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Establishing a fair and transparent telecommunication regulatory framework that promotes universal access to ICTs. Adopting technologically neutral licensing practices enabling service providers to use the most cost-effective technology to provide services for end users.  " _ZvQ N Y   T J r9GSR 2003 Universal Access Regulatory Best Practice Guidelines (Cont d)GG * 4   Adopting a framework of interconnection rates linked to costs. Reducing regulatory burdens to lower the costs of providing services to end users. Developing an effective regulatory body responsible for implementing policies directed towards assuring the best quality reliable services at the most affordable prices that meet the needs of consumers existing and future. Promoting competition in the provision of a full range of ICT services to increase access, affordability, availability and use of ICTs.* " _Zb S  /   p6!GSR 2003 Best Practice Guidelineshttp://www.itu.int/ITU-D/treg/Events/Seminars/2003/GSR/Documents/BestPractices_E_31.pdf http://www.itu.int/ITU-D/treg/Events/Seminars/2003/GSR/Documents/BestPractices_F_31.pdf http://www.itu.int/ITU-D/treg/Events/Seminars/2003/GSR/Documents/BestPractices_S_31.pdf   d 0Wd 0Xd 0 Definitions    +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 +0" dZ2Zfebfb3bfJbB d    X Universality Goals  {Availability Affordability Accessibility Traditionally Implemented By Placing Obligations on Fixed Line Monopoly Operator d) " nQs )$Q\)     K4+Availability and Accessibility Goals Vary ,,+ Some countries or regions lack services of any kind Some countries or regions seek to add advanced ICTs to existing basic services L4 " i " iQ " i$  ;-3The Basic Access Continuum, From Voice to Broadband44 5"-Principle Objectives of Universality 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 * " nZ   5What are Universal Access Objectives For Your Nation?66$  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? 6  " nZZ  X  S f <.@Achieving Universal Service or Access Through Monopoly OperatorsAA  "Very few countries have achieved universal service/access goals solely through monopoly operators For this reason, most countries have embarked on sector reform Lb " n " n? " n a A )Universal Service/Access as an Obligation**License conditions, e.g. roll-out obligations Cross subsidies Interconnection levies and access deficit charges Universal Access Funds e Basic Access Continuum, From Voice to BroadbandD " nZ2 " nZ 2  "Universal Access as an Opportunity##Can regulatory conditions be provided to transform universal service obligations into market opportunities? Could your country use sector reform to achieve universal access? Rl " nZ " nZC " nZ  2k   0  7Sector Reform Is Working As a Tool for Universal Access88$Mobile is the prime example! More mobile than fixed line subscribers in many developing countries Prepaid makes it affordable Public access, through mobile payphone, re-sale and entrepreneurs is making mobile even more effective SMS even cheaper than voice and is a limited email substitute 2$ " n$H !Mobile PayphonestProvided 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 8: " nZ Z:u: Rural Market Gap and Competition!!  lCompetition, 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 p "  " v "  " O " >o v N v;)What do we mean by Market Efficiency Gap?**) w<Market Efficiency Gap Defined   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 e  f'fEfh    L! %<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 . . .? 2 " n4m D% C0GUniversal access/ service: What role for regulators and policy-makers?HH@G Set measurable targets Analyze which targets can be achieved through sector reform, especially the introduction of competition Consider the use of Universal Access/Service Funds to provide limited and targeted smart subsidies within a competitive framework : " Z " Z jK  , > /  &8Use of Universal Access Funds to Address True Access Gap99|Basic principles of funds Who contributes? How much? Which revenue? Who manages fund? How to identify projects to be funded?} " n}'xFirst Step in creating a Fund Enabling Legislation 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 < " nZ " nZ (HEnabling Laws and Policies (cont d.)%%F   Define responsibilities for implementing and administering the Fund Emphasize market-oriented, non-discriminatory principles Establish enforcement and dispute resolution powers ( " n  )%Sources of Contributions to the Fund &$Equitable contribution by all market participants Fixed percentage of designated revenues Key questions: What revenues should be covered? Should anyone receive special treatment Who should contribute?@i " nZ`nZi ` *%Management and Administration of Fund&&Under control of independent telecommunications regulatory authority Management autonomy Independent budget, separate accounting Regular Audits L " n " d2   #"Procedures for Funding Allocations##zDevelop 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 i " nZ " nZ " nZ " nZH " nZZ=0h  J+7Funding Only for Basic Voice or Also For Advanced ICTs?880 Different Perspectives Some experts recommend limiting funding to basic communications -public payphones--because these projects will leverage financing for other services, including advanced Other experts argue that citizens need access to ICTs NOW and recommend at least some financing be provided for Internet access through telecentres " nZ " nZ " nZ " nZ+(~Zh7   > ,:Minimizing Fund Expenditures: The minimum subsidy auction;;Project identification Maximum Subsidy determination Mechanics Project Guarantees Impact of Consumer and Interconnection tariffs on financial self sustainability $ " n1Trends In Telecommunication Reform 2003 Includes Detailed Look at Minimum Subsidy Auctions Chapter 5 and Annexes$r(Jq RDescribes 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 ,)0 " iU(*.   B 2>Trends 2003 Chapter 5 (cont d.)   