs now properly
set usage targets, as well as medium-term goals; for instance, the UAS programs in Sri Lanka
highlight the diference between access and usage and, therefore, put great emphasis on
content and service development (e.g., e-government, ICT skills, and capacity building).
TABLE 3.11: Summary of Recommendations in Terms of Planning
Recommendations
Priority (depending on UAS model)
B.1 Carry out a thorough gap analysis to
understand what the UAS programs
should focus on
Recent UAS programs: B.1 (Gap analysis)
should be a priority for recent UAS
programs, where the limited resources
need to be allocated carefully, as well as
B.3 (Sustainability), as sustainability is more
diicult to achieve in countries with a lower
level of economic development.
Mature UAS programs: B.2 (Governance
structure) is mostly relevant for established
UAS programs.
B.2 Set up a governance structure for the
USF that is adapted to the local context
and ensure full integration, coordination,
viability, and checks and balances
B.3 Focus on the longer-term sustainability of
UAS projects
CONCLUSIONS AND RECOMMENDATIONS
Funding
C.1 – Diversify the funding sources
Before redistributing funding to operators that implement UAS programs, the
USF collects funding through a number of sources, such as the following:
i.
Levies on operators: This is the most usual source of funding, in which
all or some of the national operators are required to contribute to the USF
through a levy in proportion to their revenues. In some instances, it may
be appropriate to reduce the levy paid by small rural operators.
ii. Contributions from the government’s budget
iii. Contributions from other regulatory sources: For example, spectrum
fees or inancial penalties imposed on operators (e.g., for failure to comply
with rollout obligations).
iv. Contributions from international funding providers: For example, the
World Bank.
TABLE 3.12: Guidelines for USF Funding
Diversify the sources of funding: This is important as it (a) maximizes the amount of resources
available for UAS programs; and (b) facilitates the collection of funds; for instance, if the fund is
strictly inanced by the government budget (as in the case of Chile), the revenues can be afected
by changes in budget priorities on an annual basis, whereas UAS programs ideally need long-term
and predictable investment plans. Using a levy on operators, independent of available government
funding, can be a way to put aside inancial resources for ICT projects if a government has more
pressing needs. For instance, in Sri Lanka, funding of the USF comes from various sources, including
a levy on operators, direct contributions from the government, and funds from international
institutions. Similarly, FONATEL in Costa Rica receives an annual contribution from operators, as well
as additional revenue streams from regulatory sources (e.g., licenses, penalties, and interest).
Design the levy on operators so there is no impact on competition: For instance, if
ixed infrastructure was deined as the key technology for providing broadband services, then
mobile operators would become major contributors while ixed operators would become the
main recipients of the fund. A levy on all market players, set as a percentage of revenues, is
often seen as a fair scheme.
Flexibility of rules: To adapt to market evolution, especially in relation to the market positions
of diferent players, rules should be lexible. As a result, when there is a levy on operators, it is
best practice for this levy to luctuate within precise boundaries, according to the fund’s need
during the next investment period.
Use exemptions in exchange for UAS commitments: An eicient way to reach UAS targets
is to exempt UAS contributors from paying part or all of the levy in exchange for commitments
to implement UAS programs. This solution streamlines and simpliies the management of UAS
programs.
Aggregate the diferent revenue streams into a single fund: This will simplify the
monitoring and auditing of funds.
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C.2 – Maximize the level of funding
Designers of UAS policy need to understand the maximum amount of inancial resources that could be collected in the context of UAS, which is related to
the following:
i.
The scale of the UAS programs that the government intends to put in
place to meet the objectives set in the policy and the estimates of the related costs.
ii. Telecom sector revenues, if the sources of funding are based (fully or partially) on operators’ revenues.
iii. The portion of the budget that the government is willing to invest in the
broadband sector.
Several metrics can be used (and benchmarked against peer countries)
to assess the maximum amount of inancial resources that could be collected,
such as the level of spending on UAS programs as a percentage of total telecom
revenues, as a percentage of overall GDP, or as a percentage of GDP per capita.
The diiculty lies in the data gathering, as multiple programs usually co-exist
and in some countries the inancial reporting may be relatively inaccurate (or
even nonexistent). It is also not straightforward to compare the diferent inancial instruments (e.g., grants, loans, and subsidies).
