Universal Access PoliciesUniversal Access Policies

ITU-WTO Workshop on Telecom & ITU-WTO Workshop on Telecom & ICT Regulation Relating to WTO ICT Regulation Relating to WTO Obligations and CommitmentsObligations and Commitments

1-7 December 20041-7 December 2004

WTO, GenevaWTO, Geneva

Presented by Susan Schorr, Regulatory Officer, Regulatory Reform Unit

Telecommunication Development Bureau

ITU BDT Products on Universal Access

Trends in Trends in TelecommunicationTelecommunicationReform 2003: Promoting Reform 2003: Promoting Universal Access to ICTSUniversal Access to ICTS

GSR Universal Access GSR Universal Access Best Practice Best Practice Regulatory GuidelinesRegulatory Guidelines

ITU-D Study Group Question 7-1/1ITU-D Study Group Question 7-1/1

GSR 2003 GSR 2003 Universal Access Universal Access Regulatory Best Practice Regulatory Best Practice

GuidelinesGuidelines• Designing universal access policies, Designing universal access policies,

regulations and practices in order to regulations and practices in order to createcreate incentives for the private sector to incentives for the private sector to extend universal access to extend universal access to communicationscommunications services.services.

• Establishing a fair and transparent Establishing a fair and transparent telecommunication regulatory framework telecommunication regulatory framework thatthat promotes universal access to ICTs.promotes universal access to ICTs.

• Adopting technologically neutral licensing Adopting technologically neutral licensing practices enabling service providers topractices enabling service providers to use the most cost-effective technology to use the most cost-effective technology to provide services for end users.provide services for end users.

GSR 2003 GSR 2003 Universal Access Universal Access Regulatory Best Practice Regulatory Best Practice

GuidelinesGuidelines (Cont’d) (Cont’d)• Adopting a framework of interconnection Adopting a framework of interconnection

rates linked to costs.rates linked to costs.• Reducing regulatory burdens to lower the Reducing regulatory burdens to lower the

costs of providing services to end users.costs of providing services to end users.• Developing an effective regulatory body Developing an effective regulatory body

responsible for implementing policiesresponsible for implementing policies directed towards assuring the best quality directed towards assuring the best quality reliable services at the most affordablereliable services at the most affordable prices that meet the needs of consumersprices that meet the needs of consumers—existing and future.—existing and future.

• Promoting competition in the provision of Promoting competition in the provision of a full range of ICT services to increasea full range of ICT services to increase access, affordability, availability and use access, affordability, availability and use of ICTs.of ICTs.

GSR 2003 Best Practice Guidelines

o http://www.itu.int/ITU-D/treg/Events/Seminars/2003/GSR/Documents/BestPractices_E_31.pdf

o http://www.itu.int/ITU-D/treg/Events/Seminars/2003/GSR/Documents/BestPractices_F_31.pdf

o http://www.itu.int/ITU-D/treg/Events/Seminars/2003/GSR/Documents/BestPractices_S_31.pdf

DefinitionsDefinitions

Universal Service: policies focused on providing individual household connections to public telecommunication network.

Universal Access: policies focused on ensuring that all people have reasonable means to access a publicly available telephone in their community (but not necessarily in their home) through shared use of lines or terminals including public payphones, community telecentres, teleboutiques or community Internet access centres

Universality: term used by some to refer to both universal service and universal access

All share same goal

UniversalUniversality ity GoalsGoals

• Availability• Affordability• Accessibility

Traditionally Implemented By Placing Obligations on Fixed Line Monopoly Operator

Availability and Availability and Accessibility Goals VaryAccessibility Goals Vary

• Some countries or regions Some countries or regions lack services of any kindlack services of any kind

• Some countries or regions Some countries or regions seek to add advanced seek to add advanced ICTs to existing basic ICTs to existing basic servicesservices

The Basic Access The Basic Access Continuum, From Voice to Continuum, From Voice to

BroadbandBroadband

Single Line Voice grade service

Access to enhanced emergency services, operator services, and relay services; Equal access to long-distance; touchtone

Access to data; minimum role of data speed on phone lines

Fully digital system end-to-end

Two-way broadband service

THE BASIC ACCESS CONTINUUM

Principle Objectives of Principle Objectives of Universality PoliciesUniversality Policies

• Allow full participation in the Information Society

• Promote economic development• Encourage equal access by all

segments of the population• Promote national political,

cultural and economic cohesion• End differences in access

between urban and rural areas

What are Universal What are Universal Access ObjectivesAccess Objectives For For

Your NationYour Nation??• Does your country have a

universal service or universal access policy?

• If not, what objectives would you identify to be included?

• Why does your country wish to improve access to its citizens?

• What kinds of services are important? Voice? Internet? Broadband? Others?