XBrings 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 experienceslc0 " iZAJH0 iZAc!' 3 XTrends 2003, Chapter 5 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 Rh0 nn0n 4!Funds Bottom line 0Funds 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 " n -~Universal Access Funds in Your Country if plan is to create 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? " n .=Promoting Public Access Either Through Funds or Sector Reform>>(  2Universal 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  " nZ=   W    /dPromoting Public Access Telecentre Success Factors33 ITelecentres, to be self-sustainable, need Viable 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 dI " nZZ+   7    @>    0"Competition, Price and Technology "#" " nThree Keys to Rural Access Are Relevant 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<=Z2 " Z=2n D1The Universal Access Toolkit@  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 8 " ( & G3LRegulators and Policy Makers shape the framework for access to ICT services "MFK L  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 % " iZ\H iZ " iZdH iZ. " iZH iZ%\d.  % "         H2=Ingredients for a Successful Universal Access 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 ? " Z?v.   5 A p  B/Thank You for Your Attention! W Susan Schorr Regulatory Officer ITU BDT Regulatory Reform Unit susan.schorr@itu.int *W UN ?d 0BV/DEFIJLMNOPQ R S T U VWXYZ[\]^_`abcdefgh n&s't(x)y*z+  ` 33PP` 3333` ___MMM` 13` 333fpKNāvI` j@v۩ῑ΂H` Q_{>?" dd@$? oZd@" d @ oK` n?" dd@   @@``PV    @ ` `(p@`@` %(  ^  3 (A?itulogo-en"N!   s *|ш" N & N'  "   '  0׈ "   T Click to edit Master title style! !  08܈ "@  Z*   0` "   \*   0 "   page - *&   $  0 "  RClick to edit Master text styles Second level Third level Fourth level Fifth level!     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Z MTrends in Telecommunication Reform 2003: Promoting Universal Access to ICTSNN @ H ?"d w B6  o9GSR Universal Access Best Practice Regulatory Guidelines :: @ Tt ?"/=O X ITU-D Study Group Question 7-1/1!!H @ 0޽h ? 3333  ' L0(  Lx L c $xº    x L c $ú  H L 0޽h ? 3333  ( T0(  Tx T c $Ӻ1[     x T c $|Ժ   H T 0޽h ? 3333   D$(  Dr D S     r D S   H D 0޽h ? 3333   $(  r  S @    r  S 8v  H  0޽h ? 3333   $(  r  S      r  S    H  0޽h ? 3333   $(  r  S l    r  S @  H  0޽h ? 3333       (  x  c $    x  c $  F   zVI\  S "`P  3 "`$P  3 "`$ P  3 "`$, 7 P   3 "`$ 5 P   3 "`$    c $ "` iSingle Line Voice grade service.     s * "`(mA  vAccess to enhanced emergency services, operator services, and relay services; Equal access to long-distance; touchtonew w   c $P# "`P>   9Access to data; minimum role of data speed on phone lines2:` 9  c $ ("`   z Fully digital system end-to-end > `     c $/"`  STwo-way broadband service   c $/̙"` C WTHE BASIC ACCESS CONTINUUM  H  0޽h ? 3333   T$(  Tr T S 8    r T S 9v  H T 0޽h ? 3333   $(  r  S H    r  S I[  H  0޽h ? 3333   0(  x  c $W    x  c $X  H  0޽h ? 3333    $(  r  S `^    r  S 4_  H  0޽h ? 3333   0$(  r  S Pn    r  S n  H  0޽h ? 3333   @$(  r  S ,{    r  S {  H  0޽h ? 3333   P$(  r  S t    r  S 4  H  0޽h ? 3333  ) \0(  \x \ c $ ~   x \ c $̛'  H \ 0޽h ? 3333;  *   d{ (  dx d c $ 3   F 7P  d ]3Z d s *L`  d 0ȟL`  H   Z d s *L `  d 0@q@  ^ Access today" ( 2     d 6/7%  gPoverty0( 23f   ZB  d s *@  d 0P` M  zGeographic isolation6( 23f   Z  d s * $P   d 0D p iCommercially feasible$( 2   R  d T3f1? @  d 0l   jMarket efficiency gap$( 2   R d T3ff1?` P d 0ŋ?  eReal access gap$( 2   H d 0޽h ? 3333  +  l0(  lx l c $Nj    x l c $d͋Wq  H l 0޽h ? 3333   P$(  r  S     r  S   H  0޽h ? 3333    `L(  x  c $ڋ     s *3  "p`PpH  0޽h ? 33   p$(  r  S     r  S   H  0޽h ? 3333   $(  r  S D    r  S   H  0޽h ? 3333    $(   r   S ,    r   S   H   0޽h ? 3333   $$(  $r $ S  (   r $ S T   H $ 0޽h ? 3333   ($(  (r ( S d@j   r ( S   H ( 0޽h ? 3333    $(   r   S      r   S    H   0޽h ? 3333   ,$(  ,r , S x1    r , S L2  H , 0޽h ? 3333   0$(  0r 0 S <    r 0 S @   H 0 0޽h ? 3333   D$(  Dr D S D    r D S hEP  H D 0޽h ? 3333   H$(  Hr H S X    r H S Y7  H H 0޽h ? 3333   L$(  Lr L S h    r L S Pi  H L 0޽h ? 3333    P$(  Pr P S     r P S Px  H P 0޽h ? 3333   04$(  4r 4 S H    r 4 S   H 4 0޽h ? 3333   @8$(  8r 8 S m    r 8 S дCc  H 8 0޽h ? 3333   P<$(  <r < S XŌ    r < S ,ƌ  H < 0޽h ? 3333   `@$(  @r @ S ͌@X   r @ S Ό   H @ 0޽h ? 3333   pV(  x  c $\D}   x  c $0xI`    Tx ?"jQ 4Available in Trends in Telecommunication Reform 200355f4 H  0޽h ? 33  ZK0 6(  ~  s *(QD   x  c $WL  H  0޽h ? 3333f   <(  ~  s *P }   ~  s *$ c  H  0޽h ? 33  & $(  r  S l R   r  S h  H  0޽h ? 3333V 0 0    (  d c $6Z     s *l# u    Before moving to a discussion of Funds, let us first identify the roles for policy-makers and regulators. First they can set measurable universal access targets, such as setting goals to add a certain number of new subscribers, or reach all villages with a population over a certain size. Next it is important for policy-makers and regulators to analyze what universal access goals they can achieve through regulatory reform, and which goals may require further intervention. Universal service funds have received a lot of attention in recent years. Our Trends 2003 publication explores best practices in establishing and running such funds. But Trends also recommends that before countries create elaborate fund financing mechanisms they first strive to extend networks through sector reform and market development. Targeted and limited  smart subsidies to spur extension of service to areas and populations that would not otherwise be reached are often required. But regulators should avoid applying subsidies that simply perpetuate the inefficiencies of the existing regulatory regime and marketplace. Governments and operators can reduce their financial support for such specialized tools if regulatory reform measures are given a fair chance.J- RV XB" 8 } H  0f ? ̙331 0 P=(  d c $6Z    s *R Ju   '_Trends 2003 provides a universal access toolkit for regulators. The report identifies best practice guidelines for universal service funds, minimum subsidy auction mechanisms and public access strategies such as Telecentres financed through such funds. The report draws from the experiences of countries like Colombia, Chile and Peru that created universal access funds to finance the deployment of telecommunications and other ICTs in remote rural areas. Countries like Jamaica, Malaysia and India are putting these guidelines into practice. The Trends 2003 Toolkit further provides guidelines on establishing community telecentres to provide public access not only to telecommunications, but advanced ICT services such as the Internet, tele-learning and tele-medicine. These guidelines include a sample business plan for operators seeking self-sustainability. ``-   i e H  0f ? ̙332 0 ~v (  d c $6Z   j s *i 5Zu   (A great deal of experience has been gained regarding the ingredients highlighted on this slide for a successful policy approach. While there are many views on universal access, one thing is certain: there will be many experiments and attempts to find working models to achieve universal access (widespread availability of telecommunications or ICT services) and, beyond that, universal service (that is the availability of telecommunications or ICTs in the home). Those that succeed will do so through local adaptation of the ingredients listed above coupled with persistence and responsiveness. The ITU s Telecommunication Development Bureau endeavors to assist its Member States in fulfilling their commitments to achieve universal access to ICTs and create an information society.  E S {   # H  0f ? ̙33?3 0 (  d c $X8    s *hz LCv   yAs we have seen, the telecommunication and ICT world has changed dramatically. National regulatory bodies and policy makes are confronted with similar challenges to respond to the fast changing and evolving ICT environment, within the particular circumstances of each of their nations. All must review the potential impact of new technologies and services, and define how to create the best environment for their development. { &J !     H  0f ? ̙33 0 0 (  X  C 6Z     S @x 5Zu   " H  0f ? ̙33Z  0   p (  X  C 6Z      s *  u   " The terms universal access and service are often used interchangeably, but the nuance between the two terms is important to acknowledge. Although Universal Service, traditionally a fixed phone for every household, is a practical policy objective in many developed countries, in emerging market countries it is adopted as a long-term goal. What is a more practicable, readily achievable goal for developing countries is Universal Access. Universal Access broadly refers to access by members of a community to a publicly available telephone (not necessarily in their home), which can be provided through payphones, telecentres, multi-purpose community centres, or similar community based centres. With the growth of mobile, in particular in developing countries, these definitions are evolving. Understanding the difference in the focus of universal access and service is important, yet the concepts underlying both policies are similar  to expand and maintain availability of affordable telecommunications services to the public. In particular the focus of such policies is providing services to rural, remote, and lower-income users who would not otherwise be servedFe   v  H  0f ? ̙33` 0   (  ^  S       S ̟P     Three major goals have driven universal service and access goals. Availability  the level of service is the same wherever a person lives or works, so that s/he is not disadvantaged by her/his geographic location. In particular, rural and urban distinctions do not affect a person s ability to access communications services. Affordability  the level of services is affordable by everyone, so that a person is not disadvantaged by her/his income. Cost variations due to location, terrain, or climate, which often dovetail with urban/rural factors, do not impact on one s access to information and communications technologies (ICTs). This dimension presents unique challenges with regard to addressing network expansion; and Accessibility  people with disability can use the service, so that one s level of physical and mental ability does not disadvantage a person in terms of her/his access to communications services. But these main goals beg one question. Universal access or service to which kinds of services? Historically, universal service programs were aimed at access to basic communications services. This has been largely achieved in developed countries. Mobile services are helping countries to achieve access to voice services. But these goals are now expanding as Internet and broadband services and the promise of the Information Society beckon. Whether in explicit policy statements or otherwise, countries increasingly seek to improve access to both voice and advanced services, primarily the Internet 8Bk_ b:{    H  0f ? ̙33r4 0 2*(  X  C 6Z   *  S  5Zu   dIn addition to the concerns just mentioned, countries of course vary dramatically in terms of the level of services currently available. Some countries or regions lack services of any kind. Some countries or regions seek to add advanced ICTs to existing basic services. The current state of ICT development will impact short term and long term goals. ee(o H  0f ? ̙33z - 0 : 2 @ (  X  C 6Z   2   S Xp `   |In order to be effective, universal access and service concepts and policies must be sufficiently elastic to adapt to the specific market, and the changing needs of the country in which they are to be applied. There is a definite correlation between local economic and sector conditions and universal access and service definitions, including the specific targets on dates and service levels. A robust definition of universal service and/or access should include: Types of access  goals for both individual, or personal service and community or shared access should be made clear; Types of services  it is important to be clear about what services are being targeted, namely voice, voice and data, mobile, Internet, broadband, etc. Regulators and policy makers have a critical role to play in determining measurable targets for universal access. The first qualitative measurement is usually an examination of teledensity figures. Have any of your countries set such targets? The next major issue is how to achieve the universal access/service goals and objectives that you set. ]BJbbdbBBBBB l H      H  0f ? ̙33" 0 J(  X  C 6Z     S 4 u   LbBefore discussing how sector reform can achieve universal access, it is useful to discuss the principle objectives of universality policies. Why are availability, affordability, and accessibility of ICT services important? Telecommunications services form a base for, and in fact facilitate access to other critical resources and tools for development, including health, education, agricultural extension, and water. Internet services do even more to aid socio-economic development. Thus, the objectives that governments seek to achieve through development and implementation of universal access policies include: To allow full participation in the Information Society To promote economic development, efficiency and growth To encourage equal access by all segments of the population To promote national political, economic and cultural cohesion through the integration of isolated communities into mainstream society To end differences in access between rural and urban areas, as well as differences between the Information Rich and the information Poor To foster the improvement of the delivery of public services.kBbFB b BGbB>b:TG =  H  0f ? ̙33  0  (  X  C 6Z   H  S H 5Zu  H " H  0f ? ̙33 . 0   < (  X  C 6Z   H   S H 5Zu  H > The decision in many countries to have public monopolies to provide telecommunications services was driven by the goals of universal service. Initi1ally, many countries believed that a public monopoly operator would be in a position to effectively build telecommunications networks and make services available to the citizens at equitable prices  thus addressing availability, affordability and accessibility. Looking back at the ability of monopoly operators to meet targets set for them in exchange for exclusivity periods, whether this was the best approach to follow is questionable. In South Africa, for example, although the monopoly incumbent was granted a five-year exclusivity in the local, long-distance and international markets in exchange for universal service obligations, the percentage change in annual growth rate (CAGR) of main lines was only 3.7 per cent between 1995 and 2001. Still, there are exceptions. In the Maldives, the PRIVATIZED monopoly operator has achieved its rollout targets. This experience is fairly rare. It is for this reason that most countries have embarked on sector reform. 0fdbB d  H  0f ? ̙33  0 i(  ^  S   H  S +H0p  H D2Either operators pay for the obligation or they play by meeting rollout targets or other measurable objectives. Under the  pay, plan, regulatory authorities have over time explored several options, some of which have since been found to be unsatisfactory since they do not provide incentives for operators to invest in the rollout of their networks. The options that have been used by regulatory authorities include: License Conditions, Cross subsidies Interconnection Levies and Access Deficit Charges Universal Service/Access Funds One policy option does not need to be adopted at the exclusion of others; in many cases a combination of several policy options has proven more effective.Imposing universal service-related license obligations is one of the most common means used by regulators in implementing universal service programs. This approach places the responsibility for financing the programs squarely on the operators and can be successful if the obligations are realistic and not anti-competitive in nature. Often, these obligations have been imposed on monopoly operators in exchange for exclusivity periods. They can include line roll out obligations, teledensity targets, community service obligations, public/payphone obligations, requirements to lessen waiting lists, quality of service targets, and geographic/population targets. These obligations are often stated in operators licenses. Cross subsidies have been used, mainly before competition is introduced, so that monopoly operators can finance their universal service obligations from more profitable businesses, such as international and long distance. This becomes increasingly difficult to continue once competition is introduced. Similarly, incumbents may seek to finance their obligations from interconnection fees or access deficit charges. ADCs have proven problematic for many of the same reasons that traditional cross-subsidies have been criticized  inefficiency and anticompetitive tendencies. They inflate the prices of subsidizing services (e.g. international service) and as a result can reduce demand for those services in a disproportionate manner. They may also promote bypass of the PSTN and duplication of facilities as competitors could terminate calls more cheaply on the PSTN if they did not have to pay ADCs for PSTN termination. Lastly, they do not provide an incentive to the incumbent or USO provider to lower costs and be efficient . The creation of special telecommunication funds to address the delivery of telecommunications services in under-served areas has gained popularity in the last decade. The development of a Fund, which is a depository for all the monies collected from various sources, is generally viewed as one of the best means of promoting universal access objectives. The funds collected are then disbursed to achieve certain defined targets. I will discuss the idea of funds in greater detail shortly.  q@` ``/@@@e ` @>@\    >   HD3H ?"%* W  4  N7H ?"@~ VThis slide shows some of the traditional methods that have been tried for achieving universal access. The theme of this slide is that one way to achieve universal universal service/access is to treat it as an obligation. Let s explore this in greater detail before looking at universal service in another way as an opportunity. The idea that universal service/access is an obligation is sometimes referred to as pay or play. 6 2(2B H  0f ? ̙33   0   4 (  X  C 6Z   H  S qH 5Zu  H 6More recently, policy experts have begun arguing that it is time to rethink the notion of treating universal access as an obligation. Experts increasingly view universal access as an opportunity. They cite to the number of un-served ICT users as an indication that there is a huge untapped market bursting with pent up demand. While for many years there was an assumption that untapped users represented an unprofitable market, the thinking is now beginning to change. Sector reform has caused policy makers to re-evaluate earlier assumptions. Experts are now saying not only that there is a market to be served, but that it can be profitable. They cite the experience of mobile communications as the prime example of how sector reform can be used to address the pent up demand for ICT services. The argument is that policy makers should focus on meeting this demand through sector reform or filling the market efficiency gap first before considering other measures such as universal service funds.  H  0f ? ̙33  0 _W(  ^  S HH p  HQ  S  ZH p  H Before developing complex universal service funds, imposing cumbersome licensing burdens and using some of the other traditional approaches to universal access, countries may find that they can achieve more through sector reform. Competition in mobile communications has improved teledensity figures remarkably. This is causing some universal service experts to refer to the mobile boom as the mobile miracle. It has been competition and entrepreneurial approaches taken in concert that have had the biggest impact. Competition has sparked operators to compete in terms of price and service offerings. We have seen examples from around the world of prices falling once a second operator is introduced and tumbling further upon the arrival of a third operator. Lower prices mean greater affordability which means better access. Competition almost always means that the private sector is providing the services. And private sector involvement fuels innovations. Prepaid cards are one of the best innovations the private sector has developed that has helped improve universal access. Mobile has brought other innovations as well, such as public mobile payphones and SMS. Some experts now argue that mobile has effectively eliminated the universal access problem for the urban poor and for many rural users too. SMS is even cheaper than voice and means that mobile users can engage in a kind of email. ( _ H  0f ? ̙334 0 `(  ^  S    H   S XH`   H  Competition in the mobile sector can to a large extent resolve the universal access problem of the urban poor and even of many  easy-to-reach semi-rural areas through the availability of mobile payphones. The provision of mobile payphone services appears in a number of ways: through individual entrepreneurs (e.g. India, Uganda, Nepal, Cambodia, Nigeria), mandated in some mobile licenses (e.g. South Africa), chosen by some rural operators as least-cost solution (e.g. Chile), or a separate business managing a network of small entrepreneurs (e.g. Uganda, Bangladesh). Mobile technology has been used to provide fixed-wireless public payphones as well as truly mobile payphones, and stand-alone as well as manned phoneshops. Even in countries that do not allow mobile operators to provide payphone service (e.g. Nigeria), public access business springs up informally. In Nigeria, informal mobile resellers are identified on the street by their colourful umbrellas. The umbrella people buy a used phone and a prepaid card and resell the service to passersby on the streets In Colombia, roving mobile re-sellers use sandwich boards instead of umbrellas for easy identification. Some stands carry an array of mobile phones with different rates depending on which network the call will be terminated. As mobile coverage continues to extend to rural areas, mobile services are increasingly available to rural users as well. In countries like Botswana, initial coverage areas included in the 2 mobile operators licenses have been exceeded. Mobile coverage in Morocco extends almost everywhere except deep into the Sahara desert. 0mkbBT   H   D  H  0f ? ̙33  0   l (  X  C 6Z   H  S H 5Zu  H nThe message to regulators is that they should strive to enable operators first to address the universal access market or the pent up demand among un-served populations--on a commercial basis before addressing the truly non-viable areas and customers that are beyond the reach of the market. The truly non-viable areas could be addressed with  smart subsidies which I will discuss later today. The message on subsidies is that policy makers and regulators should try to avoid financing market inefficiencies. New technologies, like Wi-Fi and WiMAX are pushing the boundries of what is and what is not commercially viable. Providing access to the urban poor can be done through policies and innovative measures that are well within the reach of the market, often without much special government financing. The main requirement is to allow entrepreneurs to re-sell and retail services freely to people who cannot afford their own private communications facilities. .bg   1V  H  0f ? ̙333 0 (  ^  S  p  H  S H0 ` @  H Once regulators and policy makers exhaust the avenue of sector reform, they are still likely to find areas that cannot be served through market forces alone. It is for this reason that countries have begun exploring the creation of universal service or development funds. There has been a lot of interest in funds. But as was noted earlier, funds should only be created in the context of an overall framework of sector reform. Otherwise, the limited money available in any fund will be used to subsidize inefficient operations. Thus, many policy experts believe funds should only be used as a measure of last resort. This is not least due to the fact that fund management and project identification is burdensome. Funds take a considerable amount of energy and skills to do well. But of course, this can be achieved through staff training. Best practice shows that funds are best reserved for rural access projects. As we discussed yesterday, urban populations can be reached through sector reform. We will now explore some of the key issues related to funds, including who contributes, how much will they contribute, from which revenues, who will manage the fund, and how are projects to be identified for funding. The focus is on using funds for rural access. :`$  H  0f ? ̙33 0 @8  (  ^  S    H2   S HP `  H D All key development programs begin at a high level of national legislation, presidential decrees, or ministerial policy statements, all of which establish the framework and limitations in which the policy must be implemented. Such a foundation is necessary to ensure the credibility and authority of the policy, as well as to ensure that its terms are consistent with other national priorities and ongoing programs. Thus, the first step in creating a fund is to develop enabling legislation or policy to ensure that the basic objectives and operation of the Fund are achieved without placing burdensome restrictions on its functioning. This slide identifies some of the key topics to be addressed in enabling instruments: The entire basis of universal access policy should be established as a principle, which holds that access to communications is a common right of all citizens. Chapter 4 of Trends contains sample language. The government s mandate for universal service/access should outline the general objectives for infrastructure development, in line with the statement of citizen rights, as well as overall national economic and social goals. Again, Ch. 4 of Trends has sample language. Authorizing legislation should explicitly require the establishment of a USF, although the fund s specific parameters and implementation should be defined by the fund administrator. The establishment provisions should also set forth a timetable for initiating the fund, and should refer to the objectives and obligations as the basis for the fund s disbursements. <#`"""( H  0f ? ̙33  0   0X (  X  C 6Z   I   S  I `u  I Z  The enabling statute must identify or create the institution that will administer the fund and define the responsibilities and authority of that entity, as well as any advisory board or committee. It is important at the outset to establish the clear principle that the USF is not intended as a substitute for private market incentives and investments, nor should it interfere in any way with competitive market forces. This principle should be stated clearly in the enabling legislation to ensure that the Fund s activities always conform to market-oriented and non-discriminatory standards. The authority of a universal service fund s administrator to implement and enforce its decisions--especially the collection of payments from all mandated contributors--must be strongly established in the law. Similarly, it should be clear that the fund administrator has final authority over fund disbursement decisions, subject only to appeals concerning misapplication of the fund s own rules. It is important to design this aspect of legislation and policy to minimize frivolous legal maneuvering and stalling by reluctant participants or strategic competitors" H  0f ? ̙33P 0 @(  ^  S 88 P  I  S 2IG  I XThe most common practice among funds being instituted around the world is to require direct contributions from all telecommunications service companies, based on a defined percentage or portion of their revenues. Other funding sources are often also included, especially at the outset to help launch the Fund, such as direct Government or even donor contributions, as well as revenues from spectrum auctions or carrier privatizations. The most equitable and competitively neutral practice for obtaining fund contributions is to require all market participants to contribute an  equivalent amount, by setting a fixed percentage of designated revenues as a common obligation. The key questions to be clarified under the policy are: 1) What constitutes a  market participant ? 2) Which  designated revenues are covered by the percentage? 3) Is there a basis for differential treatment of different types of services or operators? Generally, the range of companies and operators that should be required to contribute to a USF are those that come under the regulatory auspices of the telecommunications regulator and/or offer services considered to be included within the definition of  basic and enhanced communication , irrespective of whether they are dominant or non-dominant competitors, and without regard to which technologies (e.g., wireline, wireless, VSAT) they may employ. In principle, operators should contribute a portion of all revenues derived from services that are directly or indirectly linked to the basic and advanced ICT infrastructure, including the very services the fund will support. Revenue categories that should potentially be excluded from fund contributions are those derived from activities that are unrelated to telecommunications services. Establish a goal of applying competitively neutral, equitable treatment to all market participants suggests that all companies in the telecommunications industry should contribute comparably to the USF. There could be circumstances, however, in which specific operators or service groups might merit special consideration--and potential exemption from Fund contribution. For example for small, start-up companies in new markets seek to develop business opportunities that policy-makers view as valuable to sector growth (one important example of this category could be Internet service providers); and where operators offer services in locations or to certain classes of customer--that are within the defined areas and populations the fund is designed to help.  `Hy  "    Hx3I ?"  V  X  H6I ?"  xThe USF policy (as defined by the fund s administrator, in keeping with the enabling provisions of the law) must clearly define the sources from which the funds will be obtained to accomplish its objectives The precise obligations and terms under which such funds will be collected also must be stated explicitly .  =; < H  0f ? ̙33 0 rjP(  X  C 6Z   Ij  S `?I 5Zu  I Decisions about the management and administration of the Fund must also be taken before the fund is established. Best practice recommendations are that the fund should be under the control of an independent telecommunications regulatory authority, rather than the ministry or a special agency. Some countries have split control. The regulator administers the fund, but the ministry decides which projects are to be funded. This does not always breed efficiency. The fund administrator should have management autonomy. Also, all accounts must be kept separate from the regulatory authorities other accounts. In any event, very careful accounting standards and procedures must be adopted, including audits, proper documentation of all disbursements and payments to avoid any allegations of wrong doing on the part of the fund administrator. (RPQ H  0f ? ̙33  0   `6 (  X  C 6Z   I  S vI 5Zu  I 8The establishment and management of a fund is the topic for an entire week s seminar. ITU has organized seminars of this nature on a regional or sub-regional basis. Indeed we organized such a workshop in Moscow last year for this region. The limitation of time would not permit me to go into any greater detail on fund administration, management and procedures. But clearly the fund administrator must develop an operating plan to identify the projects and targets for a specific period, and must conduct a sound needs assessment to identify locations, populations and any socio-economic activities with the greatest needs to receive funding on a priority basis. In addition, a review procedure must be developed after projects are implemented to ensure they are meeting the goals established for them. This places a heavy burden on the regulator, or fund administrator. Another option could be to make funds available to communities that apply for them. Venezuela is experimenting with such an approach.  H  0f ? ̙33 0 pE(  X  C 6Z   I  S PH 5Zu  I GAnother fundamental decision that regulators and policy makers must make is what kind of services are to be funded? Basic or advanced? There are two different arguments. Some fund experts say that only basic communications should be financed because initial experiences have shown that jump start funding for basic communications often is used to leverage financing for other services including advanced communications. Other experts argue that citizens need access to ICTs now and that at the very least some projects should be provided for Internet access through telecentres. Very few countries have such large funds that they can do both and tough choices must be made. @ :\ c H  0f ? ̙33  0   l (  X  C 6Z   I   S I  u  I n  Once projects are identified, the next goal of the fund administrator is to develop a mechanism that will enable the fund to allocate the least amount of subsidy for any project. The idea is that subsidies allocated from a fund are to be considered  jump start funds. Countries in Latin America, Colombia, Chile and Peru have had the greatest success with minimum subsidy auctions. The idea is that the fund administrator, after careful analysis and calculations, determines the MAXIMUM subsidy it would award to any project. Then interested parties bid for the subsidy, but instead of bidding the subsidy amount up, the winner is the one who asks for the lowest amount. The mechanics require considerable explanation, are fully explained in the next edition of Trends for Telecommunication Reform. The mechanics involve not only how to determine the maximum subsidy that would be allocated, but also how to implement project guarantees so that subsidy payments are not made until the winner performs. The experiences of the Latin American countries who have used minimum subsidy auctions is that projects that receive jump start subsidies will only become financially self sustainable if interconnection and user tariffs are high enough to support financial sustainability. *  H  0f ? ̙33 0  (  X  C 6Z   I  S I 5Zu  I " H  0f ? ̙33 0   (   X   C 6Z   I   S I 5Zu  I " H   0f ? ̙33w  0 7/(  X  C 6Z   I/  S I 5Zu  I If you would like to learn more about Funds and minimum subsidy auctions, I would recommend that you look to Trends, both the chapters and its annexes. H  0f ? ̙33! 0  (  X  C 6Z   I  S \I 5Zu  I " H  0f ? ̙33 0  (  X  C 6Z   I  S  I 5Zu  I " H  0f ? ̙33 0 $(  ^  S  @  I  S I u  H As noted earlier, one of the key determinations that policy makers will be called upon to make in deciding which projects to finance from a Universal Service Fund, is whether the project will be for basic services, like public payphones, or to deploy telecentres. Once a decision is made to provide smart subsidies for telecentres, decisions must be taken on what kind of telecentre. There are a range of telecentres, including fairly basis telecentres only offering phone, fax and maybe email access. Telecentres may offer a far greater range of services, including business support, training for local populations, telemedicine or tele-learning options. Telecentres, of course, do not have to be linked with a fund. Many telecentres are financed by local entrepreneurs or aid agencies. * 9 )   1 w 9 5 H  0f ? ̙33 0  9(   X   C 6Z   I   S Ip ]  I ;KTelecentres need a viable business plan if they are to become financially self-sustainable. Trends 2003 includes a sample business plan for running a telecentre. The experiences in Central America and Latin America is that community involvement is key. Again, here is where regulators can become involved in consulting with local communities on what they want or need. Also, there is a need for any Internet services to provide content that is of local relevance, such as content related to local agricultural or manufacturing concerns. Costs and revenues are key to financial sustainability. Here the ability to locate telecentres in existing public facilities like schools and health clinics will not only help to reduce costs, they may increase the number of potential clients who will be aware of its existence. Any communities that may have a computer lab for a school, e.g., could be turned into a telecentre during non school hours. Finally, gender awareness is key for the success of any telecentre. Women must feel comfortable entering the telecentre, and may require training to appreciate the value of ICTs. Thus the location and hours the telecentre is open will be key to women, as may be the availability of child care. Thus, locating a telecentre in a school may encourage women to use it while her children are being educated. LK    R + 5" [ R H   0f ? ̙33 0 $ (  $X $ C 6Z   I $ S I 5Zu  I " H $ 0f ? ̙33/ 0 0< (  <X < C 6Z   I < S I 5Zu  I " H < 0f ? ̙33,8 0 PP|(  P^ P S 6Z   I P  0I 5Zu  I fThe regulators participating in the 2003 GSR agreed to the following set of best practice guidelines on universal access.  We the regulators participating in the 2003 GSR have identified and propose the following best practice guidelines to achieving universal access to information and communication technology (ICT) services: Under the heading  An enabling environment: the role of governments and regulators:  A series of policy and regulatory reform measures can be taken to achieve universal access to ICTs. These include . . . [the measures identified in the slide and the next slide] There are also headings entitled  access to information and communication infrastructures and  Guidelines in regard to finance and management of universal access policy. ( H P 0f ? ̙339 0 `X8(  X^ X S 6Z   I X  0I 5Zu  I " H X 0f ? ̙33: 0 e]`(  `^ ` S 6Z   IW `  0xH 5Zu  I Fostering a competitive environment, or more broadly, addressing the market efficiency gap, is the first step in the analysis of how to address rural access. Before looking at other universal access policies and practices, policy makers and regulators can analyze if there are any market barrier preventing rural users from having access to telecommunications and ICT services. (} H ` 0f ? ̙33; 0 OGh(  h^ h S 6Z   IA h  0K 5Zu  I {What do we mean by the market efficiency gap? If we examine this figure we can see an area defined as where access is provided today. The next rectangle shows where access would be provided if markets were allowed to act efficiently, without any market barriers In other words, how far can the market reach?. The third rectangle shows those areas, whether due to poverty or geographic isolation or both, that may need further intervention to achieve rural access. The relative size of each of these areas would vary country by country, depending on a variety of factors, including the state of market liberalization, wealth, etc. ||{ H h 0f ? ̙33< 0 c[0p(  p^ p S 6Z   KU p  0K 5Zu  K The mobile miracle has given rise to a new precept, the need to fill the market access gap before addressing the true access gap. The market efficiency gap, is the difference between what market are actually achieving under current conditions, and what they could achieve if regulators barriers were removed and regulation used to provide incentives. This gap can be bridged through more private provision of service facilitated by effective competition and by market-oriented policies and regulations that create a level playing field for new entrants. The only question relates to how far the market can reach commercially, and how best to implement and sequence more competitive conditions. Effective market-oriented regulation creates the environment for operators to be able to serve a much broader area and populace and thus close the market efficiency gap. This frontier can be reached within the context of general telecommunications sector reform and does not require subsidies. &b`]bbb=b b 8b b  b b b   H p 0f ? ̙33r08(Z@ 5!@m#(%xdP< t `; BpxLp%j+4 8: FrTWncpjHlPromoting Public Access Either Through Funds or Sector Reform3Promoting Public AccessTelecentre Success Factors#Competition, Price and Technology The Universal Access ToolkitMRegulators and Policy Makers shape the framework for access to ICT services >Ingredients for a Successful Universal Access Policy ApproachThank You for Your Attention!  Fonts Used Design Template Slide Titles)d 8@ _PID_HLINKSAmailto:susan.schorr@itu.intXhttp://www.itu.int/ITU-D/treg/Events/Seminars/2003/GSR/Documents/BestPractices_E_31.pdfXhttp://www.itu.int/ITU-D/treg/Events/Seminars/2003/GSR/Documents/BestPractices_F_31.pdfXhttp://www.itu.int/ITU-D/treg/Events/Seminars/2003/GSR/Documents/BestPractices_S_31.pdf_?VKtuthilltuthill  !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}~      !"#$%&'()*+,-./0123456789:;<=>?@ACDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklnopqrstvwxyz{|Root EntrydO)Pictures*Current UseruSummaryInformation(BhUPowerPoint Document(cVDocumentSummaryInformation8m