TABLE 3.1: Guidelines for Maximizing the Level of USF Funding
Set operators’ contributions to the USF to an appropriate level: It is important to strike
the right balance in the level of contributions required from operators, as collection targets
which are too ambitious may result in an ineicient diversion of capital from private operators
(leaving them with insuicient funds to meet their other legitimate goals), while collection
targets that are too modest may prevent the funding of programs that are needed to make
an impact on broadband infrastructure and usage stimulation. Based on the case studies,
dedicating a share of revenues to UAS programs that is much higher than 5 percent is diicult
to enforce, and could be an impediment to healthy development of the sector and to private
investment.
Balance USF spending with the level of funds collected: Clearly, overspending is
undesirable, but care should also be taken that the level and rate of spending is in line with
the ability of the USF to disburse the money collected. As shown in the case studies, several
countries have had diiculty in making full or timely use of the money collected; this is the case
in the Dominican Republic and Costa Rica, and also most presumably in some countries where
inancial reporting is too limited to give a clear view of USF spending (e.g., Vietnam).
Regularly reassess the levels of inancing: With the rapid pace of development in the
broadband sector, it is important to reassess the inancing for UAS programs on a regular
basis. This is true on the collection side (because operators’ revenues will luctuate) and on
the spending side (because equipment and infrastructure costs change with technology
developments).
CONCLUSIONS AND RECOMMENDATIONS
C.3 – Deine clear rules for USF disbursements
Inappropriate funding of projects through the USF can create diiculties in the
broadband market, such as: market distortion by not supporting all operators
fairly; project failure due to a miscalculation of needs and requirements; dependence of projects on ongoing or additional inancing; and potential fraud
if the conditions for award of funds are unclear.
To solve these diiculties, many countries have endorsed the OutputBased Aid (OBA) mechanism to disburse USF resources, which seems to be the
best practice today for many developing countries. The main advantages of
this solution are outlined below.
TABLE 3.14: Advantages of the Output-Based Aid Mechanism to Disburse
USF Resources
When properly designed, OBA limits market distortions, as all entities (e.g., operators and
agencies) are competing fairly to obtain the subsidies.
OBA favors strong involvement by the private sector, which usually ensures greater eiciency
than with government-led implementations.
OBA encourages cost eiciency, through its auction mechanism.
OBA has clear result-oriented rules.
TABLE 3.15: Summary of Recommendations in Terms of Funding
Recommendations
Priority (Depending on UAS Model)
C.1 The sources of funding must relect the
strategic vision of the UAS policy and the
environment
All UAS programs: C.1 (Diversiication
of funding sources) and C.2 (Maximizing
funding levels) should be a high priority in all
UAS programs, but especially for recent UAS
C.2 The level of spending needs to be
programs as they are helpful in addressing
signiicant to bring the desired results
inancial constraints.
C.3 The rules for spending the USF should be More mature UAS programs: C.3 (Clear USF
fair and transparent
rules) comes as a second step once resources
have been made available.
Implementation
D.1 – Ensure cooperation between public and private sectors
In the context of broadband UAS, the government’s role is to ensure that citizens and businesses have access to broadband services in order to meet social and economic needs. Although governments have the inancial resources
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to fund the UAS programs directly, it is generally accepted that they are not
the most eicient agents to actually implement these programs, and that their
role should focus on the following activities:
i.
Deinition of UAS policies, in line with the wider direction of the ICT sector
in general, and the broadband sector in particular.
ii. Partial funding, when needed or when relevant, to speed up the realization of economically viable projects or to enable the creation of noneconomically viable projects.
iii. Allocation and supervision of fund collection and disbursement.
iv. Monitoring the implementation of UAS programs.
Many countries do not require massive investments to achieve reasonable UAS targets, and the private sector is usually well positioned to ill in the
market gaps once adequate support has been provided by the State. To a large
extent, it is best practice for the private sector to take charge of the implementation of UAS programs and also to contribute (fully or partially) to the funding
of such programs. As discussed earlier, this is because of the following reasons:
i.