Achieving Universal Achieving Universal Service or Service or Access Through Access Through

Monopoly OperatorsMonopoly Operators

• Very few countries have achieved universal service/access goals solely through monopoly operators

• For this reason, most countries have embarked on sector reform

Universal Service/Access Universal Service/Access as an Obligationas an Obligation

• License conditions, e.g. roll-out obligations

• Cross subsidies• Interconnection levies and

access deficit charges• Universal Access Fundse Basic Access Continuum,

From Voice to Broadband

Universal Access as an Universal Access as an OpportunityOpportunity

• Can regulatory conditions be provided to transform universal service obligations into market opportunities?

• Could your country use sector reform to achieve universal access?

Sector Reform Is Working Sector Reform Is Working As a Tool for Universal As a Tool for Universal

AccessAccess• Mobile is the prime example!• More mobile than fixed line

subscribers in many developing countries

• Prepaid makes it affordable• Public access, through mobile

payphone, re-sale and entrepreneurs is making mobile even more effective

• SMS even cheaper than voice and is a limited email substitute

Mobile Payphones

• Provided by Individual Entrepreneurs in India, Uganda, Nepal, Cambodia and Nigeria

• Mandated in Mobile Licenses in South Africa

• Chosen by some operators as least cost solution in Chile

• As a business managing a network of small entrepreneurs in Uganda and Bangladesh

• Informal operations, such as “Umbrella People”

Rural Market Gap and Rural Market Gap and CompetitionCompetition

• Competition, or more broadly—Market Efficiency Gap—is the first step in analysis of how to address rural access

• Question: Are there market barriers preventing rural users from having access to telecommunication and ICT services?

• Requires an assessment of the state of market liberalization and competition

What do we mean by What do we mean by Market Efficiency Gap?Market Efficiency Gap?

Access todayP

overt

y

Geographic isolation

Commercially feasible

Market efficiency

gap

Real access

gap

Market Efficiency Gap Market Efficiency Gap DefinedDefined

“The Market Efficiency Gap is the difference between what markets are actually achieving under current conditions and what they could achieve if regulatory barriers were removed and regulation were used to provide incentives.”

Source: ITU Trends in Telecommunication Reform 2003: Promoting Universal Access to ICTs, Practical Tools for Regulators

Can You Identify Any Market Efficiency Gaps In

Your Country?• Are there any regulatory barriers

to entry that could be removed to encourage commercial responses?

• What are your policies on resale?• Interconnection?• End user tariffs?• License fees?• VoIP, License-exempt spectrum . .

.?

Universal access/ service: Universal access/ service:

What role for regulators What role for regulators and policy-makers?and policy-makers?

1. Set measurable targets2. Analyze which targets can be

achieved through sector reform, especially the introduction of competition

3. Consider the use of Universal Access/Service Funds to provide limited and targeted « smart » subsidies within a competitive framework

Use of Universal Access Use of Universal Access Funds to Address True Funds to Address True

Access GapAccess Gap• Basic principles of funds• Who contributes?• How much?• Which revenue?• Who manages fund?• How to identify projects to be

funded?

First Step in creating a First Step in creating a Fund—Enabling Fund—Enabling

Legislation or policyLegislation or policy• Define principles of the right

to communications access• Define objectives and

obligations for national telecommunications development

• Mandate establishment of Universal Service/Development Fund

Enabling Laws and Enabling Laws and Policies Policies ((contcont’’dd.).)

• Define responsibilities for implementing and administering the Fund

• Emphasize market-oriented, non-discriminatory principles

• Establish enforcement and dispute resolution powers

Sources of Contributions Sources of Contributions to the Fundto the Fund

• Equitable contribution by all market participants

• Fixed percentage of designated revenues

• Key questions:What revenues should be What revenues should be

covered?covered?Should anyone receive Should anyone receive

special treatmentspecial treatmentWho should contribute?Who should contribute?

Management and Management and Administration of FundAdministration of Fund

• Under control of independent telecommunications regulatory authority

• Management autonomy• Independent budget,

separate accounting• Regular Audits

Procedures for Funding Procedures for Funding AllocationsAllocations

• Develop an Operating Plan identifying intended projects and targets for an identified period (1-2 years)

• Projects to be identified through needs assessment identifying locations, populations, socio-economic activities with the greatest needs

• Use funds for “smart” subsidies—to launch new universal access projects

Funding Only for Basic Funding Only for Basic Voice Voice or Also For or Also For Advanced ICTs?Advanced ICTs?

