Model Universal Service Fund Policy Procedures and Implementation ITU/BDT Arab Regional Workshop

1. Model Universal Service Fund Policy Procedures and Implementation ITU/BDT Arab Regional Workshop “Visibility of Rural Connectivity” Khartoum, Sudan, 5-7 September 2004 Presentation by Kojo Boakye Research Officer , CTO

2. Summary • The need for Universal Service Funds • Fund Mission, Priorities and Objectives • Authorising and Enabling Laws and Policies • Sources of Contribution to the Fund • Management and Administration of the Fund • Procedures for Determining Funding Allocations • Project Definitions and Criteria • Proposal Evaluation and Criteria • The Commonwealth Telecommunications Organisation (CTO) • Conclusion

3. 1. The Need for Universal Service Funds • More than 70% of the worlds’ extremely poor live in rural areas and they highlight the need for Universal Access (UA). • Urban focus of ICT expansion is largely due to costs and risks associated with investing in rural areas. • National digital divides create a need for additional investment mechanisms aimed at achieving UA. • We must not underestimate the need for efficient USFs

4. 2. Fund mission, objectives and priorities (1) • Overriding mission and vision: • Contribute to national economic development and social well-being • Promote technological innovation in the telecommunications sector • Promote competition in the telecommunications market • Establish efficient, self-sustaining market-oriented businesses

5. 2. Fund mission, objectives and priorities (2) • Practical objectives and priorities: • Provide access to advanced communications capabilities • Provide universal access to basic telephone communication • Provide support for economic development and opportunity • Provide direct support to public and community service institutions

6. 3. Authorising and Enabling Laws and Policies (1) • All key development programmes begin at a high level of national legislation, presidential decrees, or ministerial policy statements • Frameworks to ensure credibility and consistency with other national policies • Use general language, to avoid overly restricting implementation of objectives

7. 3. Authorising and Enabling Laws and Policies (2) • Define principles of the right to communications access • Define objectives and obligations for national telecommunications development • Mandate establishment of Universal Service/Development Fund • Define responsibilities for implementing and administering the Fund

8. 3. Authorising and Enabling Laws and Policies (3) • Emphasise market-oriented, non-discriminatory principles • Establish enforcement and dispute resolution powers

9. 4.Sources of Contributions to the Fund (1) • Equitable contribution by all market participants • Fixed percentage of designated revenues • Key questions: • Who should contribute? • What revenues should be covered? • Should anyone receive special treatment?

10. Contribution amounts determined through appropriate market analysis Needs assessment Cost analysis Revenue/demand forecasts and fee calculations Limited options for “in-kind” alternatives to direct financial contributions 4. Sources of Contributions to the Fund (2)

11. 5. Management and Administration of the Fund (1) • Under control of independent telecom regulatory authority • Management autonomy • Independent budget, separate accounting

12. Regulatory Agency Board of Directors (Commissioners) Fund Advisory Committee Universal Service Regulatory Agency Management Fund Director Economics Division Assist. Director Accounting, Legal Project Managers Accounting, Legal 5. Management and Administration of the Fund (2)

13. 5. Management and Administration of the Fund (3) • Accounting Standards and Procedures: • Contributions • Payments, Documentation, Certification, Audit • Fund accounts and budgets • Project Fund • Operating Budget • Reserve Fund • Project budgets

14. 6. Procedures for determining funding allocations (1) • Operating Plan • Intended projects and targets for planning period (1-2 years) • Projects • Activities funded by the USF • Concessions • Licenses, grants, awards to individual applicants to use Fund resources in fulfillment of a Project

15. 6. Procedures for determining funding allocations (2) • Target Objectives • Interim targets for each category of Fund assistance • Highest priority typically to basic telephone access • Allocations based on relative degree of progress toward targets

16. 6. Procedures for determining funding allocations (3) • Socio-economic Priority Criteria: • Locations where economic conditions inhibit pure market-based solutions • Population with low relative income • Population not integrated with a centre of development • Scarce and dispersed population • Population with low access to infrastructure and communications • Historically disadvantaged groups