Private sector companies have a good understanding of the realities of the market (e.g., in terms of obstacles to uptake and market
responsiveness).
ii. Companies often have solid expertise in cost–beneit analysis and can
precisely assess the funding required to achieve breakeven on an investment (which also applies to UAS programs).
iii. Companies often have better project management capabilities, being
motivated to be inancially eicient, and are better than most governments at implementation in the ield.
Most successful UAS programs have relied on the private sector for their
implementation, with public tenders being made available to companies,
which are willing to invest in projects that meet the conditions and obligations
requested, in exchange for subsidies or low-interest grants. This is the case in
Pakistan, for instance, where all projects under the USF are irst approved by
the board of directors and then advertised for open reverse auction. The auction amount is capped by the USF, based on the estimated project capital costs
and expected market conditions.
CONCLUSIONS AND RECOMMENDATIONS
It should be noted that some parts of UAS programs simply overlap with
other programs, objectives, or private institutions. These would include the
following:
i.
Social responsibility programs, such as support for poor or disabled
people, or provision of equipment to schools and universities.
ii. Projects to provide technical redundancy programs, such as deployment
of additional infrastructure, which could, for instance, provide additional
capacity that could be made available to small rural operators.
iii. Demand stimulation, such as local content development or ICT
training, which ultimately provides operators with new Internet users/
customers.
Public–private partnerships are now considered to be a good way to develop UAS programs, particularly for projects related to the supply side (e.g.,
infrastructure rollout). Ultimately, the aim is for the private sector to replace
the public sector, once this is commercially viable.
Finally, best practice suggests that incumbent, or at least major operators,
need to be fairly heavily involved in UAS programs, given the level of inancial
and technical resources that are usually available to them. Meanwhile, local authorities can provide key inputs in terms of planning the partnership, as illustrated by the approach taken to UAS programs in the United Kingdom. These
recommendations are summarized below.
TABLE 3.16: Guidelines for Cooperation Between Public and Private Sectors
The main roles of the government in UAS programs should be: (a) deinition of UAS
policies, (b) partial funding where appropriate, (c) collection and disbursement of USF, and
(d) monitoring implementation of UAS programs.
It is best practice for the private sector to take charge of implementation and also to contribute
(fully or partially) to funding. Private companies can bring (a) good understanding of the
market, (b) expertise in costing and cost-beneit analysis, (c) project management capabilities,
and (d) implementation skills.
Consider the use of PPPs, particularly for projects related to the supply side (e.g., infrastructure
rollout). If possible, the private sector should replace the public sector once the project is
commercially viable.
The incumbent or other major operators should be fairly heavily involved in UAS programs.
Local authorities can provide key inputs in terms of planning the partnership.
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D.2 – Focus on supply and demand
Countries have varying challenges in relation to UAS but, in most cases, successful UAS programs encompass both the supply and the demand sides. This
was properly addressed in Sri Lanka, for example, where the e-Sri Lanka initiative was established to implement a holistic approach to support ICT development in the country. The major components of the e-Sri Lanka program
include support for both supply and demand sides:
i.
ii.
Supply: The rollout of broadband infrastructure through the provision of
backbone networks, a government-wide broadband network, and the installation of a network of telecenters.
Demand: The rollout of e-government services and development of
human capacity in ICT at all levels of education and in all sectors.
Given the broad scope of areas to be covered by UAS programs and the
typically limited amount of resources available, prioritization of programs is
diicult but necessary. Attention must be given to the impact of a program,
the time needed to achieve a return on investment, and the costs versus the
beneits. There is no single way to identify the most suitable projects, as this
is directly dependent on market speciicities on the one hand and UAS policy
objectives on the other.
Universal Access and Service programs need to be resilient to changes in
broadband technology to ensure that UAS is provided in the most eicient
and cost-efective way during all phases of the implementation. This is particularly important in the case of implementation plans lasting three to ive years,
which represents a signiicant timeframe in the ICT sector.
The most suitable technology for providing broadband UAS is relatively
country-speciic, and the choice must be made by taking into account a variety
of parameters (e.g., afordability, quality of service, adaptability to geographic
constraints, and compatibility with end-user devices). New protocols may be
more eicient than existing protocols, for instance, but the cost of equipment
change can be a strong barrier to adoption.
Lastly, UAS programs should be deined to cover a realistic period of time,
which the case studies suggest might be approximately three to ive years.
Longer periods of time do not seem appropriate, given the rapid rate of change
in market conditions and the speed of technological developments. It is important to keep in mind, however, the broader vision of the UAS policy, and deine
CONCLUSIONS AND RECOMMENDATIONS
TABLE 3.17: Factors to Assess When Prioritizing UAS Projects
Compliance with overall UAS policy objectives.
Economic impact (i.e., economic growth through direct and indirect efects) and reduction of
poverty.
Economic sustainability in the long term: the total costs, potentially quantiied in terms of costs
per capita, total costs, or the nature and level of subsidies required.
The overall economic beneits versus the costs of the projects: estimated by comparing the
generated revenues with the costs, potentially quantiied in terms of net present value for the
project, or its internal rate of return.
Social impact: the extent of the needs of the population that is afected by the project, the
total size of the population afected, and a reduction in the digital divide in societal terms (e.g.,
access to healthcare and education services in remote areas).
For a given amount of funding, it may be a good approach to focus the resources on a small
number of high-impact projects instead of a large number of low-impact projects.
programs in the context of a sustained, long-term development plan with a horizon of 15 to 20 years. Best practice suggests that the following factors must be
carefully assessed when selecting the projects to be implemented.
D.3 – Ensure strict supervision
As shown in the country case studies, it is best practice to engage in a clear
monitoring of the progress and achievements of the UAS programs versus the
targets set for reasons of eiciency and transparency. This monitoring is made
diicult by the complex factors which need to be considered, such as Internet
usage (for universal service) instead of Internet subscriptions, which requires
more subtle and pools-type analysis. Such monitoring is best undertaken by
a centralized body that can control and compare the progress and achievements (e.g., INDOTEL in the Dominican Republic). The monitoring process provides a suitable opportunity to assess whether there is a need to reorient the
implementation plans or to adjust the targets that were previously deined.
The need for such changes might arise due to the following:
i.
ii.
Technological developments: These may make previous targets unambitious; it may be more eicient to realign the UAS objectives.
Market developments: These may shift priorities. For instance, the
market may become able to achieve coverage of previously high-cost
areas with no need for inancial support. In this case, the funding should
be transferred to other UAS priorities.
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The monitoring and control process should assess several aspects of UAS
programs, such as those listed below.
Conclusions
In conclusion, our analysis of the reference countries conirms the view that
broadband is a powerful tool for economic development and social inclusion,
and it is one that has been well understood and successfully implemented by
countries that are at an advanced stage of ICT development. The reasons for
supporting broadband development are primarily associated with delivering
socioeconomic beneits, such as improved economic growth and job creation,
creating stronger community relationships, supporting regional development, promoting competition, and attracting and retaining investment.
TABLE 3.18: Factors for Control and Monitoring of UAS Projects
Achievement of the project against objectives to date.
A detailed analysis of the reasons behind the diferences between objectives and
achievements, if relevant, and suggested measures to correct these diferences.
The impact of a program in the broadband market in general, compared with the impacts that
were expected at the beginning of the program.
The amounts of money collected and disbursed.
The eiciency with which the money has been spent (i.e., the share of funds that is actually
used for the projects compared to the amount spent on overhead).
Suggestions for improving the UAS programs in future, particularly in terms of implementation.
Suggestions for adjusting the UAS targets, if relevant.
TABLE 3.19: Summary of Recommendations in Terms of Implementation
Recommendations
D.1 UAS policy implementation
requires cooperation from the
public and private sectors, for
instance, through PPPs
Priority (Depending on UAS Model)
All UAS programs: D.1 (Cooperation of public and
private sectors) and D.2 (Focus on both supply and
demand sides) always deserve a high degree of priority,
as supply and demand are aspects that need to be
D.2 UAS programs must address the addressed and may be more appropriately tackled by
supply and demand sides with the private sector.