Different Perspectives• Some experts recommend limiting Some experts recommend limiting

funding to funding to basic communications–-basic communications–-public payphones--public payphones--because these because these projects will leverage financing for other projects will leverage financing for other services, including advancedservices, including advanced

• Other experts argue that cOther experts argue that citizens need itizens need access to ICTsaccess to ICTs NOWNOW and recommend and recommend aat least some financing be provided for t least some financing be provided for Internet access through telecentresInternet access through telecentres

Minimizing Fund Minimizing Fund Expenditures: The Expenditures: The

minimum subsidy auctionminimum subsidy auction• Project identification• Maximum Subsidy

determination• Mechanics• Project Guarantees• Impact of Consumer and

Interconnection tariffs on financial self sustainability

Trends In Telecommunication Trends In Telecommunication Reform 2003–Reform 2003– Includes Detailed Look Includes Detailed Look at Minimum Subsidy Auctions—Chapter at Minimum Subsidy Auctions—Chapter

5 and Annexes5 and Annexes• Describes a set of processes and procedures for applying Fund financing to construct and operate new public access telecom facilities in un-served rural areas in developing and least developed countries, based on a minimum subsidy competitive auction mechanism

• Focuses on public payphones as the “mandatory” designated service to be provided

• Other types of infrastructure, service delivery modalities and services, including regional broadband operators, individual lines and telecentres, delivering basic and/or advances services, may also be provided

Trends 2003 Chapter 5 Trends 2003 Chapter 5 (cont’d.)(cont’d.)

• Brings together “best” or "promising” practices, based on extensive research and on successful experiences in Chile, Peru and Colombia

• Within the context of a sector liberalization policy and recognizing the limits of the market, these countries designed market-oriented universal access regimes based on providing incentives, not on imposing obligations

• Annex 1 of the 2003 Trends Report provides a summary of these experiences

Trends 2003, Chapter 5 Trends 2003, Chapter 5 and Annexes (cont’d.)and Annexes (cont’d.)

• Development of Projects• Bidding Process• Auctions in Existing Coverage Areas• Selected Minimum Subsidy Results• Indicative Contents of a Sample RFP• Effect of Consumer Tariffs and

Interconnection Charges on Financial Viability

Funds Bottom lineFunds Bottom line

• Funds and Auctions require know-how

• Funds and auctions can help governments to extend universal access into rural areas

• There can be many pitfalls if not managed properly

• Difficult to go it alone—resources like Trends 2003 identify best practices

• Consider expert help to implement

Universal Access Funds in Universal Access Funds in Your Country—if plan is to Your Country—if plan is to

create onecreate one• Will the Fund be used only for

rural access? Or also for urban?• Is the focus on basic or

advanced services?• Are projects to receive one-time

jump start financing?• Are projects expected to become

financially self-sustainable?

Promoting Public AccessPromoting Public Access Either TEither Through Funds or hrough Funds or

Sector ReformSector Reform

• Universal Service Funds Can be Used for Payphone Deployment or Telecentres

• Telecentres and payphones can also be run by entrepreneurs or financed by aid agencies

• Telecentres can Provide “Basic” Internet Access, offer Tele-Learning/Health, Job Training and other Community Services

Promoting Public Access—Promoting Public Access—TTelecentre Success elecentre Success

FactorsFactors• Telecentres, to be self-sustainable,

need Viable Business PlanViable Business Plan• Community involvement is key• Local, relevant content and

applications are crucial• Using existing public facilities like

schools or health clinics can save costs• Staff needed to provide training for all

users• Gender awareness required for

training, location, hours

Competition, Price and Competition, Price and TechnologyTechnology

Three Keys to Rural Access Are Relevant Three Keys to Rural Access Are Relevant to Telecentres too!to Telecentres too!

• Competitive bidding keeps subsidy, if any, low

• Lack of competition for access services will impact financial viability

• Price of services to end users and from incoming calls can make or break financial viability

• Technology choice can push forward the envelope of financial sustainability and affordability

The Universal Access The Universal Access ToolkitToolkit

Part 1: Setting up and administering universal access/service funds

Part 2: How to use the funds in conjunction with minimum subsidy competitive auctions

Part 3: Public access strategies: Establishment of Telecentres with self-sustainable business plans

Available in Trends in Telecommunication Reform 2003

Regulators and Policy Makers Regulators and Policy Makers shape the framework for shape the framework for access to ICT servicesaccess to ICT services

• Fast emergence of new service issues• Mobile voice and new data services• Broadband, Wi-Fi, Voice over IP• Digital convergence, etc

• Requiring Regulatory decisions• Regulate or not regulate• Number of competitors and condition

for licenses • Access to infrastructure

• Promoting Universal Access to ICT services by• Ensuring stable and attractive

investment conditions• Encouraging competition for services• Promoting development and

affordability

Ingredients for a Ingredients for a Successful Universal Successful Universal

Access Policy ApproachAccess Policy Approach• Regulatory fairness and certainty• Recognizing ICTs as a unique tool for

development • Commitment to the development of a

fully competitive market• Clear view of the limits, purposes and

targets of direct monetary subsidies • Low-cost, adaptable and robust

technologies• Local community and/or

entrepreneurial involvement

Thank You for Your Attention!

Susan SchorrRegulatory Officer

ITU BDT Regulatory Reform Unitsusan.schorr@itu.int