17. 7. Project Definitions and Criteria (1) • Universal Access to basic telephone services - Availability of public telephones by village - Distance and time parameters - Affordability - Accessibility - Ease of use • Access to advanced telecommunications and information services -Bandwidth and Transmission Quality - Access to Computers and other devices - Training support

18. Economic development and small business support - Access to advance business data and network services - Business-orientated Internet services Public service institution support - Interactive Multimedia services and capabilities - Specialised content development 7. Project Definitions and Criteria (2)

19. 8.Proposal evaluation and criteria (1) • Six Criteria of Evaluation • Location • Quality of Service • Quantity of Service • Community Benefits • Implementation Plan • Cost

20. 8. Proposal evaluation and criteria (2) • Three Stage Process of Evaluation • Stage 1: Pre-qualification • Stage 2: Request for clarification, expansion, or modification of pre-qualified proposals • Stage 3: Evaluation of revised proposals and award of concessions

21. Model Universal Service Fund Policy and Implementation A CTO report With contributions from: ITU and David N. Townsend & Associates

22. Model Universal Service Fund Policies and ProceduresPart II: Minimum Subsidy Auctions for Provision of Public Access Telecommunications in Rural Areas • Describes Model processes and procedures for applying USF financing to construct and operate new public access telecommunications facilities in unserved rural areas in developing and least developed countries, based on a minimum subsidy competitive auction mechanism.

23. Model Universal Access PoliciesPart III: Entrepreneurial Strategies for Stimulating Telecommunications Market Development • Examines option for stimulating the development of telecommunications markets in underserved areas using entrepreneurial ventures that are supported by a liberalised public policy.

24. 9. The Commonwealth Telecommunications Organisation • The CTO is a 100 year old International Organisation owned by 53 Member Countries and an ever increasing number of Sector Members. The CTO specialises in promoting the use of ICTs for development.

25. 9. Vision • To become the pre-eminent international ICT organisation dedicated to promoting social and economic development in the Commonwealth and beyond by helping to bridge the digital divide.

26. 9. Mission • Offer highest quality programmes for capacity development, knowledge sharing and information services to member countries • Deepen, expand and diversify partnerships between governments, businesses & other organisations to reduce global poverty & achieve Millennium Devt. Goals for ICT • Help bridge the digital & knowledge divide especially in the five key sectors of food & agriculture, education, health, e-government & e-commerce

27. Membership & market for CTOService PDT contributors Sector membership Full membership Regulator Regulator National Government Commun- ications Ministry ICT Service Operators ICT Service Operators Telcos Industry & development partners Mobile operators Telco ISPs Regulator Broadcasters Industry (supply) partners Development (funding) partners Relationships CTO

28. Range of CTO Products & Services(Applied to priority development areas) • Capacity building services • Training & Consultancy • International & regional events • Country & company specific events • Development programmes • Research & in-country studies • Information & Publication Services • Consultancy, advisory & recruitment Flexibility of supply is a key feature

29. CTO New Initiatives • Knowledge and Research: The Impact of Telecommunications on Rural Livelihoods • New Programmes for Training and Development • Tel – Coop • Sea Gateway • National ICT Road Map • CTO Tariff Centre • Portfolio of CTO Courses • ICT Professionals’ Database

30. 10. Conclusion • The need for Universal Service Funds • Fund Mission, Priorities and Objectives • Authorising and Enabling Laws and Policies • Sources of Contribution to the Fund • Management and Administration of the Fund • Procedures for Determining Funding Allocations • Project Definitions and Criteria • Proposal Evaluation and Criteria • The Commonwealth Telecommunications Organisation (CTO) • Conclusion

31. Research Officer: Mr Kojo Boakye 26/27 Oxendon Street, London, SW1Y 4EL Tel: +44 (0)20 7839 1381 Fax: +44 (0)20 7930 4248 k.boakye@cto.int www.cto.int www.cto-ict.org www.ictdevagenda.org Contact details