Mature UAS programs: D.3 (Centralized control and
some degree of lexibility
monitoring) is important for established UAS plans
D.3 The implementation of UAS
(where it can facilitate further industry participation and
programs needs a centralized
increase the eiciency of UAS plans). It is less critical
control that strictly monitors
for recent UAS programs (as monitoring is diicult to
progress
implement).
CONCLUSIONS AND RECOMMENDATIONS
In the LAC region, this theory has been applied relatively early (e.g., by
Chile, which is relatively wealthy) and with considerable beneits. Meanwhile,
less developed countries are making progress toward including broadband in
their strategic development plans. In Asia, aside from very advanced countries
like the Republic of Korea, broadband is still relatively underrated in UAS plans
compared to other ICT services, such as voice telephony, or more basic commodities, such as access to drinking water or power supply. This situation is primarily due to the less favorable socioeconomic development levels but, to some
extent, it is also due to more limited acknowledgement of the full potential that
broadband has to unleash economic growth and societal development.
Once the beneits of broadband have been acknowledged, national
broadband plans and broadband UAS policies are key instruments to deliver
those beneits to otherwise unserved or underserved people and businesses.
In developed countries, these policies can beneit from favorable socioeconomic conditions, signiicant inancial resources, and long expertise in UAS
policies originally developed for voice telephony. These already established
and usually complex policies, however, create a major diiculty, as adapting
them to the speciic requirements of broadband UAS is not straightforward. In
many cases, it is better to decommission old policies and implement new ones.
In the developing countries of Latin America and Asia, this problem does not
usually arise—or at least not to the same degree. Greater inancial constraints
and less favorable socioeconomic conditions (e.g., low income levels and a lack
of ICT skills), however, require greater political commitment to broadband and
the design of well thought out, properly prioritized, and comprehensive strategies. In particular, the following are some key best practices that need to be
noted in order to meet broadband UAS targets within a reasonable budget
and timeframe.
i.
On the regulatory side: The full beneits of broadband, from an economic and societal perspective, should be recognized by the key authorities; an holistic approach to broadband development should be pursued,
encompassing spectrum policy, national backbone rollout, etc.; the role
of broadband USFs as an economic development instrument and catalyst
for social inclusion (e.g., healthcare and education) must be fully acknowledged; UAS policies should be designed by involving all relevant stakeholders (e.g., ministries, regulators, agencies, and industry associations);
UAS policies should contain a clear vision as well as ambitious but achievable objectives; and USOs are generally not an optimal way to achieve
broadband UAS policy objectives.
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ii.
On the planning side: A thorough gap analysis is required to understand
what UAS programs should focus on; the governance structure of the USF
should be adapted to the local context and ensure full integration, coordination, viability, and checks and balances; and the sustainability of UAS
projects is key.
iii. On the funding side: The sources of funding must be adapted to the strategic vision of the UAS policy and the environment; the level of spending
needs to be signiicant to bring the best results; and the rules for spending
the USF should be fair and transparent.
iv. On the implementation side: Cooperation between public and private
sectors is essential, for instance through PPPs; UAS programs must address
both the supply and demand sides with some degree of lexibility; and implementation needs centralized control to monitor progress strictly.
The IDB and ADB are ideally placed to provide strategic and inancial support to countries in the LAC and Asia regions that are willing to embark on this
path. Although the efort required is inevitably signiicant and must continue
for an extended period, experience indicates that the medium- to long-term
beneits more than compensate for the hardships of the endeavor.
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Oicers: Draft.” Incheon City, Korea: United Nations Asian and Paciic
Training Centre for Information and Communication Technology for
Development (UN-APCICT/ESCAP).
University of Siegen. 2010. “Study on the Social Impact of ICT.” Final Report
D7.1. Siegen, Germany: Unversity of Siegen.
Websites/Databases
Autoridad Telecomunicaciones y Transportes – ATT, Bolivia (www.att.gob.bo).
Bangladesh Telecommunication Regulatory Commission (www.btrc.gov.bd).
Connectednation.org (www.connectednation.org).
CONCLUSIONS AND RECOMMENDATIONS
European Commission, Digital Agenda for Europe. (Available at http://
ec.europa.eu/digital-agenda/).
Federal Communications Commission of the United States of America (www.
fcc.gov).
Indian Ministry of Communications and Information Technology – Department
Telecommunications (www.dot.gov.in).
Indian Universal Service Obligation Fund (http://usof.gov.in/usof-cms/
home.jsp).
Information and Communication Technology Agency of Sri Lanka – ICTA
(www.icta.lk).
Korea Communications Commission – KCC (http://eng.kcc.go.kr/user/
ehpMain.do).
Ministry of Justice of the Socialist Republic of Vietnam (http://moj.gov.vn/en/
Pages/home.aspx).
Ministry of Posts and Telecommunications in Bangladesh (www.ptd.gov.bd).
Nanasala project, Sri Lanka (www.nanasala.lk).
National Broadband Plan of the United States of America (www.fcc.gov/
national-broadband-plan).
Ofcom, United Kingdom (www.ofcom.org.uk).
Pakistan Telecommunication Authority – PTA (www.pta.gov.pk).
Reguladora de Telecomunicaciones en Republica Dominican – Indotel (www.
indotel.gob.do).
Subsecretaría de Telecomunicaciones – SUBTEL, Gobierno de Chile (www.
subtel.gob.cl).
Superintendencia de Telecomunicaciones – Sutel, Costa Rica (www.sutel.
go.cr).
TeleGeography (www.telegeography.com).
UK Department of Culture, Media and Sport (www.culture.gov.uk).
Universal Service Administrative Company (www.usac.org).
Universal Service Fund of Pakistan (www.usf.org.pk/Company.aspx).
Rules
European Commission. 2002. Universal Service and Users’ Rights Relating to
Electronic Communications Networks and Services (Universal Service
Directive). Oicial Journal L-108 of 24 April 2002. Directive 2002/22/
EC of the European Parliament and of the Council of 7 March 2002.
Available at http://europa.eu/legislation_summaries/information_society/
legislative_framework/l24108h_en.htm.
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UNIVERSAL ACCESS TO BROADBAND AND SERVICE PROGRAMS: A COMPARATIVE STUDY
Government of the Socialist Republic of Viet Nam. 2010. Scheme to Early
Make Vietnam a Country strong in Information and Communication
Technologies, Socialist Republic of Vietnam, September 22, 2010.
Approval by Decision No. 1755/QD-TTg of September 22, 2010. Available at
http://www.moj.gov.vn/vbpq/en/Lists/Vn%20bn%20php%20lut/View_
Detail.aspx?ItemID=10749.
——— . Establishment, Organization and Operation of Vietnam Publicutility Telecommunication Service Fund. Prime Minister Decision No.
191/2004/QD-TTg dated November 8, 2004. Available at http://www.
moj.gov.vn/vbpq/en/Lists/Vn%20bn%20php%20lut/View_Detail.
aspx?ItemID=7480.
INDOTEL (Instituto Dominicano de las Telecomunicaciones). 2012. El plan bienal
de proyectos de desarrollo para el período 2012–2013. Aprueba deinitiva
por Resolución No. 015–12 y Plan Bienal 2012–2013 anexo. Available at http://
www.indotel.gob.do/index.php/indotel/proyectos-indotel/planes-bienales.
Parliament of the Democratic Socialist Republic of Sri Lanka. 1991.
Telecommunications Act No 25.
UK Government. 2010. Digital Economy Act. Oice of Telecommunications.
Available at http://www.legislation.gov.uk/ukpga/2010/24/contents.
Broadband is key to inclusive growth. It contributes substantially to social
and economic development in the areas of job creation, business investment,
and online services, among others. Several countries in Latin America and
the Caribbean have already initiated reforms of their telecommunications
framework to advance broadband towards universal usage. On one
hand, the universal access service (UAS) policies that are relatively solid
in middle-income or emerging countries will attract signiicant inancial
resources to manage the high costs that relate to new infrastructure in rural
areas. Depending on the country’s topography, however, the possibilities for
development may be limited and costly. On the other, UAS policies that are
considered advanced or have been long established (and rely considerably
on the private sector) will need to address the disbanding of old frameworks.
The objective of this publication is to assist national authorities in the
region as they bridge the gaps between their countries and those that have
developed efective UAS